Opportunity Grows Beyond Mining: Innovators Rewarded on The Fusion Payable Staged Network
Fusion introduces new blockchain protocol technology expanding earning opportunities beyond mining
November 2018
Over the past four years, cryptocurrencies have expanded rapidly in terms of technology advancement and adoption. The industry now stands at the cusp of entering a new era of internet functionality underpinned by blockchain technology referred to as, “The Internet of Value” (IOV).
In the early stages of the IOV era, blockchains have been created in the digital world enabling spheres of value exchange centered around tokens (digital representations of values). The reach of these spheres is growing rapidly through network effects and positive reinforcement cycles where the ecosystem improves through the innovation from its members. The ecosystem financially rewards members for their contribution and consequently draws more members into the ecosystem, advancing innovation. However, in the majority of public blockchain models, misaligned incentive structures have led to unintended consequences — high concentration of rewards. Unfortunately, the high concentration of rewards has actually had the reverse impact, limiting innovation.
How did this happen?
The role of miners is critical to the health and functioning of any blockchain-based system since miners are responsible for verifying transactions by temporarily commandeering the accounting rights of the entire network. As compensation for verifying network transactions, miners are financially rewarded. However, blockchain reward structures are over-concentrated in favouring miners who represent a small subset of the blockchain’s ecosystem, therefore undervaluing innovation contributions.
New Incentive Models: Rewarding Innovation Through Increased Technical Functionality
To improve existing incentive models in order to reward and spur innovation, technical breakthroughs are a clear path forward. With the goal of including more members in the blockchain ecosystem to share in the reward system which will in turn incentivize innovation, Fusion has introduced two new functions embedded in the Fusion Protocol: Time-Lock and Quantum Swap. Both functions will be operational on the Fusion Payable Staged Network (PSN).
Time-Lock: holders of assets can split the ownership of the assets into any time slice. The asset holder maintains the rights to the underlying asset and can set the time for the duration that a counter-party can use the asset. The asset holder can monetize the time slices, creating a win-win situation for both parties. In other words, holders of P-FSN, Fusion’s test token in PSN, can lend their tokens in exchange for a return, plus retain the long-term benefits of holding their P-FSN. The party borrowing the time-locked asset now has access to assets without having to buy the tokens outright.
Quantum Swap: A revolutionary technology breakthrough, users can natively swap one token for another from the Fusion Wallet without having to go through external exchanges, using two-step atomic swaps, or smart contracts. On the PSN, users will be able to swap P-FSN with FSN within their wallet or the extended web3 interface.
By combining Time-Lock with Quantum Swap, holders of P-FSN who don’t want to run a node can time-lock their P-FSN for a period of time (for example, 1 month) and swap the time-locked P-FSN with another user who wants to run a node via quantum swap for ERC-20 FSN Tokens. At the same time, the counter-party is able to increase their stake in the network and therefore realise greater returns, this also leads to a more stable and secure blockchain ecosystem, benefiting all members of the network. The actual swap ratio will be determined by the market forces created between miners and holders, just as values are discovered in a free economy.
Inclusive Ways to Earn on the PSN Use Case Walk-Throughs
To provide a better understanding of the economics, below are walk-through examples of two use-cases showing how a user who holds 500 ERC-20 FSN tokens can earn rewards on PSN.
The following three assumptions will be used to define the market:
- In the first month of PSN’s online launch, there are on average 2,500 tickets being bought and competing to be selected to pack the next block on PSN.
- The average Quantum Swap exchange rate for one thirty-day (0, 30 days) time-locked P-FSN is 0.1 ERC-20 FSN. Therefore 10 P-FSN = 1 ERC-20 FSN
- FSN token price is $0.70.
CASE ONE — Token holder wants to participate in mining.
In use-case one, a token holder is comfortable setting up a node and participating in staking on PSN. If the participant has 500 ERC-20 FSN that he has mistakenly left in an exchange (and cannot access his 500 P-FSN). The optimal way for this miner to be rewarded (given the previous three assumptions) is to buy 5,000 thirty-day time-locked P-FSN tokens at a cost of 500 ERC-20 FSN. The token holder can use the 5,000 time-locked P-FSN tokens to purchase 25 tickets for staking. Given these numbers and the assumptions above (competition against 2,500 tickets, giving the holder a 1% of total staking power), the miner can expect to earn 36 ERC-20 FSN tokens per day which means 1,080 ERC-20 FSN tokens per month. This roughly yields $756.00 over the course of the month.
CASE TWO — Token holder does not want to participate in mining.
In use-case two, a token holder does not want to go through the process of running a staking node but wants to earn a return from his token holdings. If the participant holds 500 P-FSN tokens, the optimal way for this holder to be rewarded is to Quantum Swap 500 thirty-day time-locked P-FSN tokens in exchange for 50 ERC-20 FSN tokens. In this way the token holder has the capacity to generate a return on his tokens without actively participating in staking. And 30 days later, the holder still holds 500 P-FSN and he could do the swap again.
In both cases, miners and holders have different ways of earning rewards for participating in the growth and innovation on the Fusion PSN ecosystem. The PSN will serve as the “sandbox” to test these new earning models and offer a way for participants to develop new innovative earning models.
How to Get Involved, Test, Earn and Learn on the Fusion PSN, Plus Additional Information:
How-To Guide on staking and earning rewards on the PSN
