Introducing KR8OS: A Decentralized Marketing Analytics Platform
As Chief Technology Officer at KR8OS, it’s my pleasure to introduce the platform that our team has been designing and building to bring true transparency and standards to digital advertising. Developing this platform is the culmination of our years of collective experience in the advertising and blockchain industries.
Our team knows well the frustration of working with closed, centralized analytics and attribution systems. At our previous company, that frustration compelled us to focus on billing advertisers for impressions and on building AI models to optimize costs based on conversions. As we deployed these models, we noticed that certain behaviors recurred as we trafficked our campaigns through various publisher channels. Most obviously, when we trafficked app install campaigns, publishers would charge us for more installs than we were seeing within the advertised apps. The problem is that a users’ behavior and activity spans multiple apps and publishers. Because each publisher maintains its own set of data on how users view and interact with ads, publishers charge advertisers the same amount, no matter how little or how much influence they have on the users that install apps. Decentralizing that data would allow advertisers to track user activity themselves and ensure that they only pay for legitimate clicks and conversions.
Accurate mobile app attributions are just one example of the possible improvements from decentralizing marketing analytics. Decentralized analytics would also provide publishers with a global click database, which they could use to consolidate billing while providing advertisers full transparency into the attribution process. In such a system, we can introduce any digital standard that is transparent, fair, and trusted by all parties, and completely reform the untrusted system that is digital advertising. We are now working closely with the iAB to help define the standards and solutions for problems that have plagued the industry for ages.
Why We Need Decentralized Marketing Analytics
With the recent findings that hostile foreign actors attempted to influence an election, many users are pushing digital publishers and advertisers to become transparent. For advertisers, this is a classic supply chain transparency problem, though a bit more advanced because any publisher can deliver a conversion. The important part is to figure out who did. A decentralized tracking database makes this possible for all participants in the digital advertising ecosystem.
Advertisers these days must deal with fraud and generally shady behavior from the publishers who serve ads. Digital advertising is an untrusted world, much like the financial and privacy systems that Bitcoin has disrupted. The same concepts of incentivized verifications and decentralization can be used to bring security and standards to digital advertising and truly disrupt it.
Until recently, though, there was no virtual currency that held real-world value. With the emergence of Bitcoin and Ethereum, it’s now possible to build fully decentralized systems that can offer incentives in the form of virtual currency.
How Does the KR8OS System Work?
Our white paper provides a deeper description of how the KR8OS decentralized marketing analytics system is designed. It is composed of several components:
- A dashboard — Interfaces with a back-end API to set up accounts and campaigns, and to generate reports
- A set of smart contracts for managing resources (e.g., accounts, campaigns, escrow payments)
- A back-end API — Syncs resources to and from the cache database and blockchain
- A tracking HTTP API — Where participants (publishers and advertisers) can send their tracking data (e.g., impressions, clicks, conversions)
- A gossip protocol that relays tracking data to other nodes in the network
- A checkpointing daemon — Periodically, the network of clients comes to a consensus as to the number of metrics they have tracked and attributions they have computed. When a consensus is reached, its result is stored on the root (Ethereum) blockchain for historical record-keeping.
- A set of smart contracts for consensus checkpoints and payment distributions — To unlock payments, participants set a number of tokens at stake and submit the results of the metrics they tracked. The group of participants that are deemed to be correct receive a portion of advertisers’ escrow payments for tracking metrics and computing attributions. This set of smart contracts is intended to eventually plug into Ethereum’s Plasma Framework for scalable side chains.
The tracking and relay API, the checkpointing daemon, and all smart contracts will be made available as open source components in the coming days. Our intent is that any person can download and setup their own verification nodes.
What Is the Incentive for Verifiers?
Verifiers participate in the KR8OS system by purchasing Marketing Analytics Tokens, or MAT. But tokens are only effective if they are part of a sound crypto-economy, with a game theory that serves the interests of all participants. For that reason, we have designed the KR8OS system to to appeal to the motivations of all players: advertisers, publishers, and verifiers) We have outlined the motivation for advertisers above. For publishers, their motivation to participate is to establish a level playing field on which to compete with large publishers such as Facebook.
Verifiers are motivated by the possibility of gains from correctly tracking and computing analytics. Those that provide faulty metrics lose tokens they had set at stake. If their bad behavior continues, they will lose the ability to participate and access the system. If they establish a record of responsible behavior, they will continue to collect fees determined by the number of tokens they have at stake.
What Is the Token (MAT) For? Can’t you use Ether?
KR8OS is using Ether for all payments transactions within the system, because we believe Bitcoin, ZCash, LiteCoin, and Ether have captured the value transfer markets and users only want to use those coins.
Projects such as Kochava’s XCHNG, which is not even clear on its implementation or goal, implement their own root blockchain. We have chosen a different approach. Most brain power is going to premium blockchains like Ethereum, so we believe it’s better to use Ethereum rather than build our own root blockchain. Niche currency coins will also be difficult to scale to the point where they can compete with titan coins like Ethereum and Bitcoin. Ethereum’s proof-of-stake and plasma sidechain framework provides a perfect mechanism for implementing highly scalable systems on the Ethereum blockchain. We don’t want to reinvent the blockchain wheel.
The MAT has two purposes: It provides users with a license to participate in the system, and it is the currency for verifiers’ stakes in the decentralized, consensus-based process for determining attributions. Because the fees a single verifier can collect is diminished as the number of verifiers increases, and supporting unlimited nodes is impractical, a minimum number of tokens are required to participate and receive network data. The value of MAT directly reflects the quality of the metrics and analytics tracked within the decentralized system. Since Ether’s value does not change based on the quality of KR8OS system, using Ether as the verification token would not provide participants with motivation to maintaining the integrity of the KR8OS system. These two requirements led us to create a new token and utilize titan coins, particularly Ethereum, to transfer value. Verifiers will want to continue to collect MAT tokens to place at stake and earn higher processing fees. The total amount of fees is directly related to the number of advertisers trafficking campaigns at any given time period.
The beauty of our system design is its seamlessness: because the system plugs into existing advertising systems, there is no ramping-up period while users complete SDK or browser installations. A critical mass of decentralized token holders and verifiers can be achieved simply through the token sale and availability of the client. Advertisers can then use the system as they would any traditional tracking and attribution platform, but with Ether and tokens as its fuel.
What’s Next?
Over the next few weeks, we will release several key components of the system:
- A publicly available dashboard for advertisers to set up campaigns and deposit Ether
- Our open-source verification client, which can be downloaded and used by anyone
- The first stable version of our resource management and consensus processing smart contracts.
We are an agile team that has delivered state-of-the-art advertising platforms at breakneck speed before. We’re excited about creating a thriving developer community to build the state of the art decentralized marketing analytics and attribution platform.
Stay tuned to our blog and join all our social channels to ask questions and help us build the best system available. We know how much better marketing analytics can be with an open source, decentralized, and incentivized tracking system, and we’re excited to have advertisers and publishers join us in establishing that system.
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