The Incentive model of Auth3 Network
Participants in Auth3 are tightly connected, and together developing with the whole network. We want every contributor can be rewarded and maintain an active and constant participation. Therefore, how to set a fair and healthy incentive model for them is important.
Auth3 implements the “divide-and-govern” strategy, which builds the hierarchical reward pools to separate the reward mechanisms of different roles and handles them independently.
“Divide-and-govern” strategy
First, tokens used to incentivize contributors in the Auth3 network mainly come from the network rewards and transaction fees generated from market transactions. We aggregate these tokens into the total reward pool.
Second, based on the incentive mechanism at different stages such as Auth3 warm-up stage, we distribute the tokens in the reward pool to three sub-pools, correspondingly for the three roles listed above.
Third, tokens in the three sub-pools are redistributed to more specific roles such as data operators among the data producers, according to sub pools’ different distribution rules.
To sum up, the design of the hierarchical reward pool separates the reward mechanisms of different roles and handles them independently. This method successfully solved the problem brought by complex Auth3 network roles.
And there are some reasons for taking this “Divide-and-govern” strategy to build the hierarchical reward pools. The first is the benefit of reducing complexity.
Reduce complexity
Bitcoin’s workers consume CPU to calculate random numbers; IPFS’s workers provide a disk to store files. The contribution models of these two projects are both single. By contrast, Auth3 has a multi-contribution model, which needs workers who provide CPU to implement privacy computing, workers who provide a disk to store data…… In order to clear responsibilities, Auth3 divides them into auth providers, storage providers, and other workers.
Also, different from common data projects, in addition to the data providers, Auth3 has data operators. We believe that normal individuals are lacking the willingness and capacity to curate their data, so it’s important to set a third-party role to operate.
And Auth3 Dao also has different functions, deserved to be correspondingly incentivized.
Considering these diverse roles as a whole, once adjusting one role’s reward, others’ rewards need to be adjusted. If these roles are not related to the reward proportion, we need to adjust the reward one by one, which is very fussy. Instead, if we build a hierarchy involving two levels and give a clear affiliation, one adjustment to the broad category can synchronously apply to the subordinate roles, which reduces great complexity. For example, when workers’ rewards are halved, storage providers’ rewards are also halved. And about how to allocate these extra to other roles, we can consider it first for the broad category and then consider the specific roles.
Therefore, we classify these specific roles according to the way they contribute to the network, into Data Producers, Workers, DAO.
Ⅰ:Workers are the service providers of various infrastructures in the Auth3 network, including the auth provider, the storage provider, etc. The Auth3 network will allocate rewards based on the resources they provide (such as CPU, Disk, etc.).
Ⅱ: Data Producers, including the data provider and the data operator, work together to provide valuable datasets for the market. The Auth3 network will distribute rewards based on the value of the data they create.
Ⅲ:DAO is responsible for maintaining the orderly operation of the Auth3 network and promoting the optimization of Auth3, mainly including the DAO committee and other community contributors. The Auth network will allocate rewards based on the voting weight of the governors, and will also set aside a part as grants to motivate community contributors.
After classifying, Auth3 can adjust the rewards of every role synchronously or especially. This “Divide-and-govern” strategy reduce complexity effectively.
Relative independence
The second benefit is the relative independence of every role’s rewards.
In the different stages of the network (we will elaborate on the stages in the following article), Auth3 may adjust the distribution methods of every pool. Because there is a certain degree of uncertainty at the beginning of the project, also called the warm upstage. For example, after the Auth3 launch, there are too many data providers which are far over our estimation and prediction, and the workers who provide storage services are just a few. In this case, we want to adjust the distribution proportion to give more from the reward pool to the worker pool and adjust to increase the proportion of storage providers.
In this process, the specific roles under the same category and the specific roles under other categories are not influenced directly. They are relatively independent.
Auth3’s design of the hierarchical reward pools helps to fulfill the flexible adjustment, which can help to add flexibility to every change and update, protect all contributors’ interests, and maintain a healthy operation of the Auth3 network.
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