Sylo Network Incentivisation
How we’re bringing everyone to the party…
This post is the third part in a series related to the Sylo Network. In my first post, I discussed our “peer-to-peer first” approach to communication and how Service Peers build on this philosophy. In part two, I expanded on the role of Service Peers, by providing an overview of resources that might be unavailable to others and how they can be provided.
If you are interested in a more complete understanding of the Sylo Network, I encourage you to read the first two posts. ~ Paul, Sylo dev
The Sylo Network is a global network, built from decentralised technologies and with a strong focus on security and privacy. The entire network is operated by the very same peers who use the network. To ensure the network is available to all, peers without access to specific resources are provided access through Service Peers.
In an ideal world, necessary resources would be provided freely, however we must accept that providing network resources is not without cost. To ensure necessary resources are available, the Sylo Network must be instilled with economic incentivisations. In this post, we will explore these incentivisations and how they fit into our development roadmap.
The Sylo Token
At the core of our incentivisation layer is the Sylo Token — an ERC20-compatible utility token created for use with the Sylo Protocol. The Sylo Token is currently traded on KuCoin and additional exchanges may be added in response to market demands.
The Sylo Token is used within the Sylo Protocol to access network resources and can likewise be earned by peers who provide network resources.
Peers providing services to each other must have a safe environment in which to exchange payments for said services. Resources on the Sylo Network (such as message relay) are required frequently and therefore transaction fees must be kept to a minimum. Additionally, transaction security is crucial as services may be performed by a large number of untrusted peers.
Sylo manages the payment of high frequency micro-transactions through an on-chain Layer 2 payment model known as probabilistic micro-payments.
Probabilistic Micropayments
The Sylo Network is designed to allow users to request hundreds of services per minute, with the cost of each service being low. It would simply be impossible to perform a blockchain transaction for each service.
Probabilistic micro-payments allow for many small payment transactions. However, with probabilistic micro-payments, instead of receiving a payment for each service, you are instead provided with a ticket that has a probability of earning you a payment.
For example, as a peer, you might arrange for tickets with a 1:10 probability of winning. Let’s assume the Service Peer charges 10 SYLO for the service. You would give the Service Peer a ticket for each service. Most of the time, the ticket would not be a winner, and the service would cost 0 SYLO. However, 10% of the time, the ticket would win and you would pay 100 SYLO for the service.
In real life, this would be like getting a $5 coffee everyday, except instead of paying every day, you rolled a dice. If the roll was a 1, your coffee was $30. Otherwise, your coffee was free.
Over time, the probabilities even out — meaning the coffee shop would still make the same amount of money. And for peers on the Sylo Network, the number of on-chain transactions is greatly reduced, producing significant savings in transactions fees. We use probabilistic micro-payments to take advantage of this to the fullest, by using tickets that payout very rarely.
Evolution of a Service Peer
Current users of the Sylo Smart Wallet operate exclusively as peers on the Sylo Network. Network resources are provided by Service Peers operated by Sylo and our consortium of partners — shouldering the cost of running the network while we roll out our service and micro-payment protocols.
To establish a globally distributed private communication and application network, the Sylo Network must expand into the hands of our users.
Public Service Peers
In the near future, Service Peers will take their first steps into the public! This important milestone will allow anyone to participate in the Sylo Network and support peers running Sylo dApps like the Sylo Smart Wallet.
The initial release of Service Peers will open up some exciting opportunities. By allowing early access to their own Service Peer, our users can gain experience deploying, both public and private, decentralised Sylo Networks.
Operating a public network benefits all Sylo users while also allowing the operator the benefit of providing services to their own devices. This also places them in a position to jump directly into the incentivised Sylo market, when it becomes available, to start earning Sylo Tokens.
Operating a private network, in contrast, can be a powerful exercise in communication freedom and autonomy. One or more users can band together to establish an alternative to the global Sylo network. This network can operate in isolation, while still using Sylo dApps like the Sylo Smart Wallet for communication.
Service Peer Incentivisation
As the number of Sylo dApps (and Sylo users) increases, the network’s ability to provide necessary resources will become constrained by the number of Service Peers able to offer free services. The introduction of Service Peer incentivisations and a new Service Peer marketplace will greatly expand the capacity of the Sylo Network.
Fueled by the Sylo Token, Service Peers will earn probabilistic payment tickets for services provided to users.
Sylo users will now have the opportunity to explore a variety of service alternatives.
For example, Sylo Smart Wallet users could choose to remain with a free public Service Peer or migrate to their own Service Peer. Or a friend’s Service Peer.
Custom Sylo dApp developers could choose to provide their own Service Peers to support their application, or their users could use SYLO to purchase services from the existing Sylo Network.
Service Peer Staking
In a vast global network of Service Peers, it can be complicated to distinguish reliable providers from those that are not. We’ve already established the need for access to network resources and that Service Peers provide these resources. Service Peer Staking is a mechanism that allows a Service Peer to formally record its commitment to the network and its users.
Through an on-chain staking contract, Service Peer operators lock up quantities of Sylo Tokens. When peers on the Sylo Network are looking for Service Peers to provide network services, the amount of stake is used as a measure of dedication, with Service Peers being sent peer service requests in proportion to their stake. We refer to this process as stake-weighted Service Peer selection and it can be used by peers until they establish a preferred Service Peer.
The staking model could also be extended to users, who could delegate stake to their Service Peer of choice to signal their confidence in them as a provider. Staking to a Service Peer could also provide an opportunity to earn SYLO from the network without directly providing services to others.
Welcome to the Sylo Network
This concludes my overview of the Service Peers and how they work together to form the Sylo Network. I’ve covered everything from the peer-to-peer transport layer all the way up to the SYLO incentivisation layer.
Beyond what’s been covered, the devs here at Sylo are full of ideas and will be continually working towards providing the best decentralised network possible. We envision the Sylo Network as a vibrant world of distributed apps and services, owned by users, and driven by a philosophy of security, privacy, and openness.
We’ve been talking about Service Peers for a few weeks now, but the “Service Peer” will soon be receiving the full Sylo brand treatment from the amazing marketing team here at Sylo — including a new name!
Next week, I’ll do a special post where I talk about the new name, the philosophy behind the change, and maybe a few other tidbits. Stay tuned! ~ Paul.
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