Authorities and Staking

Network Authorities

A number of specialized 'authority' roles exist within the Anyone Network that coordinate relays, clients and rewards. While conventional implementations of onion routing have these roles operated by a central organization, the Anynoe Network is architected to democratize this; any holder can build enough trust in the network to run these authorities.

The Whitepaper describes the Observer model - a generalized framework for how authority roles can be decentralized. Within this model, anyone can stake tokens to operate an authority node and gain a trust score based on the node's duration of operation, staked tokens, and more. The trust score correlates to the likelihood of that node being chosen to post authoritative information in a given epoch, after which the node operator receives an updated trust score and an $ANYONE reward.

This section of the tokenomics paper outlines how these rewards are distributed and how, through delegated staking, holders who do not operate these nodes directly can earn an $ANYONE yield.

Bandwidth Authorities

The first and most prominent authority role to be decentralized is the bandwidth authority. Bandwidth authorities measure relays' bandwidth and performance, which form the basis of consensus weight and relay rewards. This section expands on the participation model involving staking and delegation, alongside detailing the economic incentives designed to bootstrap and sustain this critical function.

Staking and Running a Bandwidth Authority

Individuals interested in contributing to the network's integrity can stake $ANYONE tokens to run a Bandwidth Authority. This staking serves as a commitment to providing accurate bandwidth measurements and helps secure the network.

Tokens staked for this function are not subject to a fixed lock period, and only have a 14-day unstake wait time.

Delegation to Bandwidth Authorities

$ANYONE token holders who may not wish to run a Bandwidth Authority themselves have the option to delegate their tokens to an existing Authority. This allows token holders to contribute to the network's performance verification process while earning rewards from the system's operations. Bandwidth authorities can set their own fee on delegated tokens, which is the proportion of authority rewards kept by the operator. As the biggest reward determinant for an authority is its number of staked tokens, the proportion of those kept by the operator may be relatively low, such as 5-10%, with the remainder distributed among delegated stakers. Delegated tokens have the same unstake period applied to them.

Economic Model and Incentives

Staking reward pool: To encourage early participants, a fixed reward pool of 1,000,000 tokens (the third category referenced in Token Outflow) is allocated to form the initial rewards. The daily outflow rate matches that of the other pools, and each epoch's tokens are rewarded to the bandwidth authorities invited to submit measurements within it.

Yield (APY): Naturally, delegated-staked tokens will earn a yield. A fixed pool of rewards encourages an initial expansion of staking activity as initial per-token yields are higher. In the absence of a fixed lock period, holders are incentivized to stake tokens even with a relatively small APY.

Transition to Self-Sustenance: Over time, the intention is to transition authority rewards to a self-sustaining model. This shift will rely on a combination of network-accrued fees, gradually reducing the reliance on fixed pool incentives.

Performance Fees: Authority Performance Fee: Bandwidth Authorities have the autonomy to set a performance fee, a percentage taken from the rewards of their delegators. Authorities are required to be transparent about their performance fee rates, enabling delegators to make informed decisions when choosing where to delegate their $ANYONE tokens.

Economic Sustainability: The economic framework for Bandwidth Authorities is designed with the dual goals of incentivizing participation and ensuring the long-term sustainability of the Anyone Network's performance verification process. Through a balanced approach of fixed rewards, delegation mechanisms, and performance-based fees, Bandwidth Authorities are positioned as a cornerstone of the network's decentralized infrastructure.

Conclusion

The implementation of staking and delegation for Bandwidth Authorities represents a significant step towards decentralizing the Anyone Network's core functions. By enabling individuals to participate directly in the network's maintenance and performance verification, the Anyone ecosystem is strengthened. The economic incentives and structures put in place ensure that Bandwidth Authorities are not only motivated to contribute but are also rewarded for their essential services to the network's health and reliability.

Motivation and Justifications

1. Motivation for Decentralizing Bandwidth Authorities

• Enhanced Network Integrity and Security: By decentralizing Bandwidth Authorities and allowing users to run their own with token-based delegations, the Anyone network vastly improves its resilience and security. This decentralized approach distributes the responsibility of bandwidth measurement across various stakeholders, reducing the risk of centralized failures and enhancing trust in the network's performance metrics.

• Inclusivity in Participation: Allowing individual users and token holders to participate directly in the running of Bandwidth Authorities empowers a broader base of the community. This inclusivity not only bolsters network operations but also democratizes the earnings from these operations, aligning the network's success with that of its individual contributors.

2. Justification for Unlimited Staking Opportunities

• Attracting Large Stakeholders: By removing the cap on the amount of $ANYONE that can be staked in running Bandwidth Authorities, the network effectively opens the door for whales and large holders to contribute significantly. This strategy caters to stakeholders who might find running multiple relay nodes too labor-intensive or outside their strategic interests.

• Increasing Network Security: Large stakes contribute to the overall security and robustness of the Bandwidth Authorities by ensuring there is enough capital at stake to discourage malicious actions and to stabilize the network's performance metrics. The strength of the network ultimately comes from the well distributed nature of the token and its relative scarcity.

3. Rationale Behind Performance Fees

• Fair Compensation for Services: The performance fee model incentivizes those running Bandwidth Authorities by ensuring they are compensated for their effort and expertise in maintaining the network.

• Attracting Delegators: By allowing operators to set their own fees within a reasonable range, it creates a competitive marketplace where the quality of service can dictate earnings. This dynamic encourages Bandwidth Authorities to improve their offerings to attract more delegations, thereby increasing their earnings and simultaneously enhancing the network’s service quality.

4. Economic Balance Through Fixed Fee Token Structure

• Sustainability of Token Supply: Implementing a fixed total token reward per time period, as opposed to a fixed APY, helps maintain economic balance within the ecosystem. This structure allows the market to dictate the attractiveness of staking and delegation, ensuring that the token supply does not inflate unsustainably.

• Market-Driven Demand and Security: By letting the demand for token holdings and delegations determine the rewards, the network ensures that its economic incentives remain aligned with its operational needs and market conditions. This approach keeps the network agile and responsive to changes in stakeholder behavior and market dynamics.

5. Transition to Self-Sustenance

• Long-Term Economic Independence: The plan to gradually reduce the reliance on an external company token reward pool and transition to a model where all rewards are generated internally is fundamental for achieving economic independence and sustainability. This strategy ensures the longevity and viability of the network as it matures.

• Utilizing Premium Payment Allocations: Redirecting 35% of premium payments into the reward pools facilitates this transition by replenishing the resources needed to compensate network participants fairly. This allocation not only supports current operations but also seeds future growth and self-reliance.

Conclusion

The implementation of Bandwidth Authorities with a decentralized, inclusive, and economically balanced model represents a strategic advancement in the Anyone Network’s development. By motivating large stakeholders to participate, ensuring fair compensation through performance fees, and planning for a sustainable economic model, the network is poised to enhance its functionality, security, and community engagement. These foundations are critical as Anyone moves towards a fully self-sustaining operational model that aligns with the long-term interests of all network participants.