StrongBlock DeFi Protocol

Abstract

There are two core elements to a blockchain: miners and nodes. Miners are compensated, nodes are typically not. With no monetary reward, there is a high risk for the public blockchains they support.

To solve this, StrongBlock has created the StrongBlock Community DeFi protocol, incentivizing nodes to perform better, using the STRONG Governance token, a standard ERC-20 token.

Think Compound for blockchain nodes. Instead of liquidity pools, nodes mine for STRONG. The protocol supports the demand for high quality public blockchain performance with powerful DeFi tokenomics, resulting in the first ever DeFi system that also improves the quality of the blockchain itself.

The protocol provides three easy ways to participate and receive STRONG rewards, all available as soon as the protocol launches.

  • Mine ERC-20’s in a smart contract for daily rewards.
  • Mine STRONG in a smart contract for periodic (weekly+) rewards.
  • Participate in node selection to receive STRONG rewards.

You use STRONG to reward the nodes of your favorite blockchain. Nodes mining in the protocol earn a portion of the daily rewards, similar to the way most blockchains compensate their miners. STRONG holders can vote for nodes, granting them a higher percentage of the rewards.

10,000,000 STRONG tokens will be issued. The tokens enable governance of the platform. 4,200,000 STRONG have been set aside for rewards over 4 years. Community miners will receive daily awards starting at 2,888 STRONG. STRONG miners will receive weekly rewards starting at 888 STRONG, averaged daily.

There will be two mining pools (called Communities) at launch: ETH nodes and STRONG. New Communities can be proposed and voted in by STRONG holders. To receive daily mining rewards from a Community, ERC-20 tokens are staked; the STRONG Community only allows mining with STRONG.

All node candidate submissions for a Community are subject to rejection based on not meeting the criteria in the smart contract controlling the evaluation algorithm. Qualification criteria can be changed by referenda.

StrongBlock’s Decentralized Governance protocol consists of a series of smart contracts to which alterations can be proposed, voted in, and implemented via smart contract code updates. Some basic rules that would harm the protocol cannot be altered by referenda. Mining with STRONG is required to participate in governance.

No matter how you choose to participate, your mining benefits you and the blockchain community.

We’re working hard to ensure that when the protocol is launched it is easy to use and participate.

Defi Protocol

Miners and nodes power blockchains. Miners validate new transactions and record them on a blockchain. Miners are compensated with tokens and transactions fees. Nodes are servers on a blockchain, maintaining consensus with other nodes, verifying transactions and storing a copy of the blockchain and providing redundancy and other useful services. For example on the Ethereum Mainnet, in addition to Miners there are Full nodes, Light nodes and Archiver Nodes. All three types of nodes, Full Light and Archive, are crucial to the ecosystem — yet they are not currently compensated.

With limited resources and no financial incentive, many Full nodes run out-of-date software, maintain incomplete blockchain histories , and are intermittently off-line. There is no easy mechanism to fix this problem once a blockchain is launched.

More nodes = more resilience

According to https://medium.com/@aat.de.kwaasteniet, more than 86,000 nodes form the backbone of the top 20 tokens https://medium.com/coinmonks/ranking-cryptos-by-number-of-nodes-57a12e4ae51a.

The more nodes running on a blockchain, the more resilient it is against catastrophe and corrupt actors.

While all nodes are beneficial, full nodes archiving the complete blockchain with 24/7 uptime provide the most value. But while full nodes are critical infrastructure to a well performing blockchain, they are expensive to operate.

Token holders rely upon full nodes to maintain high-performance decentralized networks in order for their tokens to retain value.

Using a DeFi reward system to promote better node performance

To encourage more high-quality node operators, there needs to be a financial incentive to turn running a node from a hobby into a for-profit activity.

Ideally the financial incentive should come from the blockchain token holders who directly benefit from a high performing node network.

Our idea is to use the mining concept to get more nodes overall, and more full nodes specifically, running on all blockchains, and to compensate them for doing so.

StrongBlock Community DeFi Protocol

The protocol is a mining concept applied to a crucial but often overlooked objective: node performance. Note: Nodes are just the beginning of what we will be applying this protocol to.

STRONG is a standard ERC-20 token.

Communities, Voting, Staking and Signaling

The protocol provides many ways to participate. The following definitions describe how to do so.

  • Communities — Blockchain protocols.
  • Mining — The work activity of depositing or committing tokens for rewards in a community.
  • Signaling — Indicating which nodes you wish to support in a community.
  • Voting — Proposing and accepting or rejecting changes to the protocol.

You can vote and signal your STRONG at the same time. The rules are:

  • One STRONG, one Vote — Your vote is only counted if your STRONG is being mined when a proposal is made.
  • One STRONG, one Signal — Your signal stays in place until you recall it.
  • Each STRONG can be used to Signal and Vote simultaneously

Terminology usage examples:

“What is the top Community in StrongBlock’s DeFi protocol?”

“I used my STRONG tokens to Signal my support for Bob’s Best Nodes, Anne’s Amazing Nodes, and NodeWhisperer in the Ethereum Community.”

“Awesome, the governance referendum to add LINK staking in the Ethereum Community just passed!”

To get involved in a Community, the only action that needs to be taken is to mine in it. In order to Signal and receive rewards, or to Vote, you must mine STRONG in the Strong Community.

Voting delegation

STRONG Voting and Signaling rights can be delegated to other addresses. Voters and Signalers therefore do not need to own STRONG to vote or signal, if they have had STRONG delegated to them. For the purposes of referenda, STRONG holders can delegate their tokens to nodes to enable greater participation by those groups who will be most affected by referenda outcomes; or, delegation can go to experts who can better evaluate node performance.

Some will choose to participate in ways that are impactful to the community, others will participate based on how impactful the community is to them. The point is, you don’t have to choose: you’re incentivized to participate for the community good and for yourself.

  • Mining — Impacts you
  • Voting — Impacts your communities
  • Signaling — Impacts your communities and you

The more STRONG you have, the more Voting and Signaling power you have in all the communities. The more mining and participation, the more you are rewarded.

Communities

There will be one blockchain protocol Community at launch: Ethereum. New Communities can be proposed and voted in by STRONG holders by referenda. To receive daily rewards from a community, ERC-20 tokens (ETH and one other ERC-20 to be announced before launch, with many more to come) are mined for STRONG.

Mining STRONG is different from other Communities, in that STRONG is both the mining token and the reward. Mining STRONG is required to Vote and Signal. Signalers receive rewards for their participation. The StrongPool also records and reports on the voting ability of each mining account. When a miner in a Community claims their STRONG rewards, those rewards can then be mined for more STRONG.

STRONG is rewarded in the StrongPool for mining duration and Signaling activity. The longer you mine— with a minimum duration set (typically one week), and the more you Signal, the higher the reward.

When you are mining STRONG, you can only vote with the balance of STRONG tokens you were mining prior to the proposal being submitted. This prevents double voting. In addition to being able to Vote on proposals with tokens being mined at the time of the proposal, the miner can also Signal their support to nodes within Communities using the STRONG tokens they are mining. One STRONG. One Vote. One Signal.

STRONG rewards at launch

42.5% (4.25m) of STRONG has been set aside for rewards to Miners. Community mining rewards — where you are mining with tokens other than STRONG — will be distributed daily as STRONG (diminishing gradually over 4 years). Rewards from mining STRONG for a week or more will be distributed periodically (weekly at launch) as STRONG, increasing gradually over 4 years Signaling nodes in any Community with STRONG is also rewarded. Mining with STRONG is required to Vote and to Signal nodes. These parameters are Voter adjustable.

The 4.25m STRONG held in the Community Smart contact will not participate in governance of the protocol. However, daily and periodic rewards, once mined, are immediately eligible for Voting and Signaling.

The daily mining of STRONG is allocated to each staked Community, proportional to the total US Dollar value of the tokens being mined in those Communities at the time of daily (UTC) calculation using pricing oracles. Then, within each Community, a percentage of the mining rewards are split between miners and nodes. The split ratio is Voter adjustable.

The Community with the highest total daily mining as computed by an oracle mines the most STRONG rewards, with a Voter adjustable cap on maximum Community distribution. The rest of the mining rewards are then proportionally split among the remaining Communities and then between their nodes and Miners. STRONG holders can signal for nodes in a given Community— one STRONG, one Signal — with the top nodes receiving higher rewards. This is also Voter adjustable.

For example: If the Ethereum Community has $700k worth of ETH being mined at the time of daily computation, and the Chainlink Community has $300k worth of ETH in it, and we assume these are the only Communities in the system, then the Ethereum Community gets 70% of the daily mining reward, and the Chainlink Community gets 30% of the daily mining reward. The STRONG mining rewards to each Community are then distributed proportionally among miners, determined by their respective share of tokens being mined. Nodes are rewarded by their proportional share of Signals.

Miners receive rewards based on each mine-second (tokens being mined times the number of seconds they are being mined) across every full UTC day that they are being mined in a Community. Miners do not need to be staked for full days. Governable caps will be placed on mining to ensure that any given Miner cannot receive more than a certain percentage of daily rewards.

Governance referenda

Anyone with 1% (100,000) of STRONG being mined can propose a governance referendum, either simple or complex, such as adding a new mining token, a new Community, or changing the maximum number of nodes that can mine for rewards in a Community. Proposals are automated code changes that update the appropriate governance smart contract once they are approved.

All proposals are subject to a 3 day voting period, during which time any address with voting power (based on mining STRONG) can vote for or against the proposal. If a majority, and at least 400,000 votes are cast for the proposal, it is queued and can be implemented after 2 days. High risk proposals — as defined in the smart contract parameters — have 14 day voting periods.

Once a proposal has been implemented, all on-chain actions going forward are affected by those changes.

Following are a few of the proposed governance parameters that can be altered by Voter referenda.

  1. Number of Communities
  2. Adding a new Community
  3. Adding a token that can be mined in a Community
  4. Minimum mining per Community for daily rewards
  5. Maximum per Community that can be mined by one wallet address
  6. Calculation parameters for daily mining rewards
  7. Percentage of rewards to Miners in a Community.
  8. Percentage of rewards to nodes in a Community.

Early in the process, StrongBlock will be looking to the community to voice their opinions on how governance should work.

Upgradability

Some base rules cannot be altered by referenda. Yet there are several areas where smart contract upgradability is crucial.

When a new Community is proposed, the smart contract controlling Communities has the ability to add the Community, because it controls the allocation of mining rewards.

For example, why would you mine tokens if there are no longer available mining rewards in that Community? The smart contract would still exist, but miners would quickly abandon it. Likewise, when a new Community is added, Miners will likely seek other Miners to guarantee continuity of mining rewards.

The STRONG Community smart contract is unlikely to be upgradable without a hard-upgrade, as users must withdraw their STRONG and move them to a different contract entirely in order to maintain governance over the protocol.

Further, some of the Smart Contracts contemplate mechanisms to swap mined tokens between Communities.

StrongBlock Node Specifications

Becoming a Community Node

The initial Community will be Ethereum and as such will consist of Ethereum nodes. To be eligible for mining and being rewarded with STRONG, node candidates must submit their application online, and must host their unique public strong.json file containing identifying information, including the appropriate Community for which they are applying. Nodes can only participate in the Community appropriate for their protocol.

The node candidates must have an independently operating API or P2P node that is publicly queryable, and running the latest major version of the blockchain protocol for their Community. End points will be regularly queried to confirm uptime, response time, and current operating system, among other metrics. Further criteria are detailed in the application process and in the strong.json template that will be published upon launch.

Once accepted, nodes are added to a seed.json list for their Community. The seed list, published on the site, will act as a guideline for Signaling.

Node Evaluation

All node candidate submissions for a Community are subject to rejection based on not meeting the automated criteria in the smart contract controlling the evaluation algorithm. Specific disqualification reasons can be changed by referenda.

The total number of nodes that can receive mining rewards in each Community will initially be a percentage of available nodes; nodes with more Signals above a community decided threshold will receive higher mining rewards.

Initially, the protocol may utilize a lottery algorithm to Signal highly qualified nodes in each Community, based on established criteria. As individual Signaling increases in each Community to a predetermined threshold percentage of STRONG, Signaling by the Community will become the primary basis for node mining rewards.

Qualified nodes will be able to apply on the StrongBlock site upon protocol launch.

Node Signaling

Signaling will not commence until the STRONG token is publicly available, and certain governance threshold parameters for nodes have been met. Each eligible node in a Community can be Signaled. One STRONG token equals one Signal. Individual nodes will receive Community rewards as follows: the top Signaled nodes receive higher mining rewards, while the remaining nodes will receive mining rewards based on Signaling weight in the Community. For Signalers, (my signals / total signals) * daily node rewards) will be the formula for rewarding Signalers. These parameters can be changed by referenda.

Node Validation

Demand for nodes on StrongBlock and other blockchains will fluctuate, subject to peaks and troughs. For additional verification, StrongBlock may create one or more decentralized mainnet chains for each protocol Community to verify nodes to authenticate their capabilities.

Conclusion

While by no means exhaustive, this post covers enough of what you need to understand the StrongBlock Community DeFi Protocol. We’re working to ensure the protocol is rewarding to all participants, and that the user experience is as easy and intuitive as possible. Our hope is that you will not need to read and memorize this post to participate. Ultimately, the power of the protocol will rest in your hands. That’s what decentralization is all about.

STRONG empowers community governance. It is not an investment opportunity.

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Combining the demand for high quality public blockchain performance with powerful DeFi Tokenomics.

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StrongBlock.io

StrongBlock.io

Combining the demand for high quality public blockchain performance with powerful DeFi Tokenomics.

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