KeeJef
commented
4 years ago Hey @William-E-Coyote , Thanks for your effort in compiling this proposal, we have been thinking about about the idea of staking Loki to gain access to the services inside the Loki network since the beginning of the projects inception.
However we have consistently decided against this approach because of the difficulty to onboard users into the Loki cryptocurrency. It is extremely hard to onboard users to applications where they need to KYC with an exchange to Buy bitcoin in their nationalized currency, transfer that Bitcoin to a Loki accepting exchanges, setup a Loki wallet, Buy Loki with Bitcoin on an exchange, transfer that Loki to a wallet and Stake it. When you compare this user experience with that of Tor or Signal which only require you to download an application and run you can get a sense of the difficult of onboarding.
This is why we intend to go with the approach of providing additional perks alongside the Loki.network suite (Like LNS) that burn Loki to use. This way the users who really enjoy the product after using it can opt into the difficult process of acquiring Loki.
William-E-Coyote
SILFR coin
Proposal
By William E. Coyote
Silfr is a Norse name for silver, a type of money.
This is a proposal to implement SILFR, a cryptocurrency that is designed to function as a payment system for data transfer over the LOKI.network.
===========================
Section 1: Introduction
===========================
This is a proposal to implement SILFR, a cryptocurrency that is designed to function as a payment system for data transfer over the LOKI.network. This system should not interfere with the user experience of using Session or accessing SNApps on the LOKI.network. The driving idea of the design of SILFR is that a USER with LOKI in their wallet can use the LOKI.network Exit Nodes (EN) free of charge. Instead of paying for use of the LOKI.network EN with LOKI or some other cryptocurrency, they will simply stake LOKI for a limited time. This is the same as staking LOKI to a SN and receiving block rewards. Instead of rewards, the USER is receiving access to the services of the LOKI.network.
The SILFR wallet is an access point where the volume of data that passes through this point is paid for in SILFR. The primary use of SILFR is to create a method for users to pay for the use of Exit Nodes. The same access point technology can be used across the LOKI.network and track data traffic for SN, EN, and SNApp Providers. USERs pay for accessing the open internet through the LOKI EN. SNApp Providers will pay for the traffic from their SNApp on the LOKI.network. SN and EN get paid in SILFR for the traffic that crosses the node. All payment is made to or from CONTROL a centralized wallet. CONTROL is not owned by any individual or group of individuals. CONTROL is decentralized across the SN of the LOKI.network.
Transferring SILFR into LOKI takes place on the LOKI DEX. The LOKI DEX is a SNApp that permits the buying and selling of LOKI and SILFR. USERS and SNApp Providers can buy SILFR with LOKI to support their use of the LOKI.network. SN and EN will sell their SILFR to receive LOKI. In time, as volume grows, the LOKI DEX could expand to include BTC and other cryptocurrencies. The Advantages of this DEX is that it removes LOKI from centralized exchanges and increases security. In time, all of the needs of the LOKI.network to be a functioning private information service would be provided from within the LOKI.network.
===========================
Section 2: Personal Statement and Motivation
===========================
I am a crypto currency hobbyist and enthusiast. I do not work in the tech industry in any capacity. I recognize that this proposal is based on my own limited knowledge of cryptocurrency and related technologies. Everything in this proposal is based on what I imagine is generally easy to implement. I recognize that I could be catastrophically wrong, have overlooked something that is extremely important, or even hysterically incorrect in my assumptions. I have a pretty robust relationship with failure. This could just be another day of building my supra-genius invention with high hopes for success, and I end up falling off a cliff with my defunct contraption falling on top of me. No worries. I would appreciate any feedback that you can give if my assumptions are wildly erroneous. It has taken a considerable amount of time to write this proposal and I hope to at least learn something from the endeavor.
I own a sizable stake in LOKI because it is an amazing project that may become one of the most important crypto currencies in the world. The strengths of LOKI and the LOKI.network are numerous. LOKI is private when transferred to another wallet. It can be transferred immediately with BLINK. LOKI is proof of Work, that includes check-pointing and will soon be updated to Pulse which moves the PoW burden to the Service Nodes. These reasons alone make LOKI an important coin. But the LOKI coin is not the most important part of the project. The LOKI.network provides instantaneous, completely secure and private messaging along with a host of other features. And furthermore, the LOKI.network will provide private, secure and anonymous communication and data transfer to the open internet. And the LOKI.network will host an even more secure community of SNApps which will provide many unique services as well as many services found on the open internet. It appears that the goal of the LOKI network is to surpass the technology of the TOR network. The LOKI.network is on track to accomplish this goal in 2020.
The LOKI cryptocurrency is extremely robust, but there are many areas that need to be improved to have a functioning LOKI.network. The primary deficiency is in developing a method for the LOKI.network to become financially stable. Presently there are no limitations to the bandwidth for users of the LOKI.network. Anyone can use the LOKI.network for free. It is easy to foresee that users and other enterprises will take advantage of this design flaw and create more traffic than the LOKI.network can financially support.
The benefit of using a second cryptocurrency is that it gives a secure and private method of payment for the quantity of data traffic over the LOKI.network. For this to work there has to be a way to calculate the amount of traffic that crosses any Service Node, and Exit Node. Furthermore there has to be a way of calculating the data traffic that crosses the user access point and to determine if it is from services on the LOKI.network or general traffic on the open internet. The idea is to simply calculate the amount of traffic and not to determine the direction of traffic, type of traffic, or information held within the traffic. The amount of traffic will be paid for in SILFR.
To add a secondary coin to the LOKI network there has to be a way of transferring value between LOKI and SILFR. This has to be a form of Atomic Swap or Decentralized Exchange (DEX). This DEX is completely necessary because it is designed in such a way that it is extremely difficult to to be traded on any other exchange. This DEX will also increase the security of the LOKI.network and increase the overall profitability of the LOKI.network.
SILFR is designed to work seamlessly with the many aspects of the LOKI.network and creates a payment system that incorporates all participants in the network. With this in mind, it is difficult to describe SILFR as a stand alone cryptocurrency. Because it connects many working parts, there is no easy place to begin describing SILFR and you may be a bit lost at the beginning. Please take some time to work through the proposal before you draw any conclusions.
The following description begins by defining the terms and working parts of SILFR. Then a description of SILFR is provided. SILFR is designed to be a simple solution but is sophisticated in how it pulls many parts of the LOKI.network together. I have written significantly more about how SILFR could work and I will provide this information if there is any interest in this proposal.
===========================
Section 3: Terms and Abbreviations
===========================
(The names SILFR and CONTROL are chosen because they are descriptive and help identify the different working parts of the proposal. Actual names can be much different.)
The following abbreviations and terms are used:
SILFR = SILFR coin or cryptocurrency.
LOKI = LOKI coin or cryptocurrency.
SN = LOKI network Service Node..
EN = LOKI network Exit Node.
USER = any individual who is using the LOKI network or cryptocurrency.
SN Network = The activities of all the individual SN when working together.
CONTROL = the control wallet.
Staked LOKI = Loki that has been staked to receive SILFR.
Access Point = Any point on the LOKI network that transfers data.
SILFR Wallet = A wallet at an access point that is charged SILFR for the transfer of data.
SNApp Provider = any provider of SNApps that transfer data over the LOKI network.
LOKI DEX = the DEX hosted by LOKI Service Nodes.
Market Price = Present transaction ratio between LOKI and SILFR
If SILFR is adopted, The LOKI network would be supported by two different coins: LOKI and SILFR. Users will staking LOKI and receive SILFR. Paying in SILFR would become the normal method to pay for services on the LOKI network. This would give the USERs who hold LOKI virtually free use of services offered by the LOKI network. "virtually free" meaning that if they hold enough LOKI they can continue to pay SILFR for all the services that they use. Also, if the USER needs more SILFR they can trade LOKI (or another cryptocurrency) for SILFR on the LOKI DEX.
!!! IMPORTANT !!!!
For SILFR to work as described, SILFR wallets are attached to Acess Points. There is a provision in the SILFR wallet that calculates the volume of data traffic that passes through the Access Point and charges SILFR for that data. Data is not tracked through the LOKI network, it is just paid for at the Access Points. The USER Access Point can determine if the traffic originated on the LOKI network or came though the EN.
For this description the following fees and values will be used. (In actuality, these values could be significantly different.)
===========================
4: Description.
===========================
Control Wallet:
CONTROL is the wallet that holds all SILFR that is not in use. There is 1 SILFR available in the CONTROL for every LOKI staked in a SN. If there is 1,000,000 LOKI staked in all SN on the LOKI.network, then there is a total of 1,000,000 SILFR available.
CONTROL pays SILFR when a USER stakes LOKI or when an EN or SN are paid for data traffic.
Access Point:
For SILFR to work as described, SILFR wallets are attached to Access Points. There is a provision in the SILFR wallet that calculates the volume of data traffic that passes through every Access Point and charges SILFR for that data. Data is not tracked through the LOKI network, it is just paid for at the Access Points. SN are paid for any traffic that they facilitate. EN only paid for open internet traffic that they facilitate. The USER Access Point only pays for traffic from the open internet and can determine if the traffic originated on the LOKI network or came through the EN. USERS do not pay for traffic on the LOKI.network.
A USER pays SILFR for data traffic over the EN network:
The USER access point (on his computer or device) is connected to his SILFR wallet. As the USER accesses data over the EN network his wallet is automatically deducted for that amount of traffic. The payment goes to the CONTROL wallet.
Staking LOKI:
SILFR is paid to a USER when a USER stakes LOKI for 100 days. This is basically a 100 day loan of SILFR that is paid back at the rate of 1% per day. In this way a user does not have to pay any LOKI to receive SILFR.
The amount of SILFR that is paid for staking LOKI is proportional to the percentage of SILFR that is available.
Transaction fees:
The transaction fee for sending SILFR is 1% of the total contents of a wallet per day. All fees are paid to CONTROL.
The fees represent paying the 100 day loan. Because all wallets are paying the 1% per day fee to CONTROL, the 100 day loan is returned. This results in all wallets only holding SILFR for 100 days. Therefore the SILFR blockchain is only 100 days long.
A USER Does not have to acquire SILFR to access the LOKI EN.network.
A USER can hold LOKI in their access point wallet. The wallet would instantly stake LOKI and send SILFR to CONTROL as the USER accesses the EN.network. This would reduce transaction fees to 0. And the USER would still have to wait for 100 days to free and reuse their staked LOKI.
The USER can acquire SILFR in two ways, they can STAKE SILFR or they can buy SILFR on the LOKI DEX.
When a USER stakes LOKI to receive SILFR. The USER can use this SILFR to pay for EN traffic or other services or they can sell this SILFR on the LOKI DEX and receive LOKI or another cryptocurrency.
Because the market price of SILFR is inexpensive, the USER may choose to buy SILFR instead of STAKING LOKI to acquire SILFR.
EN and SN are paid for data traffic in SILFR from the CONTROL wallet, not from a USER wallet.
An EN is an Access Point that calculates the amount of data traffic that it passes for an entire block reward cycle. At the end of the cycle it submits this statement to CONTROL. CONTROL pays for the data traffic in SILFR. Therefore the SN is paid in LOKI as part of the block reward and in SILFR for the actual amount of DATA that is passed. The SILFR is part of the payment and sent proportionally to the wallets of the USERS who staked LOKI in the EN.
SNs are also paid for DATA traffic from CONTROL in the same way, but the reward is significantly smaller. Perhaps even 1 to 10.
In this way ENs and SNs are paid for the actual data traffic that they carry and operators will work to optimize their traffic. They will move the SN/EN to areas or servers that facilitate higher payment.
SNApp Providers pay for traffic in SILFR.
All SNApp providers will have a SILFR Wallet at their access point. The wallet will be charged SILFR to use the LOKI network. SNApp providers would provide data and service on the Network and pay for network traffic that uses data with SILFR. SNApp Providers will have to Stake LOKI or buy SILFR on the open market to pay for their traffic.
USERs would pay the SNApp Providers for their content or service, but not for the network traffic. Network traffic on the LOKI.Net is free to the USER.
A SNApp Provider does not have to acquire SILFR to pay for the traffic of his SNApp.
A SNApp Provider can hold LOKI in their access point wallet. The wallet would instantly stake LOKI and send SILFR to CONTROL as USERs accesses the SNApp. This would reduce transaction fees to 0. And the USER would still have to wait for 100 days to free and reuse their staked LOKI.
LOKI DEX
The LOKI DEX is a completely necessary part of the LOKI SN Network with SILFR. The primary service for the LOKI DEX is to provide instant buy or sell transactions between SILFR and LOKI.
Because the primary service of the LOKI DEX is to facilitate transactions between only LOKI and SILFR it does not have to operate like a centralized exchange. A centralized exchange facilitates a bid/ask price and buying and selling happens in real time. The LOKI DEX does not have to make a trade in real time. The LOKI DEX can act more like a semi-fluid marketplace. It can reduce transactions to happen once a block interval (10 seconds?). The LOKI DEX can set a Market Price between LOKI and SILFR based on availability and can automatically move that price a set increment between block intervals. This slower semi-fluid marketplace would stimulate buying at the Market Price instead of waiting for a better price. Also, Because this is a marketplace more than a DEX, the LOKI foundation could set a minimum Market Price.
As volume on the DEX develops, it would be possible for other coins to participate on the DEX. A USER may have BTC and want to buy SILFR for the EN. Instead of buying LOKI on an exchange then buying SILFR on the LOKI DEX he can buy LOKI or SILFR directly on the LOKI DEX.
SILFR is bought on the DEX by USERS who want to use the LOKI EN.s and by SNApp Providers that want to pay for the traffic that passes through their SNApp.
SILFR is primarily sold on the DEX by two parties that are making a profit, USERS who are staking LOKI and SN/EN owners.
All SILFR that is being sold on the DEX will still have to pay the transaction fee when traded. The SILFR seller would pay this fee and it would be invisible to the buyer. This would inspire the SILFR seller to sell as soon as possible.
The LOKI Foundation will set all rates of payment. .
This payment system would need to be balanced by setting appropriate pay rates. For example: EN would need to be paid at a higher rate than SN to ensure the EN are optimizing for increased data traffic.
This example uses a 100day period and 1% per day transaction fee, but a longer or shorter time frame may be more efficient. Furthermore it may be necessary to pay SILFR to stakers on a different curve.
This system will have to be tuned for optimal functionality.
===========================
Section 5: Design Criteria for SILFR
===========================
SILFR is a method of payment for data traffic on the LOKI.network. Should SILFR be on a blockchain? Should SILFR be a cryptocurrency? If so, what type of architecture should it have?
I am not a crypto currency engineer.I can not efficiently design a cryptocurrency that meets this criteria; but I can help clarify the design criteria.
Design Criteria for SILFR:
SILFR is used for a payment network for a distributed set of wallets. The value of those wallets has to be verified by a neutral third party, therefore I do think that SILFR meets the need to be on a blockchain.
Most other cryptocurrencies use a method of validation that is distributed across a host of unknown actors and it is taken for granted that some of these actors are bad actors that are trying to steal from the network. Because SILFR is validated across the LOKI.network it is inherently more secure.
Presently LOKI has a two minute blockchain and this is not fast enough for a micro-payment network with a DEX. Also the LOKI Blockchain would expand exponentially if used for a micro-payment system. SILFR would need to have a 10 second validation period or faster. SILFR will have a limited, 100 day, blockchain. (Or some other predefined amount of time.0
The SILFR wallet has to charge the 1% of all the contents of the wallet per day fee.
SILFR needs to have a contract capability to be the backbone of a DEX, but it probably does not need to have a Smart Contract capability. It only needs to solve a predefined set of parameters. But I can imagine that SILFR could be the beginning of a Smart Contract system if one needs to be developed.
===========================
Section 6: Problems Solved
===========================
Method to account for traffic and pay SN/EN directly for the service that they provide.
Users pay for EN open internet traffic and SNApp providers pay for LOKI.network traffic in SILFR. SN and EN are paid for the volume of DATA that passes their node. With the implementation of SILFR USERS, SNApp Providers and NODE operators are held accountable for the traffic that they create or the service that they provide.
Optimize Network data traffic.
SN and EN that are poorly located or on low quality equipment will get paid less SILFR. SN and EN operators will be paid more SILFR for moving to higher bandwidth servers and better locations. Because SN and EN are financially incentivized the LOKI.network will be optimized to handle increased data traffic.
SNApp Providers will be paying for the data traffic for access to their SNApp. This will reduce the amount of bad actors taking advantage of the LOKI.network and not contributing to a better user experience.
USERS will be paying for traffic that they create through EN to the open internet. Because they will be paying for this service, they will be incentivized to find a similar service provided by SNApp Providers on the LOKI.network. This further creates a more positive user experience and optimizes the network.
Increased Security.
The primary way that SILFR increases security is by reducing the use and reliance of centralized exchanges. The privacy of individuals can be compromised by tracking their data use across EN. If a large amount of LOKI resides on centralized exchanges these exchanges already use significant bandwidth and can easily host LOKI EN. On top of making income through block rewards they can sell the data they acquired through monitoring EN. The only way to combat this security flaw is to decrease the amount of LOKI on centralized exchanges.
Implementing SILFR decreases the LOKI available to trade on centralized exchanges in four ways.
First, USERs will stake LOKI to use the LOKI.network. This decreases the amount of available LOKI on the open market. Furthermore, this will create a chain reaction of increasing the need for more SN that further decrease the amount of LOKI on the open market.
Secondly, centralized exchanges will easily incorporate high bandwidth and well located EN that will attract a significant amount of network traffic across every EN that they host. This gives them more data to mine and sell with lower cost. Because SILFR helps to optimize the EN traffic, all of the EN on the network will be competing for increased traffic. This will lower the data volume across exchange owned EN and decrease their profitability for operating an EN.
Third, USERS will have to pay for EN use, but they can use the LOKI.network for free. USERs are incentivized to find SNApps to fulfill their needs instead of accessing the open internet. This will increase the security for the user and help to incentivize SNApp Providers to create more services. This will decrease the amount of traffic across EN.
Finally, It is difficult to trade SILFR on any other exchange. SILFR is a quickly depreciating asset and it would not be financially beneficial for any other exchange to offer SILFR unless they were operating SN or EN. This gives the added protection of being able to identify which exchanges have a large stake in LOKI.
Other ways in which SILFR increases security:
Most transactions of SILFR involve the CONTROL wallet. Almost all transactions are to or from CONTROL, and the CONTROL blockchain is only 100 days long. This removes almost any ability to track SILFR across multiple parties. This also increases the security and incentivizes use of the LOKI DEX.
Increase the value of LOKI.
Users will know that if they hold LOKI they will be able to use the services on the LOKI network for no charge. Therefore, they will hold their LOKI instead of trading the coin. Furthermore, this will create a chain reaction of increasing the need for more SN that further decrease the amount of LOKI on the open market and increasing the price of available LOKI.
USERS will bring value to the LOKI.network by trading BTC or any other supported cryptocurrency on the LOKI DEX. Individuals who own LOKI know that their stake in LOKI can purchase other crypto assets. This will further incentivize ownership in LOKI and reduce LOKI on the open market.
Provide a DEX that people will actually use.
The main reason why there are no working DEX is that there is no real need for a DEX. Presently, there is no real use of cryptocurrency other than trading back and forth between currencies as a way to rate the potential of different projects. Cryptocurrencies represent the possible potential of a decentralized financial system in the far future. Centralized exchanges provide the ability to trade cryptocurrencies far better than any DEX ever will.
The LOKI.network provides privacy. This is a real service that many people will happily pay to use. As individuals use the LOKI.network they will appreciate the service of the LOKI DEX even if it is only a limited marketplace. The LOKI DEX provides the ability to buy SILFR or LOKI which gives them access to the LOKI.network. In time the LOKI DEX will develop increased liquidity and take on the form of a proper exchange.
The LOKI DEX is private and will provide all of the security of a DEX. Individuals will own coins instead of loaning them to the centralized exchange hoping to receive a better return through trading and buying fees for trading. The LOKI DEX will have enough liquidity to buy LOKI or SILFR and give use of the LOKI.network. Users who value privacy will simply prefer to use the LOKI.DEX to buy LOKI or SILFR and support the LOKI.network.
===========================
Section 6: Difficulties
===========================
100 Day depreciation of SILFR as an asset.
At first, this is a difficult concept to understand or appreciate. It is easy to ask, "Why would anyone want to own an asset that depreciates to 0 value in 100 days?" And the answer is, "Of course no one wants to own this asset, therefore they are highly motivated to trade this asset to one that holds value." And it is this degree of motivation which provides the necessary force for SILFR to be successful.
Money is only useful when it is being exchanged regardless of it being exchanged for goods, services or time value. Money is not useful just sitting around. SILFR will be completely necessary for USERs of the LOKI network, yet it will depreciate rapidly. Therefore anyone who owns SILFR will be highly motivated to purchase something with it as soon as possible regardless of how poor of a price that they are receiving. Anything is better than nothing. And because they will be buying anything, they will be buying something. And because someone is continually purchasing something, there will be increased liquidity. Because there is liquidity, someone will offer something better at a higher price. And this activity will develop an effective market that everyone will prefer to use instead of centralized exchanges.
Access Point security.
SILFR depends on access point security. The data traffic at an access point has to be measured for quality without being measured for direction or contents. I do not know how difficult this would be to accomplish in a secure manner. SILFR would facilitate this by paying SN and EN for quantity of traffic, therefore traffic does not have to be tracked back to the USER and divulge his location.
It is also necessary to be able to determine if traffic across a USER access point is from a SNApp on the LOKI.network or the open internet. This capability helps to increase the traffic from the SNApp Providers. It may be easier to flag traffic from SNApp providers instead of determining traffic from the open internet.
Incorporating this plan on the LOKI.network without a second currency.
It would be possible to incorporate parts of this plan without a second currency. For example, the LOKI team could devise a method of staking LOKI and providing access to the LOKI.network. But sooner or later you would need a way to financially incentivize the network to optimize the network and increase security.
Smart Contracts.
SILFR is not a system for Smart Contracts. From what I have heard from the LOKI dev team, they feel that smart contracts are a creation of the cryptocurrency community that do not solve any problems of the real world. SILFR is not designed to facilitate Smart Contracts. But SILFR could be used as a way to pay for smart contracts if the LOKI DEV team ever decides to develop this functionality. NEO uses NEO GAS to power its smart contracts. In a similar way, LOKI could create a third crypto currency that facilitates smart contracts and use SILFR to power the contracts. This new currency would incorporate the idea of staking LOKI to receive SILFR inside the contract. Then the contract would automate the payment of SILFR for the use of the LOKI.network. Because a payment is involved, this would decrease the unwanted crypto kitties and other parasitic behavior. This would also create the capability to sell contracts with staked LOKI and other cryptocurrency/financial derivatives over the LOKI DEX.
===========================
Section 7: Implementation
=========================== This proposal represents a significant amount of work for the LOKI development team to accomplish. I realize that there may be more effective solutions to the problems I defined and there may be a significantly more robust set of problems that I do not understand. The LOKI development team will take a considerable amount of time considering easier solutions before they would begin to implement this solution. But if the development team decides to implement this solution, then it will have to be accomplished in a careful manner that does not interrupt the present network.
===========================
Section 8: Conclusion
===========================
This proposal has been prepared to describe SILFR in as short a proposal as possible. Although the idea of SILFR is simple, the implementation and working system is quite sophisticated. I have written more material that describes SILFR. If the LOKI development team finds this interesting and would like to learn more, please let me know. If you are not interested and would like me to remove this proposal, please let me know or just block it from your side. I am interested in working together.
Please report any spelling or grammatical errors and please ask any questions. I may have misstated something or perhaps I can rewrite something to clarify what I envision.
Thank you for reading this proposal!
===========================
Section 9: Payment
===========================
I hope to be paid for this design. I know that if this proposal is implemented this design would become extremely important to the LOKI project. I recognize that the LOKI development team is also inventing solutions that may be more effective or even similar to this proposal. The LOKI leadership and all members of the team have continually demonstrated honest and ethical behavior. I ask that if LOKI development incorporates any aspects of this design, that the LOKI foundation pays me for my ideas in whatever way that they consider appropriate.