Author Topic: Service Node Collateral amount?  (Read 2035 times)

VikingMiner

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Service Node Collateral amount?
« on: February 05, 2016, 04:15:32 pm »
Hi,

What will the Service Node collateral amount be?  Is it ok for a person to operate more than one SN?

Thanks.
VikingMiner

Erkallys

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Re: Service Node Collateral amount?
« Reply #1 on: March 06, 2016, 10:39:50 am »
Yes, it is fully ok for one to run several service nodes. Why wouldnt it be ? I think that the collateral will be something like a few thousand of SPR.
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georgem

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Re: Service Node Collateral amount?
« Reply #2 on: March 06, 2016, 02:26:54 pm »
Well, I am trying something completely new with servicenodes, a competitive collateral.
That's why development takes a little longer.  8)

Excerpt from this thread: http://spreadcointalk.org/index.php?topic=727.0

--------------------

Now a few more details about the servicenodes themselves.

Servicenodes that host full nodes and distribute derived blockchain data to the network to be used in the decentralized blockexplorer will earn a certain percentage of the mining reward (to be determined).

As has been planned for a long time, servicenodes won't require a fix collateral, instead the collateral will be determined by the free market.
An artificial competitive situation is created by only allowing a certain maximum amount of servicenodes to exist.
This limit isn't fixed either, it grows slowly over time.

As an example, in my home network I implemented a limit that is calculated with this formula: (total coinsupply) / 2000:



This means that with every 2000 coins that are mined there is one servicenode allowed.
(But 2000 is just an example, and will have to be determined in testnet. A few months ago we used 2880 to make a few interesting calculations.)

As you can see in the screenshots I currently run 9 Servicenodes on 9 computers.
Current total coinsupply in my very new fork is 19119, which divided by 2000 allows for 9 servicenodes to exist (or fewer, but not more).

As you can see each of these Servicenodes has its own idea about the collateral it wants to use, and this diversification creates yet another spread!

All Servicenodes are sorted according to the collateral they are willing to invest, from smallest to biggest. (the more the better)
In my example, the weakest Servicenode uses just over 100 SPR, and the strongest about 3000 SPR.

As seen in the last screenshot (Spread Distribution Screen) the distribution will probably most of the time look similar to a ski-jump.

Now why is the Servicenode with the smallest collateral called "weakest link"?


("weakest link")

Well, because an available seat isn't assigned to the same servicenode forever.
All seats are constantly on sale even the ones that are currently occupied (  ;D )

This means that when a newcomer arrives and he finds no empty seat, he might decide to grab one of the seats away from someone else's arse.
(but he can also come a little later when a new additional seat was created, but so will others... )

Let's imagine a few scenarios, using my example.

The 9 Servicenodes in my home network use these collaterals:

100.001
107.001
120
190.3122
335
425.1
502
1010
3000.191998


Now, imagine a newcomer arrives and wants a seat.
He could be a cheap shot and just invest 100.002, but this would be enough to "kick" the servicenode currently sitting at the weakest seat out of the race.

(BTW, "kicking" in this context merely means that the servicenode doesn't receive any rewards anymore. It does not shut down the server or any full node, or anything like that.
But what happens is that the UBA stops working, since it doesn't recognize its servicenode as valid anymore.)

What then happens, is that the newcomer becomes the new weakest link with his 100.002 collateral.

But say he would want to invest 2000 as collateral.
Now the same weakest link loses the seat, but the next 7 seats all slip down one seat, since they all must make room at the second highest seat, because that's where the 2000er is going to sit.

In this situation the servicenode that was sitting at the second lowest seat now suddenly finds itself in the weakest link position and runs the risk of losing its status next time someone appears.

And that's basically how this game will be played: a continuous switching of seats, particularly in the lower area.
If you hate this situation already, I suggest you invest lots of SPR as collateral.

Because there is a way how you can basically completely secure a seat for the foreseeable future.



This symbol indicates a servicenode that has such a high collateral, that it would require more than the current total coinsupply to kick this node 9 seats down!
Since this servicenode has a collateral of 3000 and it would require 9 newcomers to each invest MORE than these 3000, this would add up to an amount larger than all money that currently exists.

And therefor this seat can be considered truly secure.

BUT!
... since the total coinsupply continues to grow everyday (but slower and slower) even a now truly secured servicenode can easily be dropped down a few seats, the more free money is around and gets locked in servicenodes.

It is important to understand that "holding a high seat" has no benefits whatsoever, other than keeping you away as far as possible from the weakest link (the only "point of departure").

So the best place to actually be in is somewhere in the middle, as indicated by this symbol:



This symbolises the seat that represents the arithmetic mean of the sum of all money locked in servicenodes divided by amount of servicenodes.

It can be argued that this seat (and seats close to it) are very secure, and a user that keeps adding to his collateral so that he keeps being near this mean will basically never lose his reward.

georgem

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Re: Service Node Collateral amount?
« Reply #3 on: March 06, 2016, 02:28:48 pm »
Hi,

What will the Service Node collateral amount be?  Is it ok for a person to operate more than one SN?

Thanks.
VikingMiner

In crypto world it's always impossible to define what "a person" is.

Like nobody can control how many wallets you own, or addresses you control, or miners you have,
same way nobody will be able to control how many servicenodes you run.

But the rule will be that 1 servicenode will run per 1 IP. It will not be possible to run 2 servicenodes on the same IP.
So aslong as you have access to multiple IPs you can run as many servicenodes as you want.

Erkallys

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Re: Service Node Collateral amount?
« Reply #4 on: March 07, 2016, 08:43:32 pm »
I have a little problem about the competitive collateral. I think that it is a bad idea because it will lead to race to the service nodes, will increase their prices and thus will only allow the richer spreadcoiners to run a service node, and will thus go against all the kind of decentralisation that is the initial aim of SpreadCoin.
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georgem

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Re: Service Node Collateral amount?
« Reply #5 on: March 07, 2016, 08:53:29 pm »
I have a little problem about the competitive collateral. I think that it is a bad idea because it will lead to race to the service nodes, will increase their prices and thus will only allow the richer spreadcoiners to run a service node, and will thus go against all the kind of decentralisation that is the initial aim of SpreadCoin.

On the contrary.
Competition is what enables decentralization.

We have discussed this plenty of times over the past 12 months.

I guess you have to see it to believe it because it goes against your intuition.
What you probably forget is that we will always have a limited supply of total SPR, that alone should tell you that prices can't always rise.

Another reason is risk taking: if you have 1 servicenode 1000 SPR then you have 1 servicenode that earns a reward.
But if you split the same collateral into 2 servicenodes 500 SPR, then you have 2 servicenodes that earn reward. So your profitability has now doubled.
All players in this market will have this very reason to undercut eachothers collaterals.

I'd like to explain it in more detail, but alas, I have explained it 10 times already in the past 12 months.
Also, I have not much time right now.

Wait, I'll search a few of the best explanations about this.

Or better yet, if you wait a little, you are going to see it live! :-)
I mean, that's one of the things I'm currently working on.

georgem

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Re: Service Node Collateral amount?
« Reply #6 on: March 07, 2016, 09:05:04 pm »
I have a little problem about the competitive collateral. I think that it is a bad idea because it will lead to race to the service nodes, will increase their prices and thus will only allow the richer spreadcoiners to run a service node, and will thus go against all the kind of decentralisation that is the initial aim of SpreadCoin.

Also, concerning centralization vs decentralization:

You know what is centralized?

To have one guy decide what we have to pay for a servicenode.
(think dash and the 1000 DASH you need to pay. You think having to pay 4500$ for a current masternode is "decentralized"?)

So what then is decentralized?

To allow all of you guys to find out the best value for a collateral by yourself!
(basically to allow for a price discovery!)

BBS

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Re: Service Node Collateral amount?
« Reply #7 on: March 07, 2016, 11:52:02 pm »

So what then is decentralized?

To allow all of you guys to find out the best value for a collateral by yourself!
(basically to allow for a price discovery!)

So you mean "self-moderated"??  :o   ;D
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Erkallys

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Re: Service Node Collateral amount?
« Reply #8 on: March 08, 2016, 08:48:06 pm »
I have a little problem about the competitive collateral. I think that it is a bad idea because it will lead to race to the service nodes, will increase their prices and thus will only allow the richer spreadcoiners to run a service node, and will thus go against all the kind of decentralisation that is the initial aim of SpreadCoin.

Also, concerning centralization vs decentralization:

You know what is centralized?

To have one guy decide what we have to pay for a servicenode.
(think dash and the 1000 DASH you need to pay. You think having to pay 4500$ for a current masternode is "decentralized"?)

So what then is decentralized?

To allow all of you guys to find out the best value for a collateral by yourself!
(basically to allow for a price discovery!)

Yeah, I see, but in your explanation, if a masternode is at 1000 SPR, you can give 1000,01 to get the spot, not 999,99. This mean that it will lead to a price increase. After all, you're right when you say that the price will reach a certain cap, but what if that cap become really expensive after a rebirth of the price at 60 000 satoshis ?
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rhinomonkey

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Re: Service Node Collateral amount?
« Reply #9 on: March 08, 2016, 11:15:38 pm »
I have a little problem about the competitive collateral. I think that it is a bad idea because it will lead to race to the service nodes, will increase their prices and thus will only allow the richer spreadcoiners to run a service node, and will thus go against all the kind of decentralisation that is the initial aim of SpreadCoin.

Also, concerning centralization vs decentralization:

You know what is centralized?

To have one guy decide what we have to pay for a servicenode.
(think dash and the 1000 DASH you need to pay. You think having to pay 4500$ for a current masternode is "decentralized"?)

So what then is decentralized?

To allow all of you guys to find out the best value for a collateral by yourself!
(basically to allow for a price discovery!)

Yeah, I see, but in your explanation, if a masternode is at 1000 SPR, you can give 1000,01 to get the spot, not 999,99. This mean that it will lead to a price increase. After all, you're right when you say that the price will reach a certain cap, but what if that cap become really expensive after a rebirth of the price at 60 000 satoshis ?

The point he is trying to make is that the node collateral has two pressures on it. It has the pressure of competition (people wanting to get on to the node network) and also pressure for people already on the network to run as many as possible.

So the person operating the node with 1000 collateral actually has the incentive to split that up. They can run 5 nodes with 200 each, or 2 nodes with 500 each (or whatever in between). They want to profit the most they can, but in doing so, they risk losing their spot for a CHEAPER amount of collateral than had they just operated the one with 1000 coins in the first place.

Thus, the price of node collateral does not necessarily always go up with price. Remember, coin supply also increases each day, which means more spots for nodes become available. Hopefully that clears it up a bit. It will be interesting to see how it manifests upon the implementation.

Edit: There is no doubt that people buying in earlier will benefit, but this does not make Georgem's competitive collateral centralized. We the people of spread determine the node collateral!!!!