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Questions From Potential New Node Owner

#1

Hello:

I had a great conversation with Audrey on Telegram and am potentially interested in becoming a node owner.

Can the community help me out with a few questions?

-Privacy: I know that using the PRV blockchain provides shielded transactions, but I’m interested in understanding the security level with transactions coming in to and going out of the PRV blockchain.

How easy is it for observers to tell that my accounts are linked by observing transactions in and out?

Is there an anonymity set and how large is it?

-Transaction volume: Observing the block explorer I can’t seem to view individual transactions (token transfers). I’d like to see them. Can someone also provide me with a sample ETH to PRV transaction? I’d like to see that contract and how transactions are captured there.

-Node selection and time to positive cash flow: Based on what I read, it seems like people are running multiple nodes to increase the odds they are selected. I also see that nodes are not selected for very long periods of time, sometimes up to a month. This does not seem very economical given that it takes at today’s prices about 700 USD to stake.

So, I’m wondering about the ROI of staking and securing a node. A plug and play node is about $399 and to capture full node earnings, it’s about $700. The monthly earnings are about $20 per month? At those rates it would take about 2.2 years to reach profitability. Am I missing something here?

What is the team doing to increase miner profitability significantly? Are miners also getting a portion of cryptos transmitted on the network? Where are the stats for those earnings?

-Transaction Volumes: The volumes of coins shielded reported by the team seem very high. The number of transactions per block also look high: 29,791 for the last block I looked at. What are all those transactions? They can’t be token transfers, correct?

These numbers don’t add up for me.

DEX Volume: How much of the volume is real transactions vs. wash trading? I see high-value transactions, but not many small ones.

Are there plans to bridge this DEX with other Dexs with higher volume and liquidity, so perhaps that the PRV token can achieve greater visiblity and price appreciation to help miners recoup their investment?

Appreciate your response.

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#2

Someone else can go into a deeper understanding but I have two vnodes and the earnings are way higher than $20/mo.
In my first week I made 55 prv from one Vnode.

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#3

Here are the details for a recent transaction.

Notice sender, receiver and amount are all obscured. No one can observe the details of any transaction. The explorer can not display any information about an address, should you or an observer submit one to query.

This is counter to the core privacy principles of Incognito. You can view some general details about transactions on the blockchain as noted above, but more specific details such as to/from address, amount, etc can potentially be used to deanonymize a transaction and the parties involved.

That is correct for a pNode (aka Physical Node aka Node). Selection to committee is random. On average, a single pNode or vNode will be selected to committee every 7-10 days. When a Node is in committee, the Node will remain in committee for two to three epochs before being substituted back out to the waiting pool. That averages to ~40 PRV per month for a pNode. Some months may be much higher, say 50 or 60 PRV, and others lower at 30 PRV.

A vNode (aka Virtual Node aka Node Virtual) is subject to the same random committee selection. However unlike a pNode, a vNode operator keeps the entire ~10.92 PRV earned per epoch. This is almost 3x the PRV a pNode operator earns. vNode operators have monthly costs, such as the VPS fee and bandwidth cost. VPS hosted vNodes are operating around $20-30 per month.

A pNode will also earn ~10.92 PRV per epoch when in committee. However because the pNode is staked by a staking pool, the staking pool keeps 65% of the earnings, while the operator only keeps 35%. This is actually an increase in the split, as it was 75%/25% from launch until this week. pNode operators are now seeing ~3.83 PRV per epoch, up from the previous ~2.73 PRV per epoch.

  1. As you noted a pNode can be unstaked. The funded stake provided by the staking pool is returned to the pool. An operator can then stake their own 1750 PRV and keep all of the ~10.92 PRV earnings per epoch.

  2. The earning split for pNodes was increased this week from 75%/25% to 65%/35%, a 10% increase for operators.

  3. Eventually more slots in the committee shards will be made available to the community. This will allow more community Nodes to earn per epoch. Currently just 10 of the 32 slots per shard are available to the community. The other 22 slots per shard (176 in total) are fixed slots held by the core Incognito team. Every epoch 4 of these slots are substituted out for new validator nodes from the coummunity. That means the ~1015 community nodes are “competing” for just 32 slots available every epoch. With more slots available, more nodes will be able to earn, thus decreasing the statistical interval between earning epochs. However as more nodes are brought onto the network, the interval will increase again as the new nodes compete for the same slots. The 176 fixed slots will not be released by the Incognito team to the community until ~April 2021.

  4. With more transactions processed, Node operators will earn more transaction fees. Currently nodes are earning small amounts of pBTC, pETH, pUSDT, etc for each transaction validated by the node. With more transactions, there will be more fees, making earning epochs more profitable to a node operator.

  5. PRV earned by a node can be withdrawn from the node’s wallet and staked in the app. This will grow the PRV at 57% APR. The amount is continually compounded, additional deposits can be added anytime and the staked amount can be withdrawn at any time.

Those are running totals of transactions processed, per shard. Take a look at https://mainnet.incognito.org/chains. Add up the total txs listed under each shard and it will match the total transactions in the header.

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Vnode script stopped for 10 minutes
#4

I’ll try to answer some parts of your questions (to my best ofc :slight_smile:) .

I think you mean Ethereum block explorer. I can provide one of my transactions: https://etherscan.io/tx/0xfb579a2eeeeb55a63762c61a2771488b401ed389423419c8907dc4c3f1aae3a6. However, you cannot see the contract since the team hasn’t published it on Etherscan yet. I think this would be good. @duy On the other hand, Incognito is a open-source project so you may see the contract on
https://github.com/incognitochain/bridge-eth/tree/master/bridge/contracts. I believe that it is the last state of the contract since the timespan between the creation date of the contract and the last check-in date of the contract file is less than 24 hours.

You may examine @Mike_Despo’s weekly earning post. He has 8 vNodes and the average APR based on 8-week history is 123%. His APR will decrease gradually since the number of the Incognito nodes is increasing day-by-day. However, it is a good measure to verify my rough calculation which I will perform.

Incognito network has ~6 epochs per day.
Incognito network has 8 shards.
Each shard has 10 seats for the community nodes (Currently, 22 of 32 nodes are fixed for the core team)
:point_right:So, Incognito network has 175,200(=6*8*10*365) seats per year.

The function of the random node selection has uniform distribution afaik.
The current number of the community nodes is about 1100.
:point_right:So, each node will be run for about 159(=175,200/1,100) epoch per year.

The reward per epoch is around 10.9.
Finally, APR of each node will be around 99% (159*10.9/1750) per year under the current conditions. (A little note: Once a node joins any shard, it does not swap out for at least 2 epochs. However, this will not affect the calculation so much)

Unless I misunderstand your condition, you buy a pNode and 1750 PRV (so not borrowing). In that case, if we take PRV as $0.45 and stable, you reach break-even point (in terms of PRV) within about 1.5 year. You may see PRV/USDT history here.

Yes, they are. However, since Incognito is a young chain, currently the revenues coming from the network fees are so low.

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#5

Thank you for your detailed answer.

I was more interested in what the chain looks like from the source blockchain to the prv blockchain, but I see there are some things Boeing done to break that chain a bit as well.

Ideal would be to even shield the original transaction to the external blockchain address, but that’s for the future.

As for the earnings, the key thing will be to drive adoption of the solution and make the ux a bit smoother.

Thanks! This was very helpful.

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#6

Thanks for those answers.

What exactly is being processed 27,000 times?

This is not a POW chain, so those can’t be calculations, correct?

#7

The number you are referencing is the cumulative total number of transactions per committee shard, since the genesis block of the Incognito chain.

For example – referencing https://mainnet.incognito.org/chains or https://mainnet.incognito.org/ we can see that Committee Shard 6 has processed ~26,000 transactions. That is not ~26,000 transactions in one block. It is the total number of transactions processed by Committee Shard 6 since block 0.

The number of transactions processed by each committee will be different. Any single transaction will be validated by a single validator in one shard. The transaction number per shard then, is a cumulative total of all the transactions processed by validators assigned to the that shard since the genesis block and not the number of transactions processed in the last or even a single block.

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#8

This seems like a rather large amount fixed for the core team. I believe this number should be dynamic based on amount of nodes on the network. With the number of new nodes joining daily pretty soon we will see it being unprofitable for nodes to continue operating.

What is the plan moving forward? Is there anything that has been said about this already?

Also, I understand that the core team needs funding for their work. However, I believe setting a core team “fee” in the app and allowing users to select how much is paid would be a better option. The more users are making then the more they would be willing to donate. Let’s not forget that pNodes also have majority of their rewards going to the core team.

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#9

Here is Initiative 5 of the Incognito Team’s 2020 roadmap:

And here is the very current discussion & proposal about developing the mechanism for dynamic committee sizes. Please feel free to add your thoughts!

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#10

I fully understand the core team operating nodes to insure network stability, however, I do not believe such a large amount should be fixed specifically for the earning of the core team. I’m sure others in the community and future community members will share the same viewpoints.

Moving forward, with the increase of community ran nodes it will quickly become not economically feasible to continue operating nodes.

Can someone please provide me reference material to what the following are:
Randomness v2
Stake for Beacon
Highway PoS

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