Nodes
The aim of nodes is to create a strong incentive for long-term holding of peg tokens and several through the use of a locked staked high earning pool. The pool requires users to spend a fixed amount of tokens to create a node that in turn delivers daily rewards back to the user at an estimated initial rate of 1-3% daily. This will reward long term holders with a higher yield and lock up a portion of the supply helping to reduce market sell pressure.
What is a Node?
Users may be familiar with the concept of validator nodes which as the name suggest validate transactions on a blockchain, in most blockchain networks these validators are rewarded for their efforts with native tokens. FrozenBlock Nodes are not transaction validator nodes however they follow this concept of rewarding locked stakers with native token rewards for their efforts.
Users deposit tokens to purchase a node which in turn deposits a portion of that into a reward pool that drips daily rewards back to all node holders thereby granting a passive income in return for locking up your tokens. The remaining tokens are sent to the treasury and used to increase protocol sustainability through several mechanisms depending on TWAP including adding to the protocol liquidity and/or investing in other protocols to generate a non protocol specific income that can be used to directly support the system. Our node operates in a similar manner to the many well known investment type node projects in existence such as Grape Finance.
AVAXF/AVAX LP Nodes
Cost per node to be determined
Unlimited nodes per account
Estimated 1-3% daily rewards paid (tapering figure), returns are based on node pool balance and are not guaranteed
Up to a max 500% ROI on each node (adjustable figure), max possible ROI is based on node pool balance and is not possible to guarantee
Each node created also gives you an entry to any future giveaways
Future Nodes
As the protocol grows, there will be more node variations
Includes ETHF nodes, BTCF nodes, Stablecoin nodes, and more
Future nodes will continue to be unlimited per account and have no maintenance fees/taxes
Estimated 1-3% daily and up to a max 500% ROI on each node
Sustainability
Nodes often suffer from sustainability issues due to their tokens having no other purpose than simply as a reward token for selling, this too is an issue for algorithmic stable coin protocols. At FrozenBlock Finance adding strong utility to peg tokens is something we have focused on so far through unique yielding opportunities with partner protocols and soon through our decentralized lending and borrowing platform. In order to ensure our nodes are sustainable and achieve their intended outcome we take inspiration from EMP Money's successful implementation.
Education
Much like in our base layer seigniorage protocol education and strategy play a large part in ensuring sustainability of the system. If the majority of participants operate in unison and follow the same strategy the system has a better chance at maintaining sustainability over the long run, essentially making the system a social experiment in game theory. We have produced a detailed strategy flowchart for users to follow based on the TWAP of the original peg token below and often remind participants of the current optimal strategy to follow for protocol health which in turn helps protect the longevity of your investment.
ROI Caps & Reward Rates
This includes implementing mechanisms such as a maximum cap on total ROI that is possible to receive from a single node (currently 500%) and tweaking of the daily drip rate to maintain a sweet spot of 1-3% so it remains above that available for single staking PND but not such that it reduces the benefit locked staking will have for the protocol. There is no limit to the number of nodes someone can own however the more you own the greater your daily yield back in PND. Please note that this maximum cap is not your guaranteed return from each node it is your maximum possible return from each node, it is not possible to guarantee a return in DeFi or investing.
Gamification
Another feature adding to sustainability is our gamification, every week we will reward a randomly chosen node creator each week with prizes. These can include AVAX, FRZN, NFTs, Merch, and More! To enter all that is required is to create a node during that week, each node created during the week will earn you 1 entry to the contest, multiply your chances of winning by creating more nodes during the week.
Seigniorage Protocol Support
A major benefit of having a node system tied to an existing seigniorage protocol is that the rewards pool can be topped up from minted seigniorage and the node pool in turn locks up the supply of the peg token thereby creating a synergy between the two. As mentioned above a portion of the total deposits are sent to the treasury to be used to maintain sustainability of the system as below:
TWAP < 1, Treasury balance of peg token is burnt to decrease supply permanently TWAP > 1.01, Treasury balance is used to add to LP by slowly selling half of the peg token and entering the LP this will increase total liquidity, add to protocol owned liquidity and increase stability of the peg token TWAP > 1.1, Along with the above strategy a portion of the treasury balance is also slowly sold to invest in non protocol specific investments to generate a return that can be fed back into the system at lower TWAPs
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