Proposal: Should the staking requirement to operate a pNetwork node be lowered to 50,000 PNT?
Summary: This proposal would increase the number of prospective node operators via a change in the staking requirement to operate a pNetwork node. Specifically, node operators would need to stake 50,000 PNT tokens for each pNetwork node they run.
Abstract: As the upgrade to a network of node operators approaches, this proposal is aimed to determine the requirements in terms of PNT staking for operating a pNetwork node.
While pTokens bridges present a security-oriented setup and fully transparent cross-chain process, a network of node operators (multi-node setup) open for anyone to join contributes to the providing of a truly permissionless system, making pTokens more and more attractive for users.
The pNetwork Token (PNT) is leveraged within the system as an incentive for all actors to participate in the decentralization of the system and in the verification of the cross-chain movement of assets. While the current staking requirement for operators is determined in the amount of 200,000 PNT tokens, an update to 50,000 PNT tokens’ staking requirement per node would increase the number of prospective node operators. Specifically, it would enable easier access for anyone interested to operate a pNetwork node and therefore improve the level of decentralisation of the system.
Introducing such a change is aimed to increase active participation in the project while making the system decentralised across a higher number of nodes.
Motivation: The pNetwork is the increasingly decentralised layer powering and governing the cross-chain pTokens solution. As part of the project’s progressive decentralisation roadmap, a growing number of components are being introduced to the system.
The upgrade from single node to a network of node operators is designed to improve security by removing a central point of failure. Specifically, the network of node operators ensures a more reliable service - the system would be less prone to downtimes thanks to a larger number of available nodes supporting it and the impossibility for any single node to unilaterally change the rules of the game or censor transactions.
Prospective node operators need to stake a minimum amount of PNT tokens, which is then used to show their commitment and serves as a bond. Such a role actively contributes to the decentralisation of the system, while creating a potential economic benefit for stakers. Should a node operator act maliciously, it is punished by the system by losing tokens at stake. On the contrary, when operating remarkably, node operators get back tokens at stake at the end of the node’s life cycle, in addition to any pegin/pegout fees (that would be distributed proportionally based on the number of tokens at stake).
Having the minimum staking requirement set at 50,000 PNT tokens would enable a larger decentralisation of the network by lowering the entry barrier for prospective node operators without limiting the number of node instances an operator can run.
Specification: In its initial stages of development, each pTokens bridge has been backed by a single node setup (stage of the system: “Phase 0”). Following its kickoff, a series of upgrades are planned for the pTokens system to achieve an increasingly decentralised structure: decentralisation is a spectrum and the ecosystem is still learning what’s the right balance.
The launch of the pNetwork DAO was the first major step towards decentralising the pTokens system, encouraging community-participation and removing any exclusive governance powers from the main development team. The upgrade from single node to a network of node operators is designed to improve security by removing a central point of failure. Specifically, the network of node operators ensures a more reliable service - the system would be less prone to downtimes thanks to a larger number of available nodes supporting it and the impossibility for any single node to unilaterally change the rules of the game or censor transactions.
This proposal proposes to welcome node operators within the network with a minimum staking requirement of 50,000 PNT tokens to operate one pNetwork node.
The PNT token represents a key element of the system as it aligns incentives for all participants. In fact, PNT is leveraged internally by the pTokens system to enable operations for both node operators and DAO members. The flywheel effect is triggered by the need for node operators and DAO members to hold and stake PNT tokens in order for them to perform their respective roles. Prospective node operators need to stake a minimum amount of PNT tokens, which is then used to show their commitment and serves as a bond. Such a role actively contributes to the decentralisation of the system, while creating a potential economic benefit for stakers.
If approved, this proposal would set the minimum amount of PNT tokens required by each node operator to 50,000 PNT tokens. Such an amount would enable prospective node operators to support the decentralisation of the system with a pNetwork node. While this would be the minimum staking requirement, the proposal does not pose limitations on the number of pNetwork nodes a node operator can set up.
When operating a pNetwork node, node operators would still be eligible for DAO voting rewards (currently set at 42% APY, rewards distributed at the end of every epoch).
In the current phase, the pTokens system is underpinned by Trusted Execution Environments (TEEs) only - because the key-pairs needed to perform cross-chain actions are generated and managed via such security-oriented techniques, the system produces unique transparency guarantees for anyone interacting with pTokens. Thanks to the use of TEEs, full transparency is guaranteed on the whole cross-chain movement of assets (including off-chain operations). The easiest way to look at TEEs is to simply consider them the hardening of a node. The trust factor is still there, but gets minimised. Abuses are still possible, but significantly more expensive. Going forward, this solution will still be used as additional protection, yet it will be paired with a decentralised network of pNetwork nodes. In other words, the pNetwork can be seen as a decentralised network of Trusted Execution Environments.
As the increasingly decentralised layer powering and governing the cross-chain pTokens solution, the introduction of a network of node operators represents a key element for the progressive decentralisation of the system. Following the upgrade, the pTokens system will be powered by decentralised nodes around the world that communicate one with the other to keep the pTokens bridges running.
Introducing a 50,000 PNT tokens staking requirement for operating a pNetwork node would prevent abuses within the network. Should a node operator act maliciously, it is punished by the system by losing tokens at stake. On the contrary, when operating remarkably, node operators get back tokens at stake at the end of the node’s life cycle. While safeguarding the integrity and security of the system, the 50,000 PNT threshold makes the operation possible for a larger audience and encourages a stronger decentralisation of the system.
Note that, if approved, the proposal would not exclude the possibility of future changes in the staking structure.