A Primer to the 2Z Token
What is the 2Z token? How does it flow through the protocol, and what principles does it achieve?
Economics
Protocol Economics
Value and Prices for Solana Validators
Rather than charging per packet, DoubleZero sets fees for Solana validators at 5% of their consensus-related revenue streams. This pays for the infrastructure needed to support larger blocks, faster slot times, better transaction delivery, wider geographic reach, and more.
Rewards to Network Contributors
DoubleZero uses a Shapley value-based rewards model to pay providers, assessing each network contributor's marginal contribution to network speed and throughput versus using the public internet fallback. This replaces simpler traffic-carried models, which do not scale or set the right incentives.
Integrity in the Rewards Model
DoubleZero defends against two concerns — an over-concentration of power and inorganic traffic — by removing a certain percentage of the rewards from circulation.
Inflation and Network Security
DoubleZero uses inflation to pay for common security, calibrating the short-run rate to adjust in response to the supply of staked tokens and adjusting the long-run rate based on tokens burned for security.
The Duality of DoubleZero Staking
Staking on DoubleZero must balance heterogeneity in link quality and homogeneity in overhead. For the former, network contributors provide some collateral after which traffic is routed freely over the network. The latter looks like a more traditional staking system, with work proportional to stake.
Empirical Insights
Writings
Proof of Utility
Rather than hewing to traditional PoW or PoS models, DoubleZero implements "Proof of Utility." Rewards are paid out in proportion to useful work done, above and beyond the work done by other participants, which ensures the protocol remains dynamic over contribution type and contribution time.
Multiple Concurrent Leaders Can Save Decentralization
A blockchain with multiple concurrent leaders forces validators to compete explicitly on geography, so that they can capture different information shocks (and earn healthy profits) rather than duplicating one another's efforts. This leads to geography being organically incentivized.