Economics
Disclaimer: The information provided on this page regarding Venn's economic model is for informational purposes only and is subject to change or updates as the network evolves. Any details about rewards or fees may be revised to reflect improvements, regulatory developments, or changes in strategy.
Missing parts:
*add a part about the security fee itself
*add subsidy for operators (rewards)
*add payments for users (how it works)
*add subsidy by protocols to users (how it works)
*add Priority fee
Introduction to Venn Economics
The Venn Security Network's economic framework ensures sustainability and growth while leveraging Eigen's crypto-economic risk models, ensuring the cost of corruption (CoC) remains prohibitively high. This section outlines the key components of Venn's economic models, including fee collection, reward distribution, slashing mechanisms, staking, and consensus.
Fee Collection and Rewards Allocation
The Venn Security Network employs a comprehensive fee collection mechanism to generate revenue, ensure the sustainability of network operations, and incentivize network participants. Fees are collected from network participants for various services, such as secure transaction validation and security services.
Purpose
Generate revenue to sustain network operations, fund ongoing development, and provide incentives for active network participation.
Fee Mechanism
Fees are collected through smart contracts for specific network services, including transaction validation and security features.
Transaction fees are incurred either by the protocols' end users or by the protocols themselves if they choose to subsidize these fees for their ecosystem end users.
Service fees are applied for additional services like custom security checks.
Rewards Allocation
Venn Default Network Mode
In Venn Default Network Mode, all network operators validate transactions and vote on their legitimacy. The final decision is made using Venn’s consensus algorithm, ensuring a robust and decentralized validation process.
Infrastructure Node Operators: x% of the fees are allocated to operators who maintain the network infrastructure and validate transactions.
Security Node Operators: x% of the fees go to operators responsible for validating transactions using their unique and proprietary security methods.
Venn Foundation: x% is allocated to the Venn Foundation for ongoing development and administrative expenses.
Security Council: x% is directed to the Security Council to handle disputes and oversee network security.
Stakers: x% is distributed to stakers who support the network's integrity through staking.
Standalone Mode (priority fee)
In Standalone Mode, an operator serves customers that connect exclusively and directly to their node end-point, giving the selected operator 100% power in the consensus mechanism. This mode is ideal for security operators with unique, custom, protocol-specific security mechanisms.
The single Operator: x% fees are allocated to the single operator managing the transaction validation and security.
Infrastructure Node Operators: x% of the fees are allocated to operators who maintain the network infrastructure and validate transactions.
Security Node Operators: x% of the fees go to operators responsible for validating transactions using their unique and proprietary security methods.
Venn Foundation: x% is allocated to the Venn Foundation for ongoing development and administrative expenses.
Security Council: x% is directed to the Security Council to handle disputes and oversee network security.
Stakers: x% is distributed to stakers who support the network's integrity through staking.
Slashing
Slashing mechanisms penalize malicious or negligent behavior to maintain network integrity and security. Participants who act against the network's best interests, such as validating malicious transactions, face slashing penalties that reduce their staked tokens. Slashing addresses false positives, false negatives, severe malicious activity, uptime, and performance issues. Slashing is enforced automatically through smart contracts, ensuring fairness and transparency. The Security Council oversees disputes related to slashing events, providing an additional layer of scrutiny and resolution.
Slashing Conditions and Penalties:
Staking
The Venn Security Network incorporates staking and restaking (native and non-native) mechanisms to enhance economic security, incentivize participation, and ensure robust network performance. These mechanisms are based on EigenLayer frameworks and stack.
Staking
Purpose:
Staking allows participants to lock up their tokens to support network operations and security. In return, stakers earn rewards.
Mechanism:
Participants stake their tokens through smart contracts, which enable them to support the Venn network, which will be distributed across the entire Venn network of operators.
Stakers can choose to stake either in native tokens or ETH. Native staking earns bosted rewards and yields.
Staking can be locked in intervals of 7 days, 14 days, 1 month, 3 months, 6 months, 12 months, and 24 months, with a longer time period yielding higher rewards.
Rewards:
Rewards are distributed proportionally based on the amount and duration of the stake.
Delegation
Participants can delegate their restaked tokens to operators within the network, who are responsible for validating transactions and maintaining network integrity.
Delegation involves selecting an operator through the Venn interface and confirming the transaction in a Web3 wallet.
Timelock Period of 7 Days
Restaked tokens are subject to a timelock period to enhance security. For example, LSTs and native staked tokens may have a withdrawal delay to ensure the integrity of the network during periods of vulnerability or anomalous behavior.
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