Validators
Introduction
The Alkimi Exchange (AlEx) uses a decentralised, trustless infrastructure of Validators, which validate and notarise transactions on the distributed ledger.
Validators provide transactional bandwidth within Alkimi’s ecosystem, facilitating the buying and selling of digital ads more efficiently and cost-effectively.
Those wishing to operate a Validator can acquire the requisite amount of $ADS and exchange it for one Soul-bound Validator NFT (A soul-bound token (SBT), also called “a non-transferrable token,” is a type of NFT that cannot be transferred or sold to another wallet). These NFTs are also redeemable for $ADS at any time via a smart contract, there will be a short delay to ensure the uptime of the network.
The estimated monthly cost of running a validator is approximately $25. This can change based on the requirements of the project and the application that is running on the validator.
Validators are essential in supporting the proper functioning of Alkimi Exchange. Both the collateral required and the cost of the server instance may change as per the network needs.
Validator Clusters
Alkimi Validators operate in clusters to support the process required to run a programmatic ad auction and to provide additional security to the validation process. Validator clusters ensure security, scalability and speed.
The Validators also allow multi-function applications, services and features to be added to the Alkimi network. The network’s increased functionality requires more bandwidth. The bandwidth will enable the onboarding of Demand Side Platforms (DSPs), API Services and Supply Side Platforms (SSPs).
The increase in services that are able to use Alkimi Validators means that, in the future, any business will be able to run their products on Alkimi’s Network. This will allow Alkimi to evolve into an ecosystem capable of supporting the entire Digital Advertising Industry.
Validator NFTs
Cohort 1 and 2
After the passing of AOP-1, the previous node operations are now deprecated. The single validator type will now come into effect. The first 2 Cohorts will be onboarded as Validators, with the following transfer option;
- Guardian Node - 1 Validator or return of collateral
- Master Node - 1-2 Validators or return of appropriate collateral.
Validator NFT Features
The Validator NFT smart contract manages the minting, tracking, redemption and management of Validators. Below are some salient features of the Validator NFT smart contract:
- The smart contract mints NFTs for Validators. The current Master and Guardian Node NFTs will be burned and appropriate collateral is returned.
- Users can see the number of NFTs that have been minted.
- Initially, only legacy Cohort 1 & 2 node operators will be able to mint validator NFTs. However, in future, the process will be completely decentralised and will be open to everyone who can exchange the collateral with a validator NFT. Further, in order to run the validator, users will need to be KYC’d on Alkimi Labs and will need to set up their VPS.
- Allows for the slashing of bad actors and unreliable Validators via changes to the metadata of the Validator NFT.
- The smart contract also supports logging essential events to track the usage of the smart contract.
- NFT’s can be burned and collateral redeemed, after a short redemption vesting period.
Validator NFT Collateral
Users can interact with a smart contract to pay the required collateral and mint a soul-bound validator NFT.
Users can set up their VPS instance and link it to their validator NFT on the Alkimi Labs platform.
Validators can retrieve their collateral by interacting with the smart contract and burning their Validator NFT in exchange for the collateral they have provided.
There will be a short collateral vesting period before the collateral can be redeemed. This will allow for the uptime of the network.
Validator Rewards Redemption
It is mandatory for users intending to operate a Validator to KYC on Alkimi Labs, this will ensure Alkimi is AML and KYC compliant.
Alkimi Labs platform will show users their validator rewards in $ADS tokens. This may exclude certain sanctioned countries. Rewards will be distributed to validators at the end of each quarter. They will also be provided rewards dashboards which show the number of rewards accrued on a daily basis.
Queries and Transactions
Programmatic ad auctions consist of two distinct stages: the Query and the Transaction.
Query - Queries are advertisers submitting bids in an auction hosted for a particular website, IP address, cookie or relevant context on a page.
Transaction - A query becomes a transaction if the bid within the query successfully wins the auction and an ad is rendered on the publisher's website. This is referred to as an ad impression in ad parlance.
Once a Query becomes a Transaction i.e. when an ad impression is delivered, a monetary value is associated with the Transaction, which is used to yield rewards to both Validators and Liquidity Providers.
Queries Per Second (QPS)
Each cluster of Alkimi Ad Exchange is able to process up to 7,000 queries per second i.e. 18 Billion queries per month.
As the number of impressions delivered by the network and the value associated with each impression increases, so do the transaction fees generated by the network.
Once Labs. V2 launches all KYC'd users will be able to purchase as many Validator NFTs as they have the required collateral for.
They will then be placed in a queue and new Validators will be added as the rewards and bandwidth requirements reach a certain threshold.
This will ensure the best network coverage by maintaining a level of bandwidth required for all of the services offered by Alkimi. While simultaneously ensuring the most equitable rewards for all validators.
Each Validator will earn its share of the rewards once they have joined the network and started validating transactions (outlined below). Validators will help strengthen the network's decentralisation, making it more robust while maintaining high levels of transactional bandwidth.
Validator Rewards
Any business wishing to use the programmatic exchange will need to pay a fee as a percentage of the value of the transaction.
The most basic transaction involving standard display will be at the lowest fee - percentage fees will increase as the bandwidth required increases, such as for video formats.
Validator and Liquidity Providers will share 100% of the fees generated by Alkimi. These fees include 100% of the AlEx fees outlined above plus the fees from secondary income streams.
All fees will be invoiced and received in FIAT currency. Alkimi will convert this to USDT, in order to buy back $ADS and add liquidity to get stADS depending on the split of those rewards.
Validator Criteria and Management
The first two cohorts of Node operators will be converted to validators at the start of Q2. Guardian node operators will be offered 1 Validator in return for their Guardian Node NFT. They will burn their NFT and claim another, then set up their Validator through the Labs platform.
Master Node operators will be given the option to run up to 2 Validators, which will require a separate VPS for each Validator. The Master node NFT will be burned and the operator will select 1 or 2 Validators via the Labs platform. The remaining collateral (either 100K or 150k $ADS) will be returned as part of their transaction.
As the usage of the network grows, Alkimi plans to open out the validator process to all KYC'd users on the Labs Platform. This will allow any user who is KYC’d and has the required collateral to run as many Validators as they wish.
The requirements for the VPS needed by Validators is approx $25/month, each Validator requires one VPS/Validator. This will be able to be set up via the Labs platform, with a choice of most large cloud providers.
Rewards will be divided under a new formula between LP and Validators, with each Validator receiving an equal share based on network up time.