4.3.3 DEC Token Protocol
4.3.3.1 Token Essential
The DEC Token Protocol forms the cornerstone of the DGT network, dictating the creation, valuation, distribution, and usage of the native DEC tokens. This protocol is governed by a set of fundamental principles, designed to foster a transparent, secure, and efficient digital transactional environment.
Token Allocation: The token distribution model is formulated during the issuance phase. It ties into the Service Level Agreement (SLA) parameters, namely the number of transactions processed by the nodes. This relationship suggests that as the number of nodes increases, the quantity of tokens per node decreases, which is guided by specific mathematical models. This protocol encourages a deterministic commission, ensuring low transaction costs, along with non-deterministic rewards for handling scarce or complex transactions. The token distribution is segmented into two parts - a fraction transferred to the consortium's 'CORPORATE_WALLET', which the consortium can distribute as per the guidelines established in the white paper. The remainder is distributed to the network nodes during the minting process, following a fixed mathematical model.
Transparency: The network allows any user to view the status of the 'DEC_EMISSION_KEY' and 'CORPORATE_WALLET', ensuring transparency in native token distribution.
Transaction Fee: Besides the minting mechanism, nodes are compensated through transaction fees. These fees are defined at the issuance stage and regulated by the protocol. Furthermore, it endows the token with utility, allowing nodes to record and execute transactions on the network in exchange for tokens.
Security Measures: The protocol utilizes multi-signature procedures for crucial operations, such as token issuance, maintenance of the token distribution mechanism, and the regulation of token burning rules, bolstering transparency and security.
Configurability: The protocol parameters are initially set using a JSON file and inscribed in the registry during the issuance phase. Any operations not conforming to these parameters are considered violations and rejected by the network.
4.3.3.2 Token Creation
The genesis of DEC tokens is conducted via a special transaction, necessitating multi-signature authorization. This event takes place post-main network launch but prior to DEC Transaction Family functionalities being enabled. The procedure is as follows: an off-chain creation of the main consortium initiating the network, issuance of a white paper declaring the essential terms of token issuance, followed by the actual token issuance with multi-signature verification.
Subsequent steps involve distributing part of the tokens for network support operations, then gradually allocating most tokens among the nodes sustaining the network. The initial tokens are credited to the abstract account '_DEC_EMISSION_KEY_', which is an entry in the registry regarding the maximum possible number of native tokens (Maximal Supply). Part of the tokens can be distributed immediately to a special account of the consortium ‘_CORPORATE_WALLET_’, which is also systemic and is established at the time of issue. The distribution of tokens from the _CORPORATE_WALLET_ account represents the area of responsibility of the consortium and can be verified by any member of the network.
# | Parameter | Default Value | Description |
1. | Coin Name | DEC | Token Name |
2. | SYMBOL | "Đ" ([ Unicode: U+0110]) | Token Char/Symbol |
3. | Total Sum | 8 589 869 056[1] | Total Supply[2] |
4. | Admin_pub_key | 123456 | Administrator Key to manage some flexible parameters |
5. | Wait to date | 123456 | The date from which the funds can be distributed |
6. | Granularity | 0.0001 | Minimum fractional part in calculations |
7. | Link | Link to the tokenomics model (White Papers, which defines the economics of the network and the main specified parameters of emission and distribution) | |
8. | WP_Digest |
| A hash sum (MD5) for a white paper document that captures network settings |
9. | Nominal | 0.8 | The ratio of the issued token to the base currency (for example, USD). Starting number. |
10. | Nominal_name | USD | The name of the nominal fiat currency with which the initial value of the token is measured |
11. | Consortium account | 0xcfa9fe46e0873050b6819651d6cf6fd5b57e6db4965b | Address or public key of the account of the consortium receiving a share of tokens in the common pool for the development of the network (corporate_share parameter) |
12. | Consortium share | 20% | The number of tokens distributed for the purposes of direct network support (consortium).) |
13. | Minting share | 80% | A parameter that determines the proportion of tokens used to support the network (SLA Minting). |
14. | Mint param | "Umax" : 10, "B2" : 1, "T1" : 1 | Minting parameters that define the financial distribution model Umax, 𝛽2, 𝜏1 |
15. | Burn Count | 3 | Number of possible token burn operations (limited use) |
16. | Fee | 1% | Commission for DEC transfer operations (fixed in the network). Can be changed later. |
17. | Tips | 0.01 | Additional fee for "expensive" operations, may be changed later. |
18. | Account | {"limit" : 10010, "spend_period": 2 | Account restrictions (e.g., amount of one-time spending, minimum period between transactions – applied to accounts by default (can be changed for linked wallets with a notary). |
19. | emission | {"sign_min" : 2,"signers_pub_key" : […] | The minimum number of signatures for the issue, as well as the public keys involved in the signature (the minimum number of a given number of keys). |
20. | corporate keys |
| Consortium keys for manipulating the consortium wallet. |
4.3.3.3 Token Distribution
The distribution of tokens within the network operates through a series of processes, each targeting a specific group of participants and satisfying unique needs:
Initial Distribution: A predetermined portion of the tokens, usually not more than 20% of the total supply, is initially distributed. This immediate distribution injects liquidity into the system and rewards the initial contributors, fostering early engagement and network utilization. For instance, early adopters might be incentivized through airdrops, where they receive free tokens, encouraging them to start transacting within the system. This initial allocation is controlled by the consortium and is released gradually, aligning with predefined strategic goals. Transparency is paramount in this phase, and the network ensures it by publicly tracking these transactions, thus fostering trust.
Token Minting: This is a specific mechanism that distributes tokens among nodes as a response to the Service Level Agreement (SLA). Essentially, nodes earn tokens by processing transactions involving DEC tokens. This constitutes the bulk of the token distribution, accounting for approximately 80% of the total token supply. The number of tokens distributed at any given moment is calculated using a predetermined equation and is linked to certain 'heartbeat' events. These events can be thought of as the network's pulse, indicative of network activity, with more frequent heartbeats suggesting higher transaction volumes. As the heartbeat frequency increases, so does the amount of token rewards for the nodes.
Tail Distribution: Lastly, users and businesses obtain tokens through basic transaction processes, like token transfers and payments. Nodes, much like the consortium, distribute tokens to their users, stimulating the economic activities within the network. A key aspect of this tail distribution is the exchange of tokens for fiat currency. To facilitate such exchanges and thus foster greater economic integration, the network establishes bridges and payment gateways. These platforms simplify the conversion of DEC tokens into fiat currency and vice versa, promoting an active token economy. For instance, an e-commerce business operating on the network might accept DEC tokens as payment for goods or services, then use a gateway to convert those tokens into their preferred fiat currency.
By carefully balancing the distribution of tokens, the DEC network ensures that all participants – from the founding consortium to the nodes and end-users – play an active and rewarding role in the network's operation. This balance sustains the network's growth and progress while promoting a vibrant and fair economic environment for all.
4.3.3.4 Token Usage
DEC tokens serve a multitude of functions within the network, facilitating transactions, powering services, and maintaining the network's security and integrity. As integral components of the DEC Transaction Family, these tokens not only facilitate smooth transactions but also play a crucial role in the network's broader economics and security.
Basic Operations: DEC tokens form the backbone of the system's basic operations, including transfers, payments for digital objects, staking, and invoicing. These operations are governed by the rules of the DEC Transaction Family, which validates and records transactions to ensure their accuracy and consistency.
Participation in Proof of Stake (PoS): Top nodes, specifically arbitrators, can participate in the PoS mechanism. This mechanism, acting as a bridge to Ethereum, ensures the security of the network and validates transactions. Participants can stake their tokens as a show of credibility, effectively contributing to the network's reliability.
Service Implementation: Tokens serve a vital role in facilitating various services, such as lending. This opens new possibilities for users to leverage their tokens beyond simple transactions, fostering a robust and diverse digital economy within the network.
Exchange for Fiat Currencies: The network provides gateways and bridges for tokens to be exchanged for fiat currencies, promoting liquidity, and enabling users to effortlessly convert their tokens into real-world value.
Security Measures: The security of the DEC network is fortified by multiple mechanisms, including consensus algorithms, digital signatures, Zero-Knowledge Proof (ZKP) extensions, and multi-signature transactions. These layers of protection safeguard user transactions, secure staked tokens, and ensure the overall integrity of the network.
Token Economics: The value of DEC tokens is influenced by numerous factors such as supply, demand, staking conditions, and the rate of transactions within the network. Understanding these principles provides a holistic perspective on the economic sustainability and potential growth of the ecosystem.
In the future, as the DEC network continues to evolve, the token's utility could expand further, making it even more integral to the system's functioning. Its applications could diversify and grow, providing users with an increasingly flexible and powerful tool for digital transactions and services.
4.3.3.5 Token Value Representation
The DEC token, serving as the core medium of value within the DEC network, plays a pivotal role in various network functionalities. Its value, primarily tracked by the token price, encapsulates the network's operational effectiveness and its economic health. This value is intricately tied to the network's overall functionality, which can be effectively presented by the concept of network entropy and Total Value Locked (TVL)
The DEC token serves a pivotal role within the DEC network as a symbol and facilitator of the network's value. This value representation is not only associated with the token's utility but also closely tied to the network's functionality, which is effectively encapsulated by the concept of network entropy.
Functionality and Utility: The DEC token is a versatile and multifaceted tool within the network. Its various applications - including facilitating transactions, enabling services, participating in the Proof of Stake mechanism, and providing liquidity through exchange into fiat currencies - are integral to the network's operation. As the DEC network evolves and expands, the utility of the token is likely to grow in tandem. The diversification of the token's applications can enhance its intrinsic value, making it an increasingly powerful asset within the network's digital economy.
Economic Dynamics: The value of the DEC token is subject to the supply and demand dynamics within the network. Factors such as the rate of transactions, the conditions for staking, and the volume of tokens issued and circulated can influence the token's value. Furthermore, the token's value is affected by the network's overall economic health, the growth of its user base, and the success of its services. A key function of the DEC token lies in the tokenization of assets, both digital and those rooted in the real world (RWA). The token enables the transformation of these assets into a digital form, facilitating their trade, exchange, and utilization within the DEC network. This process not only contributes to the digital economy within the network but also promotes a broader shift towards decentralization in the realm of asset management.
Future Evolution: With the continuing development of the DEC network, the value representation of the DEC token can be expected to change and grow. As the network's functionality increases, as new services are introduced, and as the user base expands, the demand for and utility of the token could increase. This, in turn, would enhance the token's value representation, further intertwining the success and growth of the DEC network with the utility and value of the DEC token. Looking ahead, the potential for further extension of the DEC token's utility is vast. As the DEC network continues to evolve and mature, the token's applications are likely to diversify and expand, enhancing its inherent value. Future developments could introduce novel functionalities for the token, enriching its role within the network, and driving growth and innovation within the DEC ecosystem.
The tokenomics model discussed below proposes an effective metric that measures the value of the network for users, measured using network entropy. Network entropy serves as a quantitative measure of the complexity and diversity of transactions within the DEC network. It reflects the dynamism and evolving capabilities of the network, thereby providing an analytical perspective on the DEC token's functionality and the network's economic health.
4.3.3.6 Token Interoperability
The DEC token is the native currency of the DGT network, designed with a keen focus on interoperability, both within the network and with external environments such as Ethereum. Here is a strict protocol-like description of DEC's interoperability features:
Architecture: The DEC token operates within the rules set by the DEC family of transactions. The network consortium initiates the emission, defining the maximum supply and distribution rules.
Cross-Chain Compatibility: DEC has limited interoperability with Ethereum, facilitated by a Hash Time-Locked Contract (HTLC) bridge. On Ethereum, DEC represents as an ERC-20 Wrapped Token.
Standards Compliance: DEC aligns with the ERC20 and ERC777 standards on Ethereum, ensuring wide compatibility and easy integration with other platforms and services.
Security Measures: DEC token exchange with external networks is authenticated using Zero-Knowledge Proof (ZKP) mechanisms.
Scalability and Performance: DEC token operations are a part of the standard DGT transaction families, regulated by the F-BFT consensus mechanism for required performance and scalability.
Ethereum Bridge Realization with ZKP: The HTLC bridge between DGT and Ethereum enables secure token exchange. The implementation uses ZKP for transaction confirmation.
4.3.3.7 Token Security
The security of the DEC token within the DGT network is a paramount concern, given its critical role in the network's operation and the potential risks posed by cyber threats. The DEC Token Protocol incorporates several key features to ensure the security of tokens:
Consensus Mechanism: DEC uses the Federated Byzantine Fault Tolerance (F-BFT) consensus mechanism which ensures robust security against various types of attacks, while maintaining performance and scalability.
Transaction Validation: The DEC family of transactions set the rules for processing and validating transactions. Any operation that violates these rules is considered invalid and is rejected, preventing unauthorized or fraudulent activity.
Digital Signatures: Each transaction on the network is secured with digital signatures. These signatures verify the sender's identity, ensuring that only the legitimate owner of the tokens can initiate a transaction.
Zero-Knowledge Proof (ZKP): DEC uses ZKP mechanisms for validating cross-chain token exchanges without revealing unnecessary information. This enhances security during interoperability operations while maintaining privacy.
Smart Contract Audit: The smart contracts utilized in the DEC protocol, including those for the Ethereum bridge, are subject to rigorous auditing. This helps to identify and rectify potential vulnerabilities.
Governance: The DEC token issuance parameters, including maximum supply, distribution rules, and exchange parameters, are controlled by a consortium. This ensures that a reliable, trusted entity is responsible for maintaining the integrity of the token protocol.
Decentralization: The decentralization parameters influence the resilience of the token. A balanced distribution of nodes, tokens, users, and transactions can increase network robustness, reducing the risk of central points of failure.
Regulatory Compliance: DEC follows the recommendations of Canadian regulator CSA's Staff Notice 21-329 for crypto asset trading platforms, integrating tools for Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures directly into the protocol. These tools help prevent illicit activity, protecting both the network and its users. Since in this case DEC is considered as a crypto asset, there are restrictions for basic exchange and payment operations at the protocol level (the minimum amount that can be transferred without attaching additional attributes to the account). Additional attributes allow you to set increased capabilities using verification through notary nodes, which allows you to implement the KYC and AML procedure, considering the required location and user profile.
4.3.3.8 Governance
The DEC Token Protocol's governance framework has been carefully crafted to ensure a decentralized, fair, and efficient operation. In the beginning, the network is initiated by a consortium—a group of stakeholders cooperating to achieve a shared goal. This consortium carries significant influence initially, controlling the first nodes and setting the parameters for token emissions. These parameters are agreed upon through a consensus process and recorded in the protocol's White Paper—a document that acts as a roadmap and guide for the protocol's development.
Despite their initial control, the consortium's influence is designed to gradually diminish, promoting true decentralization. This is achieved through several mechanisms:
Token Distribution: The consortium distributes the initially minted tokens in accordance with the White Paper's guidelines. This process is transparent, with all transactions being recorded on the blockchain, ensuring accountability.
Multi-signature Transactions: Critical operations, such as token issuance and transactions involving the consortium's account, are controlled using multi-signature technology. This means that multiple parties must approve these transactions, ensuring more democratic and decentralized control.
Parameter Changes: Although the consortium can modify some parameters of token circulation to stimulate token prices or adjust commissions, these actions are limited and also governed by multi-signature transactions.
To safeguard the network from various types of attacks and ensure fair participation, the DEC Token Protocol incorporates a Proof-of-Stake (PoS) mechanism as part of its F-BFT consensus algorithm. This mechanism prevents any single party from monopolizing the network (known as a "51% attack") by setting rules for node rotation and transaction processing limits. Moreover, the network supports a public segment, which is represented in the arbitrating nodes ring—nodes responsible for final transaction validation. This further strengthens the decentralization and transparency of the network.
The DEC Token Protocol also places a high priority on regulatory compliance, understanding that regulatory adherence is crucial in today's cryptocurrency environment. More details on how the protocol ensures compliance with applicable laws and regulations can be found in separate sections. By leveraging these mechanisms, the DEC Token Protocol ensures a governance system that maintains a balance between initial guidance and long-term decentralization, fostering a secure, fair, and growth-oriented environment for all participants.
[1] 6th Perfect Number, The first seven Perfect Numbers are: 6, 28, 496, 8128, 33550336, 8589869056, 137438691328
[2] The current emission model is carried out with a limited amount - Hard Cap
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