What are SPF – Part 2

Two tokens power the utility of the Distributed Datacenter. Each plays a critical role with SPF now stepping into the spotlight

ScPrime Market Model

This post revisits ScPrimeFunds and discusses the role and future with the project. For a primer on what SPF are and how they began, start here. https://scpri.me/what-are-spf

ScPrime is a permissionless distributed storage network in what is popularly known as the DePIN segment or Decentralized Physical Infrastructure Networks. Our idea is individual nodes stitched together to provide in demand network services where operators earn Rent and Incentives in exchange for server resources. Price, security and control disruption are key goals as traditional nets have a muddy history in security and user control while a majority of the world’s data is hostage to cartel pricing.

Some distributed storage networks use a corporate-controlled model with “satellites” or Edge Caches in between the customers and the end node Storage Providers. The corporation determines pay scales and who gets data. There is little difference between these and traditional datacenters where it matters, who controls data after it is uploaded and where the security touchpoints live.

Others use a free-market model with no interference in price discovery, but also no oversight on what is uploaded. This can create an uncomfortable situation with Storage Providers hosting illegal content while at the same time, creating a race to the bottom in pricing.

ScPrime has a unique blended strategy where the satellite nodes live at the customer site. Our Relayer technology gives the customer ultimate control in choosing Storage Provider nodes based on clear information about the nodes including location, performance and capacity. XNS is the product delivering storage to customers and never sees customer data/metadata. Customers maintaining full control and selecting the Storage Provider set directly has been released as a new technology called Virtual Private Datacenter by XNS.

On XNS, customers agree to Terms of Service that if violated with illegal content reported by legitimate authorities can bring about contract termination, which is the ability to pay for the data stored. Any other controversial issues with data rightfully exist between the customer and the authority pressing an issue. There is no leverage to place on XNS as we do not hold customer data.

Free Market + Incentives

ScPrime uses a free-market plus incentives model to pay Storage Providers. Providers are free to charge as much or little as they like, but to qualify for Incentives, they must stay within a bounding box set by the corporation. The strategy is to keep the floor and ceiling price wide enough so that Providers may gain more storage by pricing to local conditions.

In populous regions with a lot of Provider nodes, they can lower cost slightly to encourage additional storage. While this induces competition, baseline pricing protects providers from large entities underpricing in the extreme to gain market dominance. The opposite is true in sparsely covered regions with providers able to top out pricing but not hold customers hostage with extreme costs in order to use local nodes.

A utility coin (SCP) generated by a Proof of Work blockchain pays Rent and Incentives on the ScPrime Distributed Datacenter. SCP is available on public exchanges where it is acquired by XNS to cover the costs of used storage. It has no other purpose and the corporation has no ability to change the available supply of this coin. After 5 years, the inflation of new coin production is nearly flat with a minimum daily mining emission nearly reached.

Another token, called ScPrimefunds (SPF) exists in the ecosystem to earn fees from the storage used on the network. The original purpose of SPF is to provide a revenue stream when the product suite offers a true decentralized end-to-end experience. While XNS expects there will always be customers who favor dollar based agreements, service level agreements and someone to contact for technical support, there are also customers who prefer to self-service and who will have the opportunity to contract with the network directly when our contracting software known as Conductor is pushed out to individual Relayer instances that desire it.

On the development roadmap, SPF have a major future role. A new block validation is needed based at least partly on Proof of Storage and potentially Proof of Stake in order to gain the necessary security on the blockchain commensurate to the value of storage on the network. This ties the creation of the utility coin with the Storage Providers generating the capacity in use on the network and aligns financial incentives.

The plan is to migrate blockchains from the current Blake2b/PoW validated chain to a larger, more secure environment. As blockchain development has been extreme over the last several years, a final choice has not yet been made as to the destination chain. Our strategy is to allow more time for scaling, fees and security to surface a clear choice based on our unique needs. Another option is to upgrade the current chain with a virtual machine scripting model and to make the SPF a governance token inside a DAO structure. We’ll work closely with the community in 2024 to determine which is the best strategy.