XTRABYTES Earnings Potential Unlike Traditional Blockchain Networks
Users seeking to understand XTRABYTES economics should first review the differences between the XTRABYTES™ ecosystem and traditional blockchain/cryptocurrency networks. In particular, XTRABYTES earnings potential involves far more entities than those found in a traditional blockchain network.
As mentioned previously, the XTRABYTES ecosystem is more than merely a network designed to facilitate cryptocurrency payments. The latter excel at providing decentralized payment transactions, a function dependent upon transaction fees that are distributed to those that facilitate these transactions (such as miners).
In contrast, the XTRABYTES ecosystem achieves far more functionality as it provides an entire ecosystem dedicated to enabling a multitude of decentralized services (including payment transactions).
Unlike most traditional blockchain companies, the XTRABYTES ecosystem actively embraces a variety of entities. Among them are the XTRABYTES companies (XTRABYTES Ltd. & XTRABYTES Intellectual Properties Inc.), the STATIC nodes, developers, asset providers, and application users.
A Closer Look at the Ecosystem Entities
As mentioned above, the XTRABYTES project currently includes two companies, XTRABYTES Ltd. and XTRABYTES Intellectual Properties Inc. These two companies occupy very distinct spheres within XTRABYTES’ ecosystem.
For instance, XTRABYTES Ltd. is responsible for the day-to-day management of the network development, the development of its core services and core applications, and overseeing business-oriented aspects of the project.
In contrast, XTRABYTES Intellectual Properties Inc. (XIP) serves as the intellectual property owner for all creations produced by the XTRABYTES project.
The STATIC nodes serve as the backbone of the XTRABYTES network, providing decentralized services to any applications running on the XTRABYTES network. As a result, this critical network of decentralized nodes are rewarded considerably through the XTRABYTES earnings potential.
Developers include those who create either a decentralized service for the network or an application that uses the decentralized services of the XTRABYTES network.
Asset providers furnish the network with specialized hardware, particularly hardware associated with various service offerings. Examples of these assets include storage space, computing power, etc.
As one might expect, a user includes any individual or company using the various applications that run on the network.
Note that any individual or organization can occupy multiple functions within the network. For example, a STATIC node can also serve as an asset provider, a developer can become a user, a user can serve as an asset provider, and so on, as displayed below.
XTRABYTES Earnings Potential
XTRABYTES earnings potential is extensive, as various opportunities exist for the entities within the XTRABYTES Ecosystem.
Income transfers include users paying XBY to application developers, developers paying XFUEL to access network services, and service providers paying asset providers for their resources. And that is merely a sampling of how entities might take advantage of the XTRABYTES earnings potential. Indeed, an entire economics system will exist within the network and yet remain outside of XTRABYTES control. As such, the various services costs, user applications costs, and asset provider fees within this network will follow the logic of a free market.
Nonetheless, two key instances exist in which fixed fees balance the earnings achieved between the various entities: the “Application fees” and the “Services fees”.
The “Application Fees Structure” refers to the entry-point of income within the network. In this instance, end-users are paying XBY, for the usage of decentralized applications (DApps) running on the network.
The “Service Fees Structure” refers to an important internal aspect of the network, the decentralized services enabled by the STATIC nodes. Developers will pay XFUEL for any associated services required for their application (or for their own network-related service).
The fees for these two instances are summarized in the following two tables. It is important to note that these fees may require some fine-tuning in the near future, particularly those that express different coefficients within the document.
The payment of these various fees will be regularly performed through smart contracts.
Various ecosystem actors can take advantage of the XTRABYTES earnings potential – as explained below.
Service Provider Income
STATIC node owners will be able to influence their earnings potential by deciding what services they provide to the network. As described in the table above, STATIC nodes will receive 50% of the total income earned by these services.
Nonetheless, individual STATIC node earnings will depend on several parameters:
- the reliability of the node “𝜌” measured in terms of uptime of the server/services
- the activity of the node “𝛼” measured in terms of number of service requests handled
- the age of the node “𝜃” measured in terms of node ownership duration
- the actual speed of the node “𝜎” measured in terms of the inverse of the average time between the request and reply times
- if it is a legacy (original) node or not, and if it is blended (XBY+XFUEL) or not, through an LB (Legacy-Blending) coefficient
- at which Tier-level the node is, through a TL coefficient
- a TRUST factor, metric that is built up by providing correct services and keeping to the agreed-upon protocols (between 0 and 1)
All these parameters are combined in a SCORE factor:
node SCORE for service X = TRUST × TL × LB × 𝜌 × ( 𝛼 + 𝜃 + 𝜎)
- 𝜌 = uptime of the node for service X ÷ total uptime of all nodes for service X
- 𝛼 = nb of requests handled by node for service X ÷ total nb of requests handled for service X
- 𝜃 = node ownership duration ÷ total node ownership duration of all nodes
- 𝜎 = node speed for service X ÷ total speed of all nodes for service X (speed =1 ÷ average time between the request and the reply)
and LB coefficient is:
- LB coefficient for blended legacy node = 1.5
- LB coefficient for blended new node = 1.3
- LB coefficient for unblended legacy node = 1.2
and TL coefficient is:
- TL coefficient for Level 1 node = 4
- TL coefficient for Level 2 node = 2
- TL coefficient for Level 3 node = 1
Thus, the payout for each STATIC node is calculated as follows:
node payout for service X = (node SCORE for service X ÷ total SCORE of all nodes for service X) × total payout for service X
Ultimately, a STATIC node’s total income will equate to the income earned by each of the services it provides. Nodes that do not follow the protocol (for any reason) will have their earnings decreased or stopped, as reflected in the value of what will become their TRUST factor.
By defining the SCORE factor as such, the nodes have these following characteristics:
- A node with very poor reliability (services uptime near to zero) is useless for the network and will have nearly zero income.
- A node that exhibits very low activity, operates very slowly, or is very new will have its SCORE factor significantly reduced. However, it will continue to earn income as long as these three parameters do not equate to zero (which it would be for a newly setup node, with zero requests handled and being extremely slow)
- Providing good machine specs for a STATIC node will improve its reliability and speed parameters, increasing both its SCORE factor and its income. Moreover, a highly capable machine can serve as an asset provider as well (see below), thus providing additional income.
- Legacy STATIC node owners will receive a combined initial benefit, courtesy of their higher LB coefficient and initial node age (counting from the node’s deployment date in 2017). Both will ensure higher income for these node owners (more than double for the first full year, see table below)
- These legacy STATIC node advantages will decline over time as the age of other nodes increases (eventually reaching equivalent maturity after 10 years ). Nonetheless, legacy nodes will be able to keep the LB factor benefit (+20%) so long as they don’t break their nodes. (see table below)
The table above also reveals the estimated loss of income likely to occur by breaking a node and re-registering a new one. For both legacy nodes and standard nodes, node owners have a strong incentive to keep their nodes operational (and for as long as possible given the age parameter).
This rule is meant to discourage the breaking of nodes for short-term market speculation, thus ensuring the network stability over the long-term.
The registration fee for STATIC nodes was initially proposed to reward both first adopters and long-term holders.
However, the current proposed services fees calculation achieves both of these goals more effectively by the node coefficient and LB factor:
- Legacy owners will have a significantly higher income than others (at least for the first few years, see table above) and
- All node owners will be incentivized to not break their nodes (which would result in resetting the “age of the node” and thus losing the higher income associated with the greater node age).
As such, there will be no fee associated with registering a new STATIC node.
A developer can earn income in two ways, either by developing a decentralized application (in which he will earn XBY paid by the application user) or by developing a decentralized service for the network (thus earnings XFUEL paid by other developers who use the service).
Application Developer Income
Application developers will earn 88% of the total income produced by their application, paid for in XBY. The remaining 12% of income will be kept as a license fee payable to XTRABYTES Ltd. (10%) and as a XTRABYTES Founders fee (2%). In addition, developers will need to pay any costs associated with the services required by their application.
Service Developer Income
Service developers will earn 45% of the total income produced by their service, paid for in XFUEL. The remaining 55% of total income will be kept as earnings for the STATIC nodes that provide the service (50%) and as License fees to XTRABYTES Ltd. (5%). In addition, developers will need to pay any costs associated with the assets required by their service.
Asset Provider Income
Asset owners will be able to earn income by providing their assets as a resource for the network. Assets consist of hardware required by the different services and can be computing resources (CPU & GPU), volatile memory (RAM) as well as storage capacity. Income will vary depending on the supply/demand balance. Anyone with a spare hardware/resource will be able to easily earn income.
Income as an Application Developer
XTRABYTES Ltd. will earn income the same way as other application developers, thus earning 88% of what end users pay in XBY for applications developed by XTRABYTES Ltd. Like other developers, XTRABYTES Ltd. will need to pay any costs associated with the services required by their applications.
Income as a Service Developer
XTRABYTES Ltd. will earn 45% of the total income produced by their services, paid for in XFUEL, in the same way as other service developers do. XTRABYTES Ltd. will need to pay, in addition, any costs associated with the assets required by their services.
XTRABYTES Ltd. will collect license fees from developers who use the XTRABYTES network.
License fees from application developers that use the network will constitute 12% of the total income earned by their applications. This license fee will be distributed to two entities, with 10% being allocated to XTRABYTES Ltd. and 2% being allocated to XTRABYTES Founders.
License fees from service developers using the network will constitute 5% of the total income earned by their services. This license fee will be allocated to XTRABYTES Ltd.
All license fees will be paid in XFUEL.
XTRABYTES Intellectual Properties Inc.
License Fees (current intent – legal aspects have to be cleared out)
XTRABYTES Intellectual Properties Inc. will own all Intellectual properties associated with the company.
All profits from XTRABYTES Ltd. (i.e. after counting all corporate expenses, such as development and marketing costs, patents maintenance costs, taxes and so on…) will be forwarded to XTRABYTES Intellectual Properties Inc.
Dividends (current intent – legal aspects have to be cleared out)
This is a very complex process and must be investigated deeply before we can give any specific information in any regard.
A global overview of all different fee/cost flows is depicted in the diagram below.
The expansion of XTRABYTES may require entities in various part of the world to address the different markets. This is indicated as “XTRABYTES INTERNATIONAL” in the diagram.
XTRABYTES Earnings Potential: A Split Example
To illustrate how XTRABYTES earnings potential can be split among the various entities in the network, here is an example.
Imagine a simple application (APP) that employs two services (S1 & S2). This APP automatically registers (thanks to S1) an image stored by the user in a database (stored in an asset A1 paid by S1), with its time tag (provided by S2).
The APP end-user has to pay 100 XBY per 1000 images that are stored this way.
The Service developer (S1) has to pay 1 XFUEL to asset provider A1 per 100 images stored.
The developer of the APP has to pay:
- 10 XFUEL per 100 images registered to S1
- 300 XFUEL per month for S2 (the time tagging service)
- 10% of its total income as a License fee to XTRABYTES Ltd, paid in XFUEL
- 2% of its total income to the XTRABYTES Founders
One-month Usage Example
If, in one month, end-users have stored 10’000 images , they will end up paying 1000 XBY in total to the APP developer.
This developer has to pay in XFUEL for the services he uses, while he will be receiving, at the same time, income in XBY. For simplicity, let’s assume that the developer prefers to have everything in XFUEL and that the current exchange is 2 XFUEL for 1 XBY (as an example rate).
Accordingly, he will receive 2000 XFUEL, from which:
- 1000 XFUEL are paid to S1 for registering 10’000 images
- 300 XFUEL are paid to S2 for the monthly fee
- 200 XFUEL are paid to XTRABYTES Ltd as a License fee
- 40 XFUEL are paid to XTRABYTES Founders
At the end of the month, this developer will have received 460 XFUEL (2000-1540=460).
Service developer (S1) has received 1000 XFUEL and has paid 100 XFUEL to A1 for the usage of the storage asset, 500 XFUEL to STATIC nodes, and 50 XFUEL to XTRABYTES LTD. for the license fee.
Service developer S2 has received 300 XFUEL, and has paid 150 XFUEL to STATIC nodes and 15 XFUEL to XTRABYTES Ltd.
In summary, here is how the 1000 XBY (or 2000 XFUEL) entering the network will ultimately be distributed:
- 460 XFUEL (23%) for the APP developer
- 350 XFUEL (17.5%) for Service developer S1
- 135 XFUEL (6.75%) for Service developer S2
- 100 XFUEL (5%) for Asset provider A1
- 265 XFUEL (13.25%) for XTRABYTES Ltd.
- 40 XFUEL (2%) for XTRABYTES Founders
- 650 XFUEL (32.5) for STATIC nodes offering services S1 and/or S2
The economic aspects of the XTRABYTES network have been designed to provide an ecosystem with balanced and attractive earnings potential for its various entities. This leads to conditions where solid foundations facilitate an attractive and long-term resilient network of STATIC nodes which help to guarantee decentralization of its services and provide sufficient cashflow to support the costs of a robust and powerful infrastructure of global servers.