Validator model introduction
Orcfax validators are the software nodes run by a decentralized network of operators around the world. These Orcfax software nodes collect, validate, publish and archive real world data on-chain for Cardano decentralized apps (dApps) to use. Instead of having off-chain business deals and contracts with hand-picked validators, Orcfax is implementing a permissionless and decentralized Oracle pool model for its validator network.
This means that anyone can become an Orcfax validator as long as they are able to meet the minimum requirements. These requirements are broken down into two parts:
- Minimum technical requirements
- Operational requirements
Each of these will be discussed further in their respective sections.
Incentivized Testnet
After the validator licenses have been distributed, Orcfax will launch the Incentivized Testnet (ITN). The ITN will take place on the Cardano test net(s) and also within our private validator channel on our discord. The validators that are willing to participate in the ITN and help us test the node software, will be rewarded for their efforts in working with the Orcfax team to finalize the technical and economical parameters of the model. Active participants will be rewarded with $FACT tokens.
More details about the ITN will be released soon.
Validator rewards
When a fact statement is published on chain, the validator that was randomly selected to put that statement on-chain will be rewarded with FACT tokens. This means that because the number of Validator licenses are limited, more feeds means that more rewards will be distributed to each active validator.
The initial version of the validator network (V1) will be designed to select validators at random to publish a fact statement, giving all validators an equal chance of earning a reward. Future models will weight this random distribution by biasing rewards to those with higher $FACT delegation.
Non-validator rewards
All Orcfax $FACT holders were invited to vote on the first-ever Orcfax proposal: the implementation of rewards for $FACT holders. The proposal passed. More than 28 million $FACT voted in favor of rewarding $FACT holders, and the results can be found here.
Orcfax facilitated this community vote in alignment with our decentralization goals, and to allow opportunities for community members to participate in (and shape) the future of the Orcfax network.
This proposal was requested by community members and introduced rewards for $FACT holders who may not have the capacity to join the Orcfax network as a validator, yet wish to receive $FACT rewards for locking (and not moving) their FACT tokens.
Orcfax is investigating methods to implement non-validator staking for the initial version (V1) of the validator network.
Where will $FACT rewards come from?
Whenever a fact statement is published by a validator, that validator will be rewarded via two different revenue streams:
$FACT Validator allocation: In the beginning, as the protocol is onboarding paying customers/integrators, Orcfax will use the Validator Rewards allocation, which accounts for 50% of the total $FACT supply, to compensate validators. As time passes these reward emissions will decrease and be replaced by customer fees.
Customer fees: These are the fees which paying customers/integrators will be subject to in order to utilize Orcfax feeds. The total revenue from these fees will increase as the network grows and matures until at some point (5–10 years) this revenue stream will completely replace the decreasing $FACT validator allocation.
As mentioned above, a portion of both revenue streams will go to the validators and the rest will go to the Orcfax network.
Building off of this structure, this proposal describes how Orcfax proposes to use a small portion of these revenue streams to reward non-validators.
Important Note: these percentages will change as the network grows. As the Validator Rewards allocation depletes over time and as more paying customers are integrated, we will increase the Validators percentage for the customer fees (and decrease the same for Orcfax). Additionally, depending on the total volume of locked $FACT and the number of paid feeds, non-validator $FACT rewards could result in a 3–8% APY (measured in $FACT).