Cryptoeconomics of the Streaming Economy

14 mins read

Cryptoeconomics of the Streaming Economy

Using digital currency to help you grow with POP Network

⚠️ Updated with the release of POP Masternode v0.2.3-alpha ⚠️

Drawing on economics, game theory, and the history of Delegated Proof-of-Stake, the cryptoeconomic system behind POP Network is meant to generate a singular result: mass adoption to dominate the $320 billion streaming media economy. All value, implied or explicit, is designed to emanate from accomplishing this goal.

                              
     Streaming makes up 82% of internet traffic   
     POP Network puts you in control
   
                                                  

POP Network is built with the intent of using cryptocurrency to create economic incentives which direct all network participants to engage in behavior that benefits the long-term health and prosperity of the system.

To actively engage stakeholders it is important to provide a clear understanding of how the blockchain generates and distributes POP Network Tokens (POP). Trust comes from transparency, not control.

Great idea!

Stakeholders

Since POP Network is launching as an Ethereum ERC-20 token for maximum distribution prior to coin swap, 20% of the existing 1.6 billion POP are earmarked for a Rewards Pool with the largest portions meant to:

  • - Accelerate the formation of a diverse and stable decentralized content distribution network anchored by POP Masternodes
  • - Aggressively encourage early adoption by Content Creators and their communities
  • - Attract reputable Delegates capable of securing the blockchain
  • - Ensure Developers have the resources they need to grow POP Network
  •  
Block rewards distribution

Masternodes

For POP Network to attract content worth streaming the underlying system of decentralized content distribution must be strong. This role is where POP Masternodes shine and why they are worthy of receiving 35% of all POP rewards.

Studies dating back decades have consistently shown peer-to-peer storage networks typically follow a power law distribution:

“In systems where many people are free to choose between many options, a small subset of the whole will get a disproportionate amount of traffic (or attention, or income), even if no members of the system actively work towards such an outcome. The very act of choosing, spread widely enough and freely enough, creates a power law distribution.” 

Power law distribution graph
Historical analysis of torrent networks — https://bit.ly/3pVV0xu

Simply put, a small subset of seeders does most of the work to service the vast majority of leechers. This is why POP Network heavily incentivizes the first POP Masternodes to use the world’s largest peer-to-peer protocol to store and serve media. Critical points to understand:

1. Anyone with 50,000 POP can become a POP Masternode
2. No special equipment is required to run a POP Masternode
3. A consistently operating POP Masternode should receive approximately 50,000 POP in rewards over the first 90 operating days of the network and nearly double that over course of one year

4. Estimated rewards from continuously operating one POP Masternode…

 
Masternode rewards chart

If we get early POP Masternodes to reasonably expect to return their investment then those nodes are likely to continue operating, thus providing a level of stability typically not found in peer-to-peer networks.

For comparison, Tron claims to have 1000 nodes on the BTFS decentralized content distribution network.

If POP Network achieves the goal of running 1000 Masternodes then we will have effectively executed a community takeover of the BitTorrent network which Tron paid $140 million.

This is probably why the Tron Foundation stymied our initial efforts to build on the Tron blockchain by erasing an early iteration of this project from Tronscan, the leading Tron block explorer.

Content Creators

The purpose of POP Network is to create a fair system of media distribution which creates value for all participants in a way that was simply not possible before blockchain technology. Without enjoyable content this endeavor is pointless.

                              
     Content Creators receive 50% of block rewards
   
                                                  

Our hope is that early creators see POP Network as an additive revenue stream rather than a replacement. In fact, much of POP Network’s initial success may depend on leveraging other social media platforms to create a user acquisition funnel.

For example, a Content Creator that is popular on Instagram may use her IG Story to create a trailer for a video which leads to POP Network. That video may be streamed exclusively and generate revenue with POP for a two-week window before being available on YouTube and Facebook for additional monetization.

In this scenario, think of POP Network as first-run movie theater revenue while YouTube and Facebook become second-run cable television revenue. POP Network gives Content Creators another revenue stream and helps diversify from over-reliance on any one platform for monetization.

#Genius

Delegates, Superdelegates, and HODLers

In a traditional Delegated Proof-of-Stake system the job of producing blocks is known by many names: block producer, delegate, witness. In the Superdelegated Proof-of-Stake system, POP Network typically refers to the role as “Delegate”.

Delegates’ base responsibilities are to produce valid blocks of transactions, maintain synchronized state, and keep a history of the blockchain. For their effort Delegates receive 10% of all POP rewards.

POP Network envisions an initial family of 21 Delegates growing to 101 (or more) as the network increases in size. Decentralization is strength.

Additionally, any change to the governance structure of the network can be proposed by any Token Holder and must be approved by a two-thirds (⅔) supermajority of Delegates with a 30-day confirmation period.

He-Man I have The Power!
HODLers have the power!

The authority to do this very important job is derived from holding a significant stake of POP. Delegates may stake their own POP or tokens delegated to them by Token Holders (HODLers). Since Delegates will likely have to lobby the community for stake support, it is envisioned that successful Delegates will actively incentivize HODLers to earn and maintain their position.

                              
     Anyone HODLing POP should receive rewards   
                                                  

Misbehaving or inefficient Delegates can be fired by Token Holders if the holders decommit their tokens from the offending Delegate and authorize an alternative.

Superdelegates

Superdelegates are appointed by elected Delegates and have the sole responsibility of protecting the network from harmful or illegal content. Enhanced by Artificial Intelligence and GPU processing power, Superdelegates run machine learning models to produce a risk assessment for each piece of content.

Because the task of Superdelegates has a unique level of responsibility on POP Network, their identity is public, unlike Delegates or Masternodes. Superdelegates are selected by Delegates, earn 3% block rewards from the DPoS blockchain, but operate independently on a permissioned practical Byzantine Fault Tolerant (“pBFT”) sidechain along the lines of Hyperledger Sawtooth.

Because of the highly experimental nature of the Superdelegated Proof-of-Stake sidechain, The POP Network Foundation may be the sole Superdelegate prior to mainnet and may continue to operate in the role until sufficient development has been made to decentralize the function.

Developers

One of the biggest ongoing problems with open-source software is funding community development. Projects from JavaScript to Bitcoin continually experience the “tragedy of the commons” where individual users, acting independently according to their own self-interest, behave contrary to the common good of all users.

POP Network hopes to avoid this problem by having a clear self-funding policy ingrained into the core of the project where all users passively contribute to the betterment of the system.

Dual-Token Structure: POP & LIT

To coordinate collective action among network participants, POP Network uses a dual-function structure, similar to EOS/RAM and TRON/Energy.

POP Network Token (“POP”) is the native utility token used to stake, secure, and govern the system while Legitimate Interchange Token (“LIT”) is the stable operational unit

The purpose of this structure is two-fold. First, since various functions on the network are only permissible by staking POP there is a natural decrease in circulating supply as the network grows. At the same time, mass adoption would necessitate a transactional cryptocurrency capable of high-frequency, high-volume usage. These are two very distinct use cases, thus two tokens.

Creator & Masternode get LIT

Second, single token Proof-of-Stake systems are at risk of hoarding problems. Since Token Holders are rewarded based on stake, there may be an incentive to hold on for dear life (“HODL”) and choke off liquidity needed for the network to function. This is antithetical to the needs of a streaming media economy like POP Network where token velocity translates to popularity and, ultimately, mass adoption.

In practice, when a consumer wants to stream media, their staked POP uses LIT to exchange for bits of content from Masternodes. The flow of LIT acts as a chain-of-custody marker tracing received media through Masternodes all the back to the Content Creator. As content gets more popular, its creator and distributors get LIT.

The interchange token can then be converted back to POP with 33% made available immediately and the remaining 67% remitted at the rate of approximately 1.1167% per day. Time itself becomes the biggest protector of the network from fraud and a disincentive for malicious behavior.

 
Token propagation flowchart
Token Propagation

Zero-Knowledge Security

POP Network is built on a zero-knowledge security model. No personally identifiable information is needed to interact with the network, except in the case of Superdelegates. An example of this design philosophy is in how POP Masternodes use WalletConnect.

WalletConnect is an open source protocol for connecting decentralized applications (dApps) to mobile wallets with QR code scanning or deep linking. A user can interact securely with any dApp from their mobile phone, making WalletConnect wallets a safer choice compared to desktop or browser extension wallets.

This functionality was recently unveiled with the release of POP Masternode v0.2.3-alpha.

Coin Swap

POP is initially launching as an Ethereum ERC-20 token to encourage a broad token distribution. During the course of development, the mechanism for swapping tokens from the Ethereum network to our purpose-built blockchain will be made available with considerable time for feedback and implementation.

Opportunity

The traditional streaming media value chain is being disrupted as power shifts from aggregators & platforms to content creators & their social networks. That means over a quarter trillion dollars is up for grabs as the old gives way to the new.

                              
     For incumbents, blockchain is a threat   
     For insurgents, blockchain is   
     a once-in-a-generation opportunity   

                                                  

 


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Ed & Tay doing shots
#endgame