Tokenomics 101: Partisia Blockchain
How $MPC Powers Partisia Blockchain’s Zero Knowledge Platform
Introduction
The Partisia Blockchain project aims to address three major challenges in the crypto space: scalability, privacy, and interoperability. The project acts as both a first layer, featuring consensus and governance, and a second layer that provides interoperable Zero-Knowledge and Oracle services.
The second layer is essentially a platform where you can buy services such as Zero-Knowledge (ZK) computations - on-chain, off-chain, and inter-chain. This adds a layer of privacy-preserving computation to blockchains in a decentralized way. The inter-chain feature is crucial to the protocol's value proposition as it allows the trustless facilitation of transactions across various blockchains through smart contracts. The decentralization of the nodes involved in the process ensures its security and integrity.
The web3 ecosystem prides itself on using transparent information. However, as seen with web2, if information is not kept under control, it can be used for purposes that you may not have initially agreed with. Therefore, having a transparent process that still keeps your information private is what web3 should move towards.
The Partisia Blockchain aims to bring this solution to the blockchain ecosystem by utilizing a global collaboration of accredited ZK computation nodes and improving the privacy and security aspects of various blockchains and platforms. Implementing privacy on-chain on a large scale opens the door to opportunities such as secret voting and secured humanitarian aid.
It is important to note that two entities are at play here: Partisia, a private company that pioneered the commercial use of Multi-Party Computation (MPC) technology, which enables multiple parties to compute a function over their inputs while keeping those inputs private. Partisia Blockchain is the project architected by Partisia to merge MPC and blockchain technologies. This led to the creation of the Partisia Blockchain Foundation, an independent non-profit foundation solely supporting the public blockchain Partisia Blockchain.
This report delves into the tokenomics of Partisia Blockchain and what it aims to bring to the blockchain ecosystem. However, if the ZK computations concept seems unclear, checking the links provided is strongly suggested.
Tokenomics
Node Operators
Partisia Blockchain nodes have four types of jobs:
Partisia Blockchain is a platform that aims to create a marketplace of zero-knowledge computations. In this marketplace, each node operator has a trust score associated with them, allowing users to select a node to run their computation based on this score. The trust score is a measure of the node's reputation and is determined based on its availability and objective fraud record. These factors are also accounted for in the service pricing. Node operators are incentivized to play fair and maintain a high trust score as it increases the likelihood of being selected by users.
To ensure the decentralization of the platform, all node operators, except reader nodes, go through an external KYC/KYB process and on-chain registration for accreditation. Synaps, a web3 identity verifier, carries out the decentralised process for accrediting new nodes. External validators validate the accreditation process and are rewarded for their work. By using external validators, existing nodes are prevented from blocking new nodes from entering the system.
Partisia Blockchain ensures that node operators operate only under one legal entity, even if they cover all the services, such as Baker, ZK, and Oracle. The accreditation is automatically renewed every year, and it is revoked only if the node fails to meet staking requirements, revokes itself voluntarily, or fails to renew due to poor performance (low trust score).
The combination of accreditation, staking, and a scoring system based on trust enables Partisia Blockchain to create a self-adjusting market that does not require a centralised entity. This approach ensures the security and scalability of the ecosystem, both of which positively impact the project.
Bring Your Own Coin (BYOC)
The Partisia Blockchain network offers a BYOC (Bring Your Own Coin) solution that enables interoperability of the chain and its services. This functionality allows users to use the ZK computations and/or oracle services provided by the nodes on the network without the need to convert their coins into the native currency ($MPC). The oracle services facilitate cross-chain interactions with smart contracts and a burn & mint type bridge, making the services very accessible and user-friendly.
The BYOC system supports external coins or tokens from users and represents them as "BYOC Twins" within the Partisia Blockchain. Bridges to external blockchains need to be developed, and currently, an ETH token bridge is already in operation. The roadmap outlines plans for additional bridges, including a framework to enable external teams to create new BYOC Twins independently.
In terms of payment for services, the $MPC tokens (native currency) do not function as a means of payment. Instead, they act as a store of value, backing the guarantees from staking presented earlier. Payments are made in the user's preferred token through the BYOC system.
The "small Oracle" is responsible for operating the BYOC solution and is a selection of Oracle nodes chosen by all available baker nodes, which are designated as the "l
The BYO”
The BYOC token bridge is a mechanism that facilitates the transfer of tokens between two different blockchain networks. It operates in fixed time periods called epochs, which are small intervals of time during which the selected oracle nodes are responsible for validating and executing token transfers.
To ensure the security and reliability of the token bridge, the selected oracle nodes need to stake MPC tokens at the beginning of each epoch. The amount of MPC tokens staked by the oracle nodes serves as collateral for the transfers, with a 1:1 ratio to the U.S. dollar.
When the collateral amount of MPC tokens is exhausted, the epoch ends, and the large Oracle replaces the selection of oracle nodes that made up the small Oracle. The small Oracle then runs a token bridge for a new epoch, with a new set of oracle nodes staking MPC tokens as collateral.
This process of epoch-based token transfers and oracle node staking ensures the security and reliability of the token bridge, making it a trustworthy mechanism for cross-chain asset transfers.
Partisia Blockchain has developed a unique approach to overcome the challenges of cross-chain bridging technologies. To address the problems that have plagued such technologies in recent years, the solution involves dividing the bridge into epochs. This approach limits the lifespan of each bridge by running them in epochs and collateralizing each epoch on a 1:1 basis. The duration of each epoch is based on the volume of transactions transferred, thereby effectively limiting the financial exposure and protecting the interests of users.
To ensure transparency and enable verifications, the system uses a double bookkeeping mechanism that makes transactions transparent. This system enables anyone reading the chains to initiate a dispute in case any issues are detected.
In addition, to account for the market's volatility and changes in buying power across different BYOC twin tokens, the fees for services are set relative to USD via a dedicated Chainlink price feed Oracle. This ensures that users are charged accurately and fairly for the services rendered.
Blockchain Technology
Partisia Blockchain's scalability is made possible by two key features: Fast Track consensus and sharding technology. Fast Track consensus is an optimistic design that streamlines the consensus process by leveraging the trust model among nodes. When at least two-thirds of all the baker nodes that operate the basic blockchain services agree through the optimistic protocol, consensus is reached. The optimistic protocol relies on a block proposer who creates new blocks and validators who check the blocks for correctness and approve them. The proposer is selected to create a certain number of blocks. Once the limit is reached, or if the proposer encounters an issue and stops producing blocks, a new proposer is selected by the committee of nodes.
The system uses three types of proof to ensure the security and integrity of the blockchain network. Proof-of-Verification (PoV) confirms that a validator verified the contents of a block and did not sign the block without checking it. Proof-of-Justification (PoJ) is a list of signatures/validations that confirms the consensus for the current block. Proof-of-Finalization (PoF) guarantees the block's finality when two-thirds of the nodes have established their PoJ.
Sharding technology enables the distribution of transactions among various shards, facilitating concurrent and evenly distributed processing. The design allows shards to be added as the number of transactions increases, avoiding potential congestion issues.
All shards share the same structure, except for the Governance shard, which oversees tasks related to the blockchain's governance. This includes committee modifications, voting poll implementation, and cross-shard configuration.
Governance
The governance system of the Partisia Blockchain platform is centered around two primary elements that ensure the successful and fair operation of the network. The first element is the Partisia Blockchain Foundation, which is responsible for overseeing the development and release of software, issuing and selling $MPC tokens, and promoting the network to a wider audience. The foundation also plays a crucial role in maintaining the integrity of the network.
The second element of the governance system is the decentralized incentives, regulations, and voting mechanisms. This includes the node accreditation process, which adds legitimacy to the network, and the whitelisting and removal of nodes, which ensures that only trustworthy nodes are allowed to participate. Additionally, the marketplace scoring and pricing mechanisms are put in place to regulate the marketplace and ensure fair pricing for all parties involved.
Currently, the nodes that operate on the network implicitly approve any new iterations of the Partisia Blockchain software. However, future versions of the software will have voting mechanisms in place that will allow operators to choose the software they run. This will give operators more control over the network and will help to encourage more participation from a wider range of stakeholders.
While the role of $MPC tokens in the voting process is not explicitly stated in the documentation, it is implied that staking $MPC tokens is necessary for participating in the decision-making process. This is because nodes play a vital role in the voting process, and staking $MPC tokens is likely to be a prerequisite for node accreditation and participation in the network.
Summarising
The Partisia Blockchain is an innovative platform that leverages on-chain privacy to enhance the privacy and security of various blockchain and platform applications. The platform allows token holders to stake MPC (multi-party computation) to become node operators like Baker/ZK/Oracle. Alternatively, token holders can delegate their staking to nodes in exchange for rewards. The Baker nodes work collaboratively as a committee of 1,000 nodes to build blocks on the chain through consensus. This approach ensures that the network is decentralized and secure.
Partisia Blockchain's large Oracle Baker nodes select eligible oracle nodes to become the small Oracle. The small Oracle builds the Bring Your Own Coin (BYOC) token bridge and feeds cross-chain prices to the system. The BYOC token bridge is a critical component of the platform since it enables chain-agnostic transactions. Users can exchange their tokens for BYOC twins, which makes it easier for them to transact across different blockchain networks.
Partisia Blockchain also features a ZK marketplace that allows users to select a specific node (sorted by trust score) and pay for ZK computation services. These services are used to ensure the privacy and security of transactions. When the amount of collateral backing the token bridge is reached, the epoch ends. Nodes that are part of the small Oracle are paid, and a new set of oracle nodes is selected for the new epoch.
In summary, Partisia Blockchain is a powerful platform that offers a range of innovative features that enhance the privacy and security of blockchain and platform applications. The platform's multi-party computation approach, decentralized network, and token bridge make it easier for users to transact securely across different blockchain networks.
Distribution and Unlocks
The maximum supply is 1,000,000,000 (1 Billion) tokens, allocated s as follows:
The following graph shows us the unlocking of the tokens.
Token price ranged from $0.05 to $0.1 during seed phase and increased 8x to $0.36 to $0.4 during IDO. Early investors don't have unfair advantage. $MPC rewards distributed every quarter based on performance, with weekly allocation and monthly measurement of nodes. Better trust score = greater percentage of rewards pool.
Value Creation and Value Capture
Partisia Blockchain is a platform that aims to tackle the challenges of the crypto space, including the trade-off between transparency and privacy, scalability, and interoperability. To achieve this goal, the platform employs a coordinated approach that combines sharding, zero-knowledge (ZK) computations, and oracle services, while ensuring transparency about the use of privacy algorithms through its use of blockchain.
To address scalability, Partisia Blockchain employs a fast consensus mechanism that utilizes sharding at both the consensus/governance layer and the ZK/oracle services layer. This approach enables transactions to occur in parallel, thereby improving the overall efficiency of the system.
With regard to privacy, the platform uses ZK computations to allow the sharing of private information between multiple parties on the blockchain, even among thousands of participants. This is achieved by fostering global collaboration among accredited ZK computation nodes and providing generic modules for cross-chain functionality. By doing so, the platform balances transparency and privacy, meeting the needs of users and regulators alike.
To ensure interoperability, Partisia Blockchain utilizes a privacy-preserving oracle that facilitates transactions across various blockchains and coins. Unlike other similar solutions, the nodes orchestrating the smart contracts that bridge the chains and sign the transactions are part of a decentralized network, which eliminates the risk of a single point of failure. To maintain privacy during the transfer, Zero-Knowledge (ZK) computations are utilized, hence the “privacy-preserving” nature title of the oracle.
Finally, the Bring Your Own Coin (BYOC) token bridge, which is collateralized with $MPC, simplifies cross-chain collaboration by allowing the use of external tokens into the system. This feature enables users to transfer assets from other blockchains into the Partisia Blockchain ecosystem with ease.
Inter-chain computation (source Partisia Blockchain’s Whitepaper)
The Partisia Blockchain project aims to provide a comprehensive solution for data protection and fraud detection, while preserving user privacy in authentication and audit checks. The project offers fundamental blockchain services, which are operated by all whitelisted Baker nodes. These services ensure the security of the peer-to-peer network, consensus, transaction layers, and enable the coordination of public communication on the blockchain.
In addition, the project offers advanced ZK and Oracle services, which are operated by a selected subset of whitelisted ZK or Oracle nodes. The ZK computation services keep the information provided by the client secret, while the Oracle services enable interoperability, thereby facilitating the transfer of data and values between various blockchains and platforms.
The project's value proposition is further enhanced by its focus on building flagship applications that address global challenges, fostering an ecosystem that encourages innovation and collaboration. The project's potential to address the three key markets it focuses on, including data privacy, interoperability, and scalability, will influence its future value.
The data privacy market, valued at $200 billion, is highly sensitive and requires privacy on all platforms. The Partisia Blockchain project aims to establish a foundation for a new data economy by providing a solution that offers privacy across all platforms.
The interoperability market, valued at $50 billion, faces issues such as costly transfers of value and data, as well as unsecured solutions. The Partisia Blockchain project offers a solution that involves decentralised token bridges and data oracles to enable secure data and value transfer between various blockchains and platforms.
Finally, the scalability market, valued at $1.5 trillion, faces issues with slow transaction speeds and unscalable decentralised finance systems. The Partisia Blockchain project aims to address these issues by implementing the fastest consensus and finalisation layer 1 protocol and secure layer 2 interoperability.
Partisia Blockchain is a project that seeks to address the challenges currently faced in various markets using blockchain technology. The project's success could lead to substantial value gain, while its failure could result in significant value and reputation loss.
Despite the project's potential, there are concerns about communication between the project team and its community. The community is apprehensive about the delay in listing the project on exchanges and the relatively large amount of unvested tokens that the team will receive on day one due to this delay. As a result, the team has muted certain topics in their Discord channel to prevent FUD. While such issues are typical during project launches, they still need monitoring as losing the community's trust could negatively impact the project's overall value.
Partisia Blockchain boasts a highly experienced team with a 10 to 15 years of experience in the commercialization of distributed cryptography. They have been involved in various projects, including Instars.com, Crosspoint by Tora.com, and VCTRADE. Additionally, Partisia and Sepior have been developing custom zero-knowledge computation systems since 2008, a factor that will significantly contribute to creating an open standard for ZK computation protocols.
Partisia Blockchain charges users fees, referred to as "gas," to execute smart contracts on the blockchain. The project uses the $MPC token only for staking, collateralization, and incentivizing computation nodes. Users pay for the services provided using the token used for the transaction. The fees are based on network usage, CPU usage, and storage usage, with additional fees for services like BYOC and insurance via staking.
It's important to understand that with the Insurance fee, the user only knows the value of the insurance and the information it provides when they pay the premium. Nodes that provide the service are selected based on the amount of tokens they have staked on their account. More information on staking can be found in the demand drivers section. It's worth noting that the pricing and payment methods can be changed through decentralized decision-making rules and a two-thirds supermajority vote of the node operators.
Demand Drivers
The value of MPC token lies in its necessity for staking by all nodes in the system to be whitelisted on the network. The amount to be staked varies depending on the node type.
The following is a detailed rewrite of the original text:
In order to enable the use of BYOC twin tokens on the network, Oracle node operators are required to stake MPC Tokens as collateral on a 1:1 ratio for all transactions made through a BYOC token bridge. This collateral is designed to provide a safety net for users in the event of objective fraud detection by a node.
Furthermore, if a user intends to perform ZK computation on the blockchain, they have the option to insure their computation by paying a premium in BYOC twin tokens. This premium payment requires ZK nodes to have staked collateral in $MPC matching the user-defined amount. The amount of stake determines the type of job a node can undertake. For example, if a node stakes 25k $MPC, it can perform Baker jobs, while staking 100k $MPC allows nodes to perform ZK jobs.
The prerequisite stake combined with the additional stake for insurance/collateral creates a competitive market. The higher the available stake, the more likely a node is to be selected for the job. This competition creates a market that revolves around staking, insuring, and delegating, which provides ample opportunities for users to get involved and benefit from the network.
Finally, token holders have the option to delegate their stake to node operators and receive a portion of the rewards without having to stake the full amount themselves. This system is known as community delegated stake and is already live. For more information on community delegated stake, refer to the discord screenshot.
Partisia Blockchain has implemented a maximum cap of 5 million $MPC per node as an effort to promote the decentralization of the nodes. The network aims to introduce more solutions in the future to provide additional utility and demand, including mini nodes that will be able to perform small tasks such as off-chain pre-processing of ZK computation. Smart contract staking will also be introduced to keep them on-chain in case they run out of gas.
The $MPC token is a crucial component of the network's architecture, acting as a store of value that provides security via staking. Those who have staked $MPC tokens are eligible to receive payments from the fees collected for using blockchain services, creating a "skin in the game" scenario for participants.
While Partisia Blockchain has specifically chosen to accept external tokens as payment for blockchain services, user demand is still mapped onto the $MPC token through the BYOC bridge, which requires collateralization and staking of the $MPC token. By doing so, the network ensures that the $MPC token remains in demand and provides value to its users.
Observations/Thoughts
The following text has been rewritten to provide more detail and description:
The token bridge system has two measures in place to protect users from potential issues. Firstly, the collateral used for the bridge can only decrease after the epoch starts. This means that if a user transfers coins on the blockchain, that transfer is counted in the collateral. If the user then decides to withdraw some of that amount during the same epoch, converting it back into the original coin, that withdrawal transfer does not "free up" collateral, but rather is counted in the collateral like any other transfer. This ensures that the collateral is not falsely reduced and protects users from losses due to incorrect collateral calculations. Secondly, in case of disputes surrounding the token bridge and its transactions, Partisia Blockchain takes on the volatility risk of the coins, not the users. If a user needs reimbursement through collateral, Partisia Blockchain converts the MPC stake into the user's coin before transferring, even if the MPC price drops or the user's coin price increases. This guarantees that users are not exposed to the risks of market volatility.
The BYOC (Bring Your Own Coin) approach to payment services is a unique strategy that allows users to pay for services in any token of their choice, eliminating the need for the native token $MPC used by nodes to secure the blockchain via staking. This approach increases accessibility for the layperson and reduces the likelihood of volatility of the token backing the stakes of the system, ensuring system security. The fees in the system act as a form of dividend, where the staked $MPC is the principle and transaction fees paid in different tokens are the yield. As long as there is demand for the services, the demand for $MPC will follow, and its price will be maintained. However, limiting the $MPC to staking lowers the demand compared to a scenario where $MPC would also be required for accessing the services. The team recognizes this aspect in their whitepaper, but they believe that the potential difficulties accompanying such a decision do not outweigh its advantages. It is therefore more of a position than a weakness in the project.
The staking system in the project is sustainable and differs from other projects that use this mechanism to artificially maintain the value of their token by "removing" it from the immediate circulating supply. However, despite the project's strong fundamentals and innovation, its main apparent weakness seems to be its marketing. Few people in the ecosystem have heard about the project, and therefore, demand has not been created. The team is aware of this current weakness and is actively working to solve it. They have recently appeared at the Paris Blockchain Week and organized the first Paris Blockchain Week Awards to improve their visibility and demonstrate their technology. The project also has an extensive roadmap with additional features to improve its three pillars of scalability, privacy, and interoperability, which will further enhance the project's value and appeal to potential users.
Summary
Partisia Blockchain is an innovative company that is currently involved in some of the most popular and exciting topics in the blockchain world. Their focus on sharding, ZK, and interoperability is critical to the development of blockchain technology, making it safer, more transparent, and more accessible to everyone.
The team behind Partisia Blockchain is highly experienced and knowledgeable. Their background suggests that their solutions are reliable, and they have been working tirelessly to tackle the challenges behind their innovations for years.
What sets Partisia Blockchain apart is its commitment to creating unique solutions that differentiate it from others in the industry. This is evident in their use of BYOC technology and native tokens, which separates the means of payment from the store of value. This approach shows that they have carefully considered their design from first principles. They are not content to merely replicate the formulas of others.
While the team at Partisia Blockchain is confident in their abilities, they recognize that they will be facing new obstacles as they implement their innovations. They have limited resources to draw upon, which means they need to be proactive in addressing any concerns that may arise. One such concern is cross-chain bridge technologies, which have had many problems in recent years. The project is addressing these issues by implementing double bookkeeping, collateral, and a time-bound strategy to make transactions transparent and secure and limit financial risk.
The success of Partisia Blockchain will depend on its ability to overcome the challenges it faces and market itself effectively. But its success will also have a significant impact on the ecosystem in a way that few projects have. Partisia Blockchain is poised to make a significant contribution to the development of blockchain technology, making it safer, more transparent, and more accessible to everyone.
This post does not contain financial advice, only educational information. By reading this article, you agree and affirm the above, as well as that you are not being solicited to make a financial decision, and that you in no way are receiving any fiduciary projection, promise, or tacit inference of your ability to achieve financial gains.
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