Protocol Tokenomics

The process shown in the Workflow section explains the mechanisms for scenario pool creation and resolution, covering the movement of funds within these steps and the roles played by protocol participants across both user types.

However, without additional measures, such a process would be vulnerable to manipulation. Depending on the number of confirmer-joiners required, Sybil attacks would be easily carried out, allowing users to collude in creating confirmations, or for one actor to act as both the confirmer-maker and all confirmer-joiners. This would make it too easy to incorrectly mark a scenario as ‘resolved,’ sending out false notifications, while gaining access to all of that scenario pool’s bounty.

To protect against this, SCENARIO will make use of its own token to serve a range of crypto-economic functions and underpin a more robust protocol.

The SNR Token

In addition to representing an abbreviation of the protocol’s name, the acronym SNR also stands for signal-to-noise ratio. SCENARIO will be a protocol that helps to separate signal from noise.

The SNR token will be crucial to the effective functioning of the protocol once fully deployed.

It will not function as a governance token, and will not be used to vote on protocol changes or upgrades. Instead, SNR will act as an access and reputation token. It will help to protect against Sybil attacks, facilitate dispute resolution, and allow for protocol and user value alignment.

In order to support a safe, staged protocol roll-out (during which the V1 scenario pool contracts will be used to test and monitor user behaviour and incentive balancing), the SNR token will not be generated at protocol launch (see Staged Roll-out).

Token's Primary functions

1 - Collateral, Reputation, Sybil Resistance and Slashing

Whilst the majority of users who hold SNR will wish to stake it, staking is not required for all users. Only users who wish to act as confirmer-makers, confirmer-joiners or arbiters will be required to stake and lock some of their SNR tokens. This requirement will minimise the risk of Sybil attacks, as it will ensure 'skin in the game' and introduce a cost for each new address that wishes to act as a confirmer (whilst also putting those funds at risk should the confirmations be dishonest). A key role of the SNR token will therefore be to act as collateral, allowing slashing to occur in cases of Sybil attacks or dishonest behaviour by confirmer-makers or confirmer-joiners.*

A core feature of Scenario is the presence of user Reputation Scoring. The calculation and role of a user’s reputation score will evolve alongside the protocol, and will take into account factors such as user behaviour, scenario confirmation performance, and SNR token staking.

2 - Arbitration

Following the resolution of a scenario pool, notifications will be triggered and sent to its askers immediately. The pool will then enter a cool down period, after which that pool’s funds will be paid out.

During this time, if more than 20%** ('asker dispute threshold') of that pool’s askers flag the pool as having been incorrectly resolved, the following will occur:

  1. The scenario pool will switch to 'RESOLVE-DISPUTED'
  2. The planned pay-out to that pool’s confirmers will be paused
  3. The scenario will be flagged for dispute resolution
  4. 10%** of all addresses staking SNR at the time of dispute will be randomly selected to act as arbiters for that pool
  5. The scenario pool’s ‘cool-down’ period will end and a new ‘arbitration period’ lasting 72 hours will begin
  6. Eligible addresses will vote on-chain to answer ‘yes’ or ‘no’ to the question: was this scenario disputed correctly?
Following the arbitration period
If arbiters have voted that the dispute should stand:
  1. The pool’s confirmer-maker will have 10% of their staked SNR slashed**
  2. The pool’s confirmer-joiners will have 5% of their staked SNR slashed**
  3. The pool will re-open to additional asker-joiners or for fund removal
  4. Slashed SNR will be sent to the builder bounty fund (50%) and the growth pool (50%)
  5. Voting arbiters will receive their share of the arbitration payment (irrespective of the result of the dispute resolution)
If arbiters have voted that the dispute should not stand:
  1. The scenario pool will switch from 'RESOLVE-DISPUTED' to 'RESOLVED'
  2. The pool’s funds will be paid out to users according to protocol revenue share rules
  3. Voting arbiters will receive their share of the arbitration payment (irrespective of the result of the dispute resolution)

See Arbiter Fund for more information.

* It is worth noting that SCENARIO’s design means that honest Sybil attacks do not harm the protocol’s core purpose of triggering notifications; as long as askers are quickly and correctly advised of scenarios that have occurred, it is inconsequential if a small number of actors colluded or acted under many addresses to resolve that pool. It is only in cases of dishonest or incorrect notifications that Sybil attacks present a problem, and it is for this reason that the 72-hour cool down period and SNR slashing exist.
** It should also be noted that protocol rules relating to the ideal asker dispute threshold percentage, eligible arbiter breakdowns, slashing percentages, minimum staking amounts, staking lock periods, staking tiers and/or proportional access to revenue distributions will need to be refined during protocol testing, given the relationship between these considerations and factors such as organic user behaviour, game theory and SNR price.

The protocol will seek to strike a balance between Sybil resistance and fairness, such that anyone who wishes to participate as a confirmer is able to do so.

The protocol’s early users and advisors will play a key role in assisting to refine the protocol’s planned tokenomics and adjusting the balance between incentives and penalties.

SNR Token Supply and Distribution

The SNR token will be a standard ERC-20 token with a maximum supply of 1 billion (1,000,000,000). It will not be minted immediately, instead being introduced as part of a token generation event (TGE) which will follow an initial period of more limited-functionality protocol testing and user reputation scoring. (See Staged Roll-out).

Potential SNR token allocation:

  • 55% to the community and/or users of the protocol
  • 15% to early backers
  • 15% to the founding team
  • 13% to project treasury
  • 2% to advisors

Note: the above token breakdown may be reviewed and updated prior to TGE

Genesis Confirmer NFT

Prior to TGE, a Scenario Genesis NFT will be made available to users. Eligibility to access the Genesis NFT will be based on a combination of whitelisted communities, reputation scoring, and early engagement with Scenario.

The Genesis NFT will be the protocol’s premier asset. Initially, it will give its holders the right to act as the first Confirmers for the protocol - a privileged role which will help the founding team to build and refine Scenario’s parameters during its earliest phases.

Confirmers are the ‘lifeblood’ of Scenario - they keep the machine running by triggering user-requested notifications, building their reputation for accuracy and liveness in the process. The Genesis NFT is an access pass to become one of Scenario’s first ever Confirmers and an on-chain record of a user’s presence at Genesis.