Book - Securing Digital Rights for Communities | Chapter 19. Service Infrastructure Pools (SIP)

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Service infrastructure pool, SIP, it's basically turning, it's a combination of a DEX and a

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DAO.

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So you take trading fees and you put them in a pool instead of going to a centralized

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company and people can vote on where that pool, where the pool funds go.

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They can go to, some of it will go to infrastructure operators.

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Some of it can go to wherever the DEX, wherever the voters want it to go.

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There's also various different ways you can do SIPs.

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For example, on a SPK Network, you can buy Larynx that money of buying the miner, which

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is just gives you the ability to mine in the network.

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It helps with stopping simple attacks, big Google coming in, they have to money attack

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the network first.

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With, um, with resources that are community owned.

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So if you want to attack the network, you have to basically buy miners off of hivers

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because those are the only ones that got an airdrop to, um, so when you buy a Larynx

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miner, this is an example of what you do with a SIP, HBD or dollars are locked up and then

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put into a trading pool, a trading pair where then the fees are going to be sectioned off

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into another pool where they're then voted on by stakeholders on what they do.

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There'll be certain parameters set, but basically that's just sort of the idea.

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Right now we use centralized exchanges.

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All the fees go to centralized operators that get more control over the industry, not where

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our best interest.

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And also there is ways to monetize civil attacks, monetize community effort and resources via

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something like a miner, depending on what you're doing.

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Okay.

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So, yeah.

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Yeah.

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Just to reiterate on service infrastructure pools, these are quite interesting ways of

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using DeFi pools, basically.

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So it's like a DeFi pool, except you've got money, as Dan said, going out to different

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projects.

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And what you do is you basically, the way it was done on the SPK Network and the way

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we think it should be done generally is you want to create a pool of liquidity because

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that's like a cushion for your projects.

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It's a protection for your projects.

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The system will definitely be trying, one of its attack vectors is to try and drive

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liquidity from projects so that they can't trade in and out of their tokens.

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And they'll do that in various means, but if what you're doing is, what you're saying

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to your infrastructure operators is if you want to operate infrastructure efficiently

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on this chain, you've got to get a hold of some mining tokens.

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And they effectively act as digital versions of physical mining rigs.

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The more of them that you have, the more efficiently you can mine against other people that have

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got the same infrastructure as you.

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If you've got more mining tokens, you'll get priority in the mining hierarchy, which

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means you'll earn more tokens than they do.

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So that's how you kind of gamify the idea of having and staking these mining tokens,

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especially if you're mining on infrastructure that isn't really that heavy.

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A lot of this stuff can be done on non-heavy duty systems and like proof of work mining.

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So now you've got a person who's got equivalent infrastructure to you, but they've got less

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mining tokens than you.

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So it's in their interest to go and put money into the SIP.

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Into the service infrastructure pool and receive in an autonomous way some mining tokens

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back out that they then can stake and now compete more effectively against you by increasing

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their number of mining tokens.

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And then what happens is as the mining resources are consumed, those mining tokens drop back

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into the SIP bit by bit, they bleed back into the SIP, and then other people are now incentivized

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to go buy them from the SIP.

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Now by buying them from the SIP, this is like an autonomous purchase.

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It's one of the first I've seen where there's an autonomous service being provided to a

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community of people in the form of efficient mining in exchange for money, and that money

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is going into the SIP and it doesn't ever leave, right?

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There isn't like a normal DeFi pool works where you a stake a stakes and provides liquidity

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on one or both sides of the pool, and other people can come trade against that and effectively

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trade in and take money out, and then the pool takes a fee and provides that back to

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the liquidity provider.

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Which is normally an individual.

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But in this case, what we're talking about is an ecosystem, it already has those features

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of standard DeFi, where individual stakers can come in and stake and stake out and help

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the ecosystem provide liquidity to traders and receive fees for that.

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But on the SIP, it's a bit different because the money that was paid in to receive the

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mining efficient tokens out, that money remains in the pool and it's not owned by anyone.

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And then that can also be used.

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To create passive DeFi fees in the same way it would be in the traditional DeFi system.

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And those passive DeFi fees can then be distributed to the community for operating infrastructure

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or for doing projects or for employing developers or whatever it is that the community votes

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on as to how that money can be distributed.

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So that's the difference between a DeFi pool, a DAO and a SIP.

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Like Dan was saying, it's like a combination of the two.

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I like that.

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Similarly, you've used.

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Those aren't yet operational.

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We'll talk about that later.

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Thank you.

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So the idea is that the SIP is operational as far as I'm aware, but that's the principle

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of them.

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The idea is that, you know, in times of the market being low and in difficult periods,

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those the funds coming out of that SIP can provide emergency funds to infrastructure

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operators instead of, you know, if for whatever reason the economy is drying up at that period

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of time and there's not enough money coming in from the economy to purchase the services,

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the SIP might be able to be reverted to to provide liquidity trading fees back to the

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infrastructure operators to help them get through a bit of a hard time.

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The other thing as well is that as more people compete for the same set of circulating miner

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tokens, more money is going to flow into that SIP over time until the point where hopefully

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there's enough liquidity in the SIP that it's making enough fees that create almost allows

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the project to be completely self-sustaining without having to have any input from external

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economy.

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That's a big thing that I don't think anyone's really experimented with yet in crypto where

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you can have an autonomous purchase of some service that's provided by an autonomous system

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and then the money from that autonomous purchase can be accumulated over time to the point

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where there's enough of it in a liquidity pool to the point where the fees are big enough

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to serve and service and pay for the infrastructure operators themselves without even having to

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rely on an external economy.

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Once you get to that place, you have a truly autonomous self-sovereign ecosystem that is

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ownerless.

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So that's where we think the path for SIPs is headed and we're currently experimenting

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on building some of those and over the next year or two, we should have a couple of those

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out and see how that all goes in practice, but definitely like it acts like a shock absorber

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to the ecosystem if there's hard times from the economy, the fees from the SIP should

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be able to use to support infrastructure operators and keep them running more effectively.

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It's effectively like saying Binance or the centralized exchanges like Binance and Coinbase,

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they currently make massive fees for themselves.

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Who are they to say that those are their fees?

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Just because they provide centralized infrastructure?

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Well now the community is able to provide its own decentralized infrastructure, which

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means that we can effectively remove Coinbase and Binance and the likes from the ecosystem.

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Not remove them entirely, of course, I'm not against them or anything.

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The idea is the fees they're making should be going back into the community to pay for

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infrastructure operators instead of into the profits of their pockets.

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And they will never provide centralised infrastructure.

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They will never provide centralised infrastructure.

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They will never provide centralised infrastructure.

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They will never provide you with a decentralized group of infrastructure operators.

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They will only keep providing centralised infrastructure and centralised profits to

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centralised stakeholders.

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The idea is how can we remove that and put it into an autonomous DAO that can then provide

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every increase in liquidity to multiple infrastructure operators in an autonomous way based on their

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performance.