Design region-based rewards for Saturn L1 network

[misilva73]

eta: 2022Q4

Description

The costs and expected performance of a CDN are highly regional. In other words, bandwidth costs varied widely based on the location and, in addition, users in different regions will have different expectations for bandwidth.

Thus, it does not make sense for the network to require the same level of standards, and give the same rewards, to L1 nodes in different regions. With this mind, we wish to explore how Saturn can adapt its reward mechanism and base requirements to take region into account.

In terms of rewards, there are two approaches we will consider:

1. Regional reward pool - the idea is to have the same reward function for all L1 nodes, but use different reward pools based on the region of the node. Since more expensive regions would have larger reward pool, the earnings of nodes located in more expensive regions would also be larger. This is the simplest approach in terms of implementation since most of the payment infrastructure and code does not need to change. Some questions to answer:
   • How do we define the regions?
   • How do we split the initial reward pool by region?
   • Do we need to worry about location-based fraud? And if yes, how can we mitigate it?
2. Auction model - this design involves changing how the earnings are computed in the Saturn L1 network. In this design, Saturn becomes a marketplace for bandwidth. Customers submit requests for some level of service and state how much they are willing to pay. On the other side, node operators state the level of service they can meet and what is the price for their service. Saturn will then match costumers to operators in an auction model. Some questions to answer:
   • What auction model works best for the retrieval use-case (balance between revenue and high service)?
   • How do we guarantee that operator meet the service level they proposed?
   • How do we set default pricing for costumers and operators to allow a smoother UX?

Main deliverables:

• HackMD report with a proposal for the regional reward pool design
• Notebooks with the code and analysis for the regional reward pool design
• HackMD report with a SOTA analysis for the auction model and a draft proposal

[misilva73]

Additional notes are here: https://www.notion.so/pl-strflt/Saturn-Regional-Incentives-d6a73131e3154bd79c66fff21835ca06