Keep Network VS NuCypher. Stakedrop VS WorkLock

Keep Network

Overview

The Keep Network is a privacy layer for blockchains that allows users and applications to store data privately. It features off-chain containers for private data called keeps. The network randomly assigns keeps to a system of participants, called signers, that help store and manage these data containers. Keeps are smart contracts that allow other smart contracts to interact with private data in a secure way. They are built on ECDSA, an algorithm supported by many of the top blockchains, and facilitate decentralized group signing with multi-party threshold signatures.

Keep Team launched tBTC, which is a decentralized, trustless and insured custody system for Bitcoin that creates TBTC Ethereum ERC-20 tokens, with a 1:1 BTC supply peg. Bitcoin holders who want to spend their BTC on Ethereum and DeFi don’t have to trust custodians, aka signers, because signers have to deposit a bond higher then the value of the BTC they hold in custody.

Website Keep Network: https://keep.network/

Website tBTC: https://tbtc.network/

Messari report: https://messari.io/asset/keep-network/profile

Stakedrop

StakeDrop is a mechanism by which users with ETH, but with or without KEEP, can stake and participate in the Keep network, and be rewarded with KEEP tokens and signer fees. The stakedrop will allow people with no KEEP to act as tBTC signers using only their ETH, with the corresponding KEEP tokens “dropped” to them as a reward over time.

There is a strong staking reward subsidy for early participants that help bootstrap the Network. The total pool of tokens for the reward is divided into:

Distribution of tokens StakeDrop

The Subsidies will be distributed following the schedule shown below.

To participate as a Random Beacon Node Operator, your minimum investment is 80,000 KEEP; it is a significant investment and this will reduce the number of participants for this operation. It is difficult to estimate how many nodes will be on Mainnet, but based on the high initial investement, it is likely that the actual number of participants fall somewhere in between 10 and 200 Nodes. Note that the investment is in KEEP and the rewards are in KEEP.

ROI for Random Beacon Node

To participate as an ECDSA Node Operator, the minimum investment should be 150% of the smallest tBTC Minting Unit. Bigger stakes have a higher chance of being selected for Minting. The barrier to entry is much lower as with the Random Beacon Node and there should be a bigger number of Nodes that participate.

Note that the investment is in ETH or in KEEP and the rewards are in KEEP, so the exchange rate between ETH and KEEP plays into the equation. It is unclear how the subsidies are actually being distributed in terms of the minting/burning activity. Higher stakes are more likely to be selected. The scenarios below assume equal stakes per Node which will not be the case for sure, so this is just a guidance of what rewards could be.

The 100 tBTC Cap will be lifted once the network is up and running for a prudent time and no major issues are seen. After that, to earn rewards, it probably will be important to increase the Stake to have more chances of minting tBTC.

ROI for ECDSA Node

NuCypher

Overview

NuCypher is a data encryption and protection layer for Ethereum (and eventually other networks) and decentralized applications (dApps) that does not rely on a central service provider. The protocol, which the team calls a decentralized key management system (KMS), aims to give developers the ability to store, share, and manage private data on public blockchains. Developers receive this encryption service via a network of NuCypher nodes in exchange for a fee (paid for in ETH).

Website NuCypher: https://www.nucypher.com/

Messari report: https://messari.io/asset/nucypher/profile

WorkLock

WorkLock, a novel node distribution mechanism used to launch the NuCypher network, allows participants to lock ETH to a smart contract, receive NU tokens, run NuCypher (Ursula) nodes, and receive fees, rewards, and their ETH back in return for providing useful work to the network.

Node operators receive fees (from network participants in exchange for data-encryption) and token-based rewards (from the network’s inflation) in return for providing useful work to the network. In addition, by running NuCypher nodes and staking the WorkLock NU tokens, all of the participants’ original ETH will be returned.

NuCypher requires participants to escrow a minimum amount of ETH to receive the NU tokens necessary to run a node; this minimum amount of ETH will be equivalent to $2000 USD. The exact amount will be dictated by the ETH to USD exchange rate at the time of contract deployment (on Sept. 1). In exchange for that minimum amount, a participant will receive 15,000 NU, the minimum stake necessary to run an Ursula node. If a participant decides to lock “bonus” ETH (an amount above the minimum), she will receive additional NU tokens based on the total number of participants in the WorkLock and the total amount of “bonus” ETH locked by all participants.

Here are a few examples of how the process is expected to work. These examples assume a minimum escrow of 5 ETH. These examples are illustrative and actual results may differ. For additional detail on the formulas that govern the distribution process, refer to NuCypher’s documentation. The documentation scripts were finalized using available up-to-date information.

Version 1 provides for a total blocked ETH of 50,000. Based on this hypothesis, made calculations ROI.

Version 2 provides for a total blocked ETH of 100,000. Based on this hypothesis, made calculations ROI.

These calculations are suitable for self-starting the node. If you participate through Coinlist, the calculations will be different. Coinlist uses a proportional token distribution system between participants. Coinlist will also receive commissions, so the final yield will differ from node yield. Also, the yield calculation model does not include the cost of servicing node. Since these costs are not fully known.

Conclusions

These profitability indicators are a forecast. The forecast is based on plausible, realistic scenarios, but exact figures can be determined after the event. The only disadvantage of the calculation model is not the inclusion of technical costs for node maintenance. Therefore, the real indicators may be slightly different, but not much adjusted.

Used sources

  1. https://keep-network.gitbook.io/staking-documentation/about-staking/staking-economics#keep-holders-stakedrop-subsidy
  2. https://estebank97.github.io/Keep-Node-Docs/#/Reasons/roi?id=the-estimated-subsidy-rewards-roi-are-as-follows
  3. https://messari.io/asset/keep-network/profile
  4. https://messari.io/asset/nucypher/profile
  5. https://docs.nucypher.com/en/latest/architecture/worklock.html#worklock-architecture
  6. https://blog.nucypher.com/the-worklock/

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