Learn how Enigma is thinking about creating and securing our secure computation network — and how we’re keeping our long-term perspective.

Hello from the Enigma team! As we approach the end of Q4 2018, we are excited to share some new information on secret nodes — our first update on this topic since the end of Q3 2018. Please read this post thoroughly if you’re interested in running staking nodes on our network! While we hope to address some of the community’s most important open questions, we must emphasize up front that this post reflects draft economics for our network and it is not a final commitment. That said, it is our best possible guidance as to how the Discovery network will function on launch.

To reiterate our last post:

At Enigma, we believe in building a more decentralized world. While blockchain technology is exciting and novel, blockchains alone can only achieve very limited decentralization due to their fundamental limitations such as scalability and privacy. By creating Enigma — a secure computation protocol that solves these limitations — we are providing the critical missing piece to a decentralized future. Enigma’s protocol is the first to enable blockchains to work with private or sensitive data, significantly expanding the meaningful scope of blockchain-based applications (and beyond). In doing this we have previously introduced the concept of secret contracts, smart contracts that utilize encrypted inputs while never revealing the raw data to the nodes performing computations. Enigma’s nodes are thus capable of computing over encrypted data, keeping secrets even from themselves — hence the term “secret nodes”.

As outlined in September, when you run a secret node, you are helping Enigma secure the decentralized web. Thus it is essential for us to build a robust, sustainable, decentralized network where participants are incentivized to continue supporting Enigma’s network for the very long term. The core Enigma team is working hard to ensure that economics allow for such a network to form. In making our decisions, we’ve looked at many comparable projects, interviewed dozens of experienced node runners and miners, built internal models, and thought deeply about potential risks to the network in the short and long term. A sincere thanks to all of you who participated in our research process!

What follows is a first draft of some of our network economics. We welcome and encourage direct feedback on the Enigma Developers Forum, or you can join the unofficial Secret Nodes community Telegram to speak with our node community and members of the Enigma core team. Since releasing our initial secret nodes post in September, we have received hundreds of submissions from interested node runners through our interest form, as well as daily direct inquiries from individuals and institutions looking to support Enigma’s mission and vision and secure our network. Please fill out this form if you would like to register your interest as well.

Economic Details

Minimum Staking Threshold

As previously discussed, secret nodes in the Enigma network are required to stake ENG tokens. Nodes must stake above a minimum threshold to help ensure network security and prevent manipulation from bad actors.

The range for this minimum threshold has been narrowed considerably through our research and modeling. Our goal, as above, was to ensure decentralization of our network as well as security. Given this goal, at this time we are anticipating a final minimum staking threshold between 20,000 ENG and 30,000 ENG, with a current working assumption of 25,000 ENG. Please note again that this is a preliminary threshold, and it may change prior to the launch of the network if there is substantial reason to do so in order to ensure Enigma’s security and sustainability. However, we are confident enough in these figures that we are comfortable sharing them here.

It is also our aim to have this minimum staking threshold decrease over the lifetime of the Enigma network.

Block Rewards

As a means of incentivizing secret node operators, Enigma will feature a form of network rewards upon mainnet release (in addition to fees for computations that are paid to nodes in ENG). In order to optimize the design of these rewards, we have interviewed dozens of staking funds, individual node runners, and Staking as a Service operators over the past month.

Two goals we have in designing network rewards are i) to create sufficient incentives to the participants of our network to keep our network secure and sufficiently decentralized and ii) to achieve a reasonable inflation level that ensures there are no significant shocks to supply. Keep in mind that ENG has a fixed total supply of 150M, with 50% already in circulation.

At this time, we are considering committing a total pool for network rewards of between 4M and 8M ENG. Network rewards would decline over time, with an expected yearly reduction rate for token rewards to be in the range of 10% to 30%. We must strongly emphasize again: these are preliminary figures and ranges that are open to community feedback and analysis, but they are our best estimates that have been based on our substantial research and modeling. This guidance is intended to set expectations for our final economics, and we welcome feedback.

System Requirements

Specialized hardware requirements for Discovery are not substantial. However, running a secret node will require access to an SGX enabled hardware device or an SGX-enabled cloud operator. Any 6th Generation Intel Processor (Skylake) after Q3 of 2015 should have this capability. However, this may or may not be enabled by the BIOS — for example, SGX in Mac computers is not enabled. Currently IBM and Alibaba Cloud do enable SGX instances. For a detailed list of SGX enabled hardware and cloud options, please visit this link. Additionally, we require the use of Linux as an operating system as Windows is not expected to be supported in Discovery.

We will be providing more in-depth guidance around hardware and specific recommended Linux distributions in the coming weeks before testnet release. You can also reference our developers forum and post any questions you may have about supported machines and devices as well as recommended software.

Other Details and Factors

Given the inbound interest in secret nodes and the entire Enigma community’s interest in building a secure, sustainable network, we’ve considered many other factors in finalizing our economics.

One such factor is token age — how long staked tokens have been present in a wallet address. Over 18,000 individual addresses hold ENG, and there are currently approximately 220 addresses above the 25,000 threshold. Many ENG tokens are held on exchanges (where we cannot analyze distribution). We are currently conducting more research on this to see if token age would be an appropriate factor to include in evaluating node stakes (as one example, “weighting” ENG holdings of addresses based on when tokens were deposited). Again, token age and all other factors are being considered through the lens of how they would help ensure the stability and longevity of the Enigma network.

Next Steps

The next major milestone for Enigma will be the release of Discovery on testnet, targeted for release in Q1 2019, with mainnet to follow soon after. At the time of testnet release, individuals will be able to run an unincentivized testnet node. If you are interested in running a testnet node when Discovery is released, please get in touch with the Enigma team through our interest form and mention this. (If you’ve already filled out the form before, you may want to resubmit it to indicate your interest in testnet nodes.) We’ve already had dozens of people reach out through our community channels, but we want and need to test our network with as many parties as possible!

Between now and testnet release, the Enigma team will continue to develop our protocol, finalize our node economics, and work with our partners (both announced and unannounced) who are building with Enigma and eagerly anticipating Discovery. We will also be producing more educational materials for potential node runners and developers who want to support our protocol and build with us, as well as materials for the broad community on topics like privacy technologies or solutions that can be built with Enigma. We are also still soliciting for EGG (Enigma Growth Grant) applications — please read our blog post on the topic if you are interested!

Future posts will go into more detail on specific aspects of Enigma’s economics, taking into account any feedback received from node runners. Expect more communication on this topic next month, and for overall communication to increase in clarity and frequency as we approach testnet and mainnet release of Discovery!

Remember that we welcome direct feedback on these draft economics on the Enigma Developers Forum, or you can share your thoughts in the unofficial Secret Nodes community Telegram. You can also join the official Enigma Telegram to speak with our team and broad community.

Lastly, but importantly: despite all the uncertainty in the space, the Enigma team has never been more confident in the necessity of our project or in our ability to achieve our ambitious goals. With the much-anticipated launch of our network approaching, we will be prioritizing improving our community communication, expanding community involvement, and conducting more educational initiatives in 2019.

Our global Ambassadors continue to be incredible advocates for Enigma, privacy, and decentralized technologies. If you’re interested in joining this elite community of humble, talented, and kind individuals, please apply today — we have big goals for next year :) Thank you also to our thousands of silent supporters who send us weekly messages of well-wishes and encouragement. It is very meaningful to our team, and we are grateful.

We look forward to sharing more with our community about secret nodes, our protocol development, our partners, and much more in the near future. Thank you for your patience and support. Without our dedicated community, there is no Enigma. You have our sincere gratitude, and we look forward to justifying your continued faith.

Onwards and upwards,

The Enigma Team