Dear ARK community,

This is a joint statement from Delegates Cryptology, Deadlock & The Golden Horde, aimed at providing voters with information on some changes to our delegations which we deem as absolutely critical in order to continue providing our services to the Ark network and community.

As you might recall, on Monday the 24th of September the ARK mainnet had a nasty outage which was exacerbated by several independent factors coming together. As the team put it in their post mortem on the Ark Reddit, this created a ‘perfect storm’ which resulted in the network failing to achieve proper quorum and consensus could not be reached. The true remedy to this outage was found by Moon and Jigsaw and involved a series of connected relays which after trial and error was effectively able to reach quorum.

Looking back on this scenario, we believe that many delegates have realised that the current crypto-economic climate has made it a tough act to be a delegate, not because of the necessary time investment but because there is not enough economic resources accrued by each delegate to ensure the safety and security of the Ark network as it currently stands.

As delegates we have the task to run, secure and maintain the mainnet and this is not always as straightforward as we all like to think at times. A lot of time, effort, expertise, communication and finances go into keeping the mainnet running. During the outages present this past week many payment runs were disrupted and through slower block times, less Ark was forged and in turn resulting in less potential payouts to voters. This is something which has not only had a negative impact on the network but also has disrupted our services as delegates to you, the voter.

In order to prevent mainnet outages like the one mentioned whilst giving as much value back to the community through outreach and networking we need to expand the infrastructure of the network and have the means to commit more time to ARK. When ARK mainnet is expanded with additional infrastructure and there is more expertise from delegates on standby we will be able to create a much stronger ARK for all of us.

The Mechanisms In DPOS

We have come together and discussed what would be the best routes for our individual delegates going forward to ensure we can continue providing to you, the voters whilst securing the network. These discussions have also been collaborative with many other delegates and have been ongoing over several days since it’s important that as delegates we get this right and adjust fairly.

Before we go into detail on the exact changes, we wanted to first make everyone familiar with the socio-economic payout mechanisms in the Delegated Proof Of Stake consensus method. DPOS inherently has a “race to the bottom” phenomenon that is constantly in play, where rising competition from other delegates along with growth in the community and new delegate contenders results in the payout of each delegate slowly increasing to the point where the delegate’s costs are as “lean” as possible and the payout share is at it’s maximum for voters.

To many looking into this structure, this may be a heralding feature which is praised for providing fair payouts and the best returns for the many in the community. What is difficult to see, as it occurs behind the scenes is that once a delegate is at maximum sharing potential there is a very fragile line that can easily be crossed where the delegate no longer has the capability of providing the services they deem necessary to be able to suitably perform their role in the network, whether that be securing it or adding further new features for everyone's benefit. As we all know, cryptocurrencies are a very volatile asset and the “race to the bottom” phenomenon can be incredibly impacted by this volatilty. As the price of Ark increased during the 2017 bull run, it was easy as a delegate to keep pushing the payout percentage higher because as the price of Ark crept up, suddenly each percent share was of much more value and therefore each delegate could quite easily adjust but still have the necessary funds to go above and beyond in performing their duties.

What now becomes difficult is that as Ark’s price has trended downwards during this bear market, the percent shared by each delegate has remained the same as during the bull run. This happens for a multitude of reasons, the most common explanation is that as a delegate, it is difficult to re-adjust downwards without causing a negative impact on the voter, much like the idea of ‘loss aversion’ it is much harder to have something taken away, than to gain that very same amount which is simply something that is hard coded into us as humans.

Delegate Changes

We wanted to share the above information so that there could be a clear understanding on the factors involved with payouts and to avoid any parochialism. With all this in mind, it’s time to address what we’ll be implementing in order to continue providing an optimum service to everyone in the community and those who vote for us. Effective from Monday 1st October, each of our delegations will be sharing 75% of all forging rewards with voters, 5% to the ACF donation wallet and utilising the final 20% in order to continue running our services, creating more initiatives and imperatively securing the network to the best standard achievable.

In order to break this all down we’ve got separate sections to involve the varying differences between each of our delegate systems along with a break down on how these funds will be allocated.

The Golden Horde — Payout Breakdown

We’ve been thinking about changing our payout structure for a while but we’ve always been hesitant since we know the disruptive effects change can cause. When the severe network issues occurred this prior week it was a final wake up call for us that change was indeed necessary in order not only to keep adding organic value to Ark but also offer further stability to the network with additional relays.

As delegates we’re really not here to make money, we care about seeing Ark prosper and we’re eternally grateful to be involved in such an amazing community. Our voters are incredibly important to us, so we know these changes need to be fair and warranted, hence this articles creation. Since putting this article together we have expanded our relays to help increase Ark’s infrastructure. We now have relays in Singapore, Australia, Japan & Taiwan with a fifth relay in Finland being added soon. Of course in addition to these we also have our main server and will be curating a devnet node too.

The costs for us to run our server and four/five relays comes to around $140–160 a month. We’re also trying to run sufficient networking and community growth plans along with developing services for everyone to utilise: you can expect our first proper service in the next month, with a lightweight API service coming next week. As a team, we’re two full time members building and tinkering our ecosystem to help Ark and as it stands we don’t take a wage from our delegation. We will however use Ark to pay for extra functionality such as paying translators who can help us provide content to other nationalities in the Ark community, bounty programs for Ark, hosting software services utilised by the Ark community and building a reserve of Ark for future initiatives. As for our wages, we plan on growing our TGH business so that it covers our time expenses, therefore any Ark we receive from forging goes straight back into strictly Ark related expenses.

We hope that we have shown just how enthusiastic and passionate we are to grow Ark and we are confident this value we can bring will have a positive reflation not only with the price of Ark but the value each and every voter and community member will get from our delegatory duties and features.

Finally, In order to make sure we can be as fair as possible, we will have financial breakdowns in our monthly reports from October onward and quarterly payout adjustments to reflect changes in price and the network situation. Combining this all together is the fairest solution we can provide and something we believe which will be a net positive for our voters.

Cryptology — Payout Breakdown

One of the big items in the cryptology proposal has always been a keen focus on infrastructure. I promised my voters to provide a stable and high-uptime node infrastructure containing multiple nodes,spread across different datacenters. The outage earlier this week has made painfully clear that a) the mainnet is not as stable as we need and b) the low costs of ARK has a negative impact on the amount of nodes.

The current cryptology node infrastructure consists of a mix of dedicated and virtual servers, spread across the planet in places like Amsterdam, Berlin, Frankfurt, HongKong, Miami, Oregon, Dublin and Sao Paulo. Most servers are used solely as ARK node, others for development, hosting, ArkTippr, DevNet and test servers. The monthly costs of the server park and management tools (SMS warnings when servers go down, performance monitoring, etc) are currently exceeding anything economically viable.

Updates to the proposal: To be able to make a better ARK mainnet cryptology will dedicate 5% of all forged block rewards to the ACF so they can use it to stimulate expansion of the network, use 18% to finance & expand our own infrastructure, overhead & development projects, 2% for a new ArkTippr functionality that will allow our voters to send free tips on Reddit & help create ARK awareness (details will follow) and use the remaining 75% to share with you, our voters. When ARK prices will rise again, I will re-evaluate the percentages to keep everything as fair as I can.

Deadlock — Payout Breakdown

Deadlock’s proposal is focused around providing stable Ark nodes and using software engineering skills for building services and tools as well as contributing to Ark’s repositories. We’d like to help make Ark network even stronger with running extra nodes along with kick-starting further community developments with some additional funding. Because we are already busy working on the promises from our initial proposal we believe it is best to donate part of our rewards directly to ACF which was made precisely for the reason of funding community projects.

At the time of writing, we are running 6 nodes (Singapore (2), London (1), New York (1), Toronto (2)) on mainnet and two nodes on devnet. Besides running Ark nodes, we have two separate VPS for arkdelegates.io and our own website. The current cost of all servers and performance monitoring and an alerting tool is $340. Additionally, to keeping our servers and services running, we are spending time working on various Ark repositories, our own repositories, and repositories of other delegates or community members.

Update to our proposal:

Payout percentages to our amazing voters will change to 75%, the remaining 25% will be used as follows: 10% for ACF (relay & bounty fund), 15% for covering the infrastructure costs of Ark nodes and service as well as the development of new and maintaining the existing services. The extra 5% will go a long way and will allow us to fund additional relays along with compensating for much needed added help with development.

We will also change how we do our work: a) Monthly progress, plan and cost reports, b) More transparent payouts – every payout coming from any of the delegates’ wallets (we’ll publish them along with our monthly reports) will have a note, c) Double (at least!) the number of nodes on mainnet which will all be registered on arkstats.net.

Please note that profit sharing percentages will change with time according to Ark’s price movements to ensure continuous development, stable and performant nodes, sufficient funding for ACF and fair profit share for voters.

The very first Monthly report will be published Oct. 1st, make sure you don’t miss it and see what we’ve worked on in September and what we plan to work on in October along with other details.

Conclusion

Thank you to all our collective voters to help us make ARK better, we will always be available on the Ark slack for questions and can also be contacted through the TGH medium. We appreciate your support and thankyou for taking the time to read our changes!