Economic Predictions For The Ethereum Alarm Clock Network

The TimeNode

The TimeNode is an off-chain agent responsible for discovering and executing scheduled transactions. For more details on the Ethereum Alarm Clock and TimeNodes, watch Logan Saether’s presentation from EthCC Paris below:

Running a service like a TimeNode can be profitable for the operators, however, given the many variables that influence its payout, it’s not trivial to estimate the expected profits. I made an attempt to create an economic model for TimeNodes to address those uncertainties, the full article with more complete explanations is available here.

This article focuses mostly on the simulation part and the results.

The Model

Before we jump to the results, let’s take a look at the model. It captures variables and probabilities for events that directly contribute to the final outcome. In general, we tried to answer the following questions:

What is the relation between the TimeBounty and node number?

Do higher deposits helps the network?

How does TimeNode reliability influence the expected payout?

Expected payout model

Where

For a full explanation of this model and all variables read the full article [link]

The Simulation

The simulation assumes the running cost of the TimeNode is $7/month (which is based on a Heroku plan) which is defined as the target in the simulation code, $7 is represented as 1000000gas which is true given 10Gwei gas price and $700 ETH/USD.

Other inputs defined in the simulation:

TimeBounty ~ 300000gas

Deposit ~ 2 x TimeBounty ~ 600000gas

Network (n) ~ 8 nodes

Ax ~ 0.95 (95%) [accuracy of the protection mechanism]

Pld ~ 0.02 (2%) [probability of loosing deposit]

Cc ~ 90000gas [claiming cost]

Ctx ~ 25000gas [failed tx cost]

Pmod = 0->1 [payment modifier]

In order to run the model, I’ve implemented this model using R script.

The results of running this model are:

p_mod res num_of_tx

16 0.75 1164.673 858

17 0.80 2442.108 409

18 0.85 3957.999 252

19 0.90 5381.834 185

20 0.95 6967.551 143

21 1.00 8388.889 119

The num_of_tx is an estimated amount of scheduled transactions that are required to cover the cost of running the TimeNode.

The summary

The variable controlled by the TimeNode operator is the payment modifier (Pmod) which is the major component. Being low enough allows TimeNode to claim transaction before others, still, in order to be profitable using a low payment modifier, the TimeNode running cost has to be low.

The TimeNode market has many characteristics of the perfect competition market: there is perfect information, no barriers to entry, they deliver the same service, TimeNode are the price takers. Based on that, long-term we may get in the situation where marginal cost is equal average cost.

The inputs used to run the model are picked using intuition, at the current stage, it’s hard to predict what we can expect. As soon as the mainnet deployment occurs, we will go back and compare the network conditions with the model.

I encourage you to download the R script. Use an online R service like this one. Experiment with inputs, run it and have fun!

Full article here.

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