# Trusted Node $TNODE WhitePaper The Gateway to PoS Rewards and Governance. Liquid Staking ◆ Validator Rewards ◆ DAO Governance ### Abstract Proof-of-Stake (PoS) blockchains are on the rise, offering higher scalability and minimal environmental impact in comparison to Proof-of-Work (PoW) protocols. For users, the allure of PoS lies in the promise of passive income from staking native tokens. Many also find the ability to vote and participate in the project's future rewarding. However, the variety of protocols and requirements for staking and governance can be daunting even for seasoned crypto investors. Additionally, many DeFi protocols offer better incentives than PoS rewards, taking capital and securing power away from PoS networks. Trusted Node builds a range of incentives and state-of-the-art UX to facilitate staking and voting and improve global PoS security. The platform offers users intuitive, multichain access to native (D)PoS protocols. It allows anyone to directly participate in a wide range of PoS protocols without personally running validator nodes. It also increases staking incentives through a variety of yield multipliers inspired by DeFi solutions. Finally, it unlocks staking liquidity, enabling both PoS and DeFi staking and allowing for capital flow between protocols rather than competition. Trusted Node DAO represents different trusted validators that can be staked by the Trusted Node user base in exchange for automated rewards and access to PoS governance. Thus it can improve the physical and economic resilience of the global PoS network by: 1. Increasing the number of nodes, 2. Diversifying validators, 3. Increasing the amount of staked coins and the cost of PoS attacks. Unlike similar services, Trusted Node staking is decentralized, non-custodial, and run by a Trusted Node DAO. ### **Executive Summary** Trusted Node is a decentralized, non-custodial validator service and governance hub enabling users to participate in PoS blockchain rewards and governance without the need to personally operate the validator nodes. Trusted Node DAO and its partners own and operate an array of validator nodes. Users have the ability to delegate coins to their chosen PoS networks, and rewards are subsequently distributed back to them. Depending on the platform’s feature utilized, rewards will be paid in blockchains’ native token, liquid derivatives, or Trusted Node token (TNODE). Trusted Node utilizes the concept of **liquid staking** to promote staking and bring capital back to PoS. Users staking their coins can create liquid, synthetic tokens, i.e. representations of their locked coins, which they can then hold, trade, sell, or deposit into Trusted Node vaults or DeFi protocols. Liquid staking enables users to gain dual rewards from securing the PoS networks AND providing liquidity to high-APY vaults. Unlike PoS staking pools and staking services, Trusted Node is decentralized, non-custodial, and governed by Trusted Node DAO. It gives users complete ownership and control of their assets. The platform also focuses on promoting DAO and user participation in the PoS governance through state-of-the-art UX. **Our mission** is to improve the safety, usability, and resilience of the PoS ecosystems and enable all users to directly participate in staking rewards and decentralized governance. # PoS Blockchains PoS consensus blockchains have experienced considerable growth in 2020/2021. According to the Q2 2021 Staked review, there are now 26 PoS coins in the top 100 cryptocurrencies with a combined market cap of over **$450B**, a 150% increase from Q1 2021. Many other PoS projects also entered maturity or obtained significant milestones in 2020/2021. The PoS growing popularity is related to environmental and scalability issues surrounding PoW. PoS blockchains require significantly less energy than PoW. The mining of new coins doesn’t require solving energy-demanding computational puzzles like PoW. It happens through staking native coins to validator nodes at no cost. The non-reliance on large amounts of cheap energy and specialized equipment makes PoS less likely to be geopolitically centralized. ![BTC and ETH PoW vs. PoS energy consumption. Source](https://1815433019-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FWNvyNUMwIxg7MJFRxs0N%2Fuploads%2Ft0DRxnZcOZgIuFCWz7ux%2Fimage.png?alt=media\&token=88052d69-0ba9-403a-ab41-d231ed9bb7c7) There are currently multiple different PoS consensus solutions that differ in their on-chain governance. For example, PoS blockchains require validator nodes to stake specific amounts of native tokens to vote on protocol proposals. In contrast, DPOS and NPOS (delegated and nominated proof-of-stake) allow native token holders to choose validators by delegating coins to their nodes. Only the ‘nominated’ validators can vote on structural changes. ![Popular types of PoS governance protocols. Source](https://1815433019-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FWNvyNUMwIxg7MJFRxs0N%2Fuploads%2FEWzziilr90ef2gcgjfRU%2Fimage.png?alt=media\&token=ccff7d23-c6dd-49d9-bf04-2fecf1e0b941) # Staking Market According to the [StakingRewards](https://www.stakingrewards.com/) (as of October 3rd, 2021), the staking market cap is currently at **$633BN**, with $146BN locked in staking with an average reward rate of 14.95%. PoS dominance is 58.68% and is expected to grow once Ethereum completes its transition to Proof of Stake. The considerable PoS hype is spearheaded by Ethereum's move from PoW towards a PoS-based network. Ethereum is the second biggest coin on the cryptocurrency market and the underlying blockchain for the vast majority of **DeFi** (Decentralized Finance) tokens and **NFTs** (Non-fungible-tokens). The PoS market is also experiencing a revival through blockchain ecosystems like Polkadot, Cosmos, or Kusama. The blockchain-as-a-service hubs foster innovation, cross-chain interoperability, and quick launch of new PoS projects with vast staking opportunities. # Role of Validators Validators are the cornerstone of PoS network security and functionality. They mine new coins or tokens by staking native assets to the nodes. They operate software that validates transactions and creates new blocks. Finally, they participate in PoS governance and vote on protocol changes, project direction, or other validators (DPoS, NPoS). The decentralization and security of the PoS network depend, among other things, on the number and diversity of validators (**physical resilience**) and the amount of staked coins (**economic resilience**). Because of their crucial function, validators often receive substantial rewards for creating new blocks (block rewards), validating transactions (transaction fees), and storing the complete copy of a blockchain on their nodes. The rewards are usually relative to their share of the network. # Staking rewards Rewards are a feature of PoS protocols that incentivizes users’ participation in maintaining the network’s security. The rewards vary from blockchain to blockchain, with annual gains between [0-96%](https://www.stakingrewards.com/staking/?page=1\&sort=tableReward_DESC) in native tokens (as of Sept 2021). Each staker gets a share of newly minted coins. In an economy where the number of coins continuously increases ([token dilution](https://figment.io/resources/misunderstanding-yield-and-inflation-in-proof-of-stake-networks/)), those who hold tokens without staking decrease their share of the global coin supply. In such systems, not staking native coins is considered an opportunity cost. By staking, users earn rewards that protect them from token dilution and enable them to maintain or increase their relative share in the network. ![Annual Change in Token Share of PoS (Tezon, Cosmos) vs. PoW (Ethereum1\* and Bitcoin) (\*the article from 2019 doesn’t include current data on the Ethereum 2.0 beacon chain). Source](https://lh3.googleusercontent.com/gMeRuGAIJTfhIERjyMlMWPPZwFr2bzEXigUwvM8ErByzRg-YFGD5QB44CwNn1tq6AML_nrHB0gmuWLUI2rrTNNKCO_pWF92MRjRtrnra7R6WKev9j_A35gNPULnXPfiEQtRpAD4) Currently, only a small percentage of token holders stake their capital or participate in blockchain governance. However, by doing so, these token holders continuously increase their share in the network and decide on protocol amendments, while the majority loses their relative stake and voting power, ultimately leading to re-centralization. Historically, DeFi liquidity pools took capital away from PoS networks because they offered higher APY incentives. However, PoS staking had its inherent advantages. The staking rewards are considered: * **More predictable**: rewards directly depend on the blockchain protocol and the number of active validators. * **Less risky**: DeFi comes with many risks related to contract bugs and hacks, market manipulation, rug pulls, etc. * **Less volatile:** the majority of tokens are subject to significant market value fluctuations based on changing supply and demand. PoS can help stabilize cryptocurrency portfolios and maximize gains against fiat. It also enables users to provide network security and add to the growth of their favorite PoS projects. # Staking Pools Centralized exchanges, wallets, and third-party services offer custodial PoS staking pools, sometimes compared to savings accounts. In exchange for locking coins for a time, users receive certain yields minus fees. Pooling of resources gives token holders indirect access to some staking benefits. However, the custodial character of most staking pools means the rewards are paid at the discretion of the third-party validator, who is the direct recipient of the mined tokens. It also goes against the philosophy of decentralized finance or the complete ownership of one's crypto asset. The risks of staking pools include exit scams, rug pulls, hacks, thefts, or bankruptcy of the central entity. Staking through the pools also requires extensive research and often complicated delegation mechanisms that may cost users their assets. # Staking-as-a-service (SAAS) There are expert third parties with data center infrastructures that offer staking-as-a-service (SAAS). Users with enough capital to stake the entire node can run validation through third parties in exchange for operational fees. Staking services give users more flexibility to run different validation nodes and easily change blockchains and providers without expert knowledge of the protocols. The third-party infrastructure is also less likely to suffer downtimes or security issues that could lead to slashing of base capital (see **Risks**). This model offers near-direct access to rewards. However, it requires large staking capital and trusted third-party providers. # DeFi vs. PoS Staking The term ‘staking’ stems directly from the Proof-of-stake blockchain consensus mechanism and is an inherent part of chains’ functionality and governance mechanisms. However, it has also been used in DeFi in relation to non-PoS blockchains. For example, Binance offers DeFi staking of Bitcoin (PoW). The term has evolved to mean earning yields on any capital temporarily locked into staking pools and vaults. It is sometimes confused with providing liquidity and liquidity mining through DeFi protocols. # Lending Protocols vs. PoS Security DeFi is an umbrella term that encompasses all decentralized finance. 2020-21 boom centered around the breakthrough mechanisms of liquidity pools and providing liquidity to many lending and swapping protocols in exchange for a share of transaction fees (liquidity mining). Liquidity pools do not create new coins but offer liquidity for transactions. Their rewards are related to market supply and demand for certain crypto assets and can be highly unpredictable. At the heights of the market, APYs (Annual Percentage Yields) of some liquidity pools reached hundreds and sometimes thousands of percent. According to [Chitra (2020)](https://arxiv.org/pdf/2001.00919.pdf), DeFi lending protocols cannibalize PoS networks’ security because their APY is higher than PoS staking rewards. In a rational market, PoS chains should struggle to find willing validators. ![Token supply locked in DeFi lending protocols vs. PoS protocols (Chitra, 2020). Source.](https://lh6.googleusercontent.com/2CL9DB_VI8YmQ-J4pY_v7YbL4_Km7i4gHNm2wTbyNHevo3y4sRLlkaNObrcqi5BUTammmqtx44VxshboHCNx6X0fonOm6kZ4JWJyryLxv40LLrnmzImD8qNL4xH3GhVlcSALBpU) Luckily, markets aren’t 100% rational or reward-oriented. Many validators run nodes altruistically to support blockchain networks. Some users also prefer more secure and passive rewards to the unpredictable and volatile DeFi smart contracts. # Entry barriers Unlike PoW, PoS blockchains do not require expensive, sophisticated equipment or access to vast amounts of low-cost energy. However, some entry barriers still make many PoS prohibitively expensive and overly complicated: * The **staking requirements** (i.e., 32 ETH are required to run a single Ethereum 2.0 node, worth over $130k as of Oct 2021) * The **expertise** needed to run and secure many validator nodes * Access to inexpensive and continuous **wifi**, which can be prohibitive for node operators in countries and regions of insufficient coverage * Difficulty **assessing** the various PoS protocols in search of the better staking gains * Low **flexibility** to switch between different blockchains as the coins are locked or bonded for a specified period * Loss of **liquidity** when staking * Other **risks** (downtimes, slashing, hacks, network attacks, etc.) Ethereum, the second-largest cryptocurrency with a devoted network of developers and supporters, has only 7.8 out of 117.8 million Eth staked (as of Sept 2021), that’s around 6.6%. # Centralization and Resilience The limited access to staking results in centralization and loss of network resilience to attacks and governance manipulation. Limited node number or diversity causes low physical resilience of the network. It can lead to concentration in the hands of a few early network participants who can collude to mount attacks or maximize their profits through on-chain governance. Insufficient staked capital leads to low economic resilience. It makes the network attacks relatively inexpensive and can lead to double-spending or market manipulations. Emerging blockchains are especially vulnerable, as they operate with few nodes and tokens staked. Other security issues may stem from difficulties accessing PoS governance, which promotes the interests of a small percentage of voters. Specific PoS protocols, i.e., DPoS (Delegated proof-of-stake) blockchains, have been criticized for promoting oligopoly and collusion by limiting the number of validators. # The Network of Trusted Nodes Trusted Node combines the benefits of PoS staking pools and staking services with powerful DAO governance to deliver a solution that’s entirely decentralized and non-custodial. Trusted Node is a **decentralized network that owns and represents trusted validator nodes.** Unlike the majority of currently available staking pools and third-party services, Trusted Node is **non-custodial**, **decentralized**, and **governed by the community**. The users come together to pool staking funds and launch validator nodes for PoS blockchains they support. # Unlocking Staking Liquidity Trusted Node uses the concept of **liquid staking**. Before delegating native tokens to validation nodes, users can generate wrapped derivatives (**t-tokens**) that can be swapped, sold, or deposited into high-APY protocols. Users no longer have to choose between PoS and DeFi staking. Liquid staking allows them to combine staking rewards and liquidity mining yields to maximize their gains. The ability to do both helps solve the previously discussed issue of DeFi protocols cannibalizing PoS security by offering higher APYs (**see Lending Protocols vs. PoS security**). Liquid staking incentivizes capital flow from DeFi to PoS and back to DeFi, creating new yield stacking opportunities. # Gateway to multichain PoS Trusted Node improves the overall crypto user experience and creates an easy gateway to different PoS chains and ecosystems. The goal is to increase users’ participation in securing the PoS networks through staking and voting. Trusted Node aims to become the go-to infrastructure helping PoS blockchains gain new validator nodes, increase the staked amounts, diversify validators, and simplify governance voting. Many custodial wallets and centralized exchanges leverage users' capital to stake nodes and earn rewards without their knowledge or approval. The Trusted Node network incentivizes users to learn more about PoS and take back ownership and control of their crypto assets and capital rewards. # Democratic Access to PoS Governance and Staking PoS staking and governance were designed to be more accessible and decentralized than PoW mining, which re-centralized through limited access to cheap electricity and specialized equipment. Yet, the inflated cost of PoS staking and custodial services leave PoS similarly vulnerable to centralization and oligopolies. Trusted Node's mission is to enhance the decentralization and security of PoS ecosystems by democratizing access to staking rewards and governance. It achieves this through the following: * Users holding any amount of PoS capital can earn staking rewards in native tokens. * Staking rewards are distributed automatically from the chains with which users stake without third-party interference. * The Trusted Node network is maintained and governed by the Trusted Node community through DAO (Decentralized Autonomous Organization). * Anyone can delegate their coins for staking without participating in DAO or owning the network tokens ($TNODE). * Anyone can participate in Trusted Node DAO by purchasing and depositing $TNODE tokens in the DAO escrow. * DAO members can propose and vote on new validator nodes and operational changes to DAO and the Trusted Node platform. * Stakers are informed about important PoS governance issues and instructed on how to vote through the Trusted Node DAO’s stake in the underlying PoS blockchains. # Infrastructure for PoS Security Through improving resilience and governance adoption, Trusted Node increases overall PoS security and decentralization. It also helps foster emerging blockchains vulnerable to hacker scrutiny and network attacks. Trusted Node improves the economic and physical resilience of the global PoS network. #### Economic Resilience * Increases the number of coins staked and the number of different stakers. * Incentivizes capital flow from DeFi to PoS.\ \=> Increases the cost of network attacks #### Physical Resilience * Diversifies validator nodes. * Increases the number of validator nodes. \=> Prevents collusion and oligopoly of the validation node operators #### Governance Security * Increases the number of active voters. * Spreads awareness about governance voting. \=> Prevents systemic changes in the interest of few validators #### Emerging Blockchains Support * Supports new blockchains through collaborations. * Offers decentralized validator node services. * Provides liquidity for new PoS coins (see Trusted Node Partner Vaults). \=> helps nurture and grow PoS ecosystems As the network grows, Trusted Node will become an integral part of the global PoS infrastructure. # Inroduction Trusted Node Network is an Ethereum DApp consisting of 5 core sections available to users: 1. **Staking Portal** where users can stake their native assets to available validators. 2. **Multichain Governance** where users can learn about issues currently up for voting and participate in governance. 3. **The Vaults** where users can provide liquidity to the Trusted Node ecosystem to earn a share of transaction fees. 4. **Liquid Staking** where users can create liquid derivatives representing their staked tokens (i.e., DVPN to tDVPN). 5. **DAO Escrow** where users can deposit their $TNODE tokens to receive voting rights and yield multipliers. ![](https://lh6.googleusercontent.com/W3_4Ja3Kv-sDH_zOJsq_f8mYRk6OdkBmeqc6MP1h8FJxXhxvYhW7rPYTIQhxM27zrPRZm505_JYFYWEueJSw1gDBpgOXHwKGY2yvn8rI0sqp0tzufUwq2yjGvU6rZcIXn75We68) Trusted Node will first launch on the Ethereum network. In the future, it will be deployed on other chains, for example, BSC and Polygon, through cross-chain bridge technology. # Staking Portal This Trusted Node feature enables the staking of native assets to their respective validator nodes. It offers direct access to chosen PoS staking rewards as long as Trusted Node DAO provides validation for those networks. Users can also join Trusted Node DAO to add new nodes. ![](https://lh4.googleusercontent.com/mqoQ6QB1Yjbxu2tviEb8K_mDjY2oaLZ0byMPaysrEM13mi9zthPGOXpI_INKnmrNSmYzQyg8pUrgakrbnrLz0LuNFk8VGrZ6uyFNmd7aG33Akqpm3Ki-UidLlJa7Xcdwg2HbXNc) The staking portal launched on October 15th, 2021 with multiple chains available for staking, including (in alphabetical order): ![](https://1815433019-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FWNvyNUMwIxg7MJFRxs0N%2Fuploads%2F985hZT9lHK8EdTarrKfe%2Fimage.png?alt=media\&token=c81b5c03-cbfb-47a8-8991-0e594b9083c7) Trusted Node is also in negotiations with other mainstream PoS (PoS, DPoS, & NPoS) blockchains: * Altair * Polkadot * Solana * Centrifuge * Polygon * Ethereum 2.0 * BSC * Helium * Filecoin * Flow * Theta * Casper labs * Near Protocol * Thorchain * Avalanche * Injective Protocol * ~~Terra~~ (already implemented) * Darwinia * Velas # Governance Portal This Trusted Node function enables multichain governance and promotes awareness about issues being voted on across various PoS blockchains and communities. There are two types of governance available on the Trusted Node platform (see **Trusted Node DAO**). 1. **Direct DAO Governance** Anyone who owns $TNODE can become a DAO member and vote on the Trusted Node DAO and the Trusted Node platform issues. Each member has voting power proportional to the $TNODE tokens they deposit into the DAO escrow. 2. **Indirect (Multichain) Governance** In PoS, only the staked validator nodes are allowed to vote. Trusted Node users who staked native coins to PoS can vote as a collective using the aggregate voting power of the DAO-represented validator nodes. # Liquid Staking This segment of the Trusted Node network allows users to create wrapped token derivatives. For an additional fee, users can generate ERC-20 tokens tied to their staked capital. These “**t-tokens**” are a liquid equivalent of the staked native assets and can be sold, swapped, or deposited to vaults for additional yields. Liquid staking brings staked coins back to circulation while still allowing users to earn rewards on their capital. At any time, users can claim their staking rewards payable in native coins, t-tokens, or $TNODE tokens. To claim back the initial asset, users need to burn their t-derivatives. Depending on the PoS and DPoS blockchain rules, there might be a withdrawal period to minimize slashing risks for the network’s validator nodes. # The Vaults Trusted Node vaults are DeFi smart contract protocols that enable an exchange of the core assets within the Trusted Node network. Users can provide liquidity to the **vaults** in exchange for additional yields and a share of transaction fees. There are 3 main liquidity vaults within the Trusted Node infrastructure, which enable exchange between native assets, liquid derivatives, and $TNODE tokens: 1. **T-token Vaults** provide liquidity for the derivative t-tokens. They contain pairs of $TNODE against various wrapped tokens. T-token vaults are an essential part of the Trusted Node ecosystem that sustains **liquid staking**. They ensure that t-derivatives remain liquid. Part of the token sale revenue will be directed to providing liquidity to the t-token vaults. Eventually, vaults or liquidity pools of t-tokens against native cryptocurrencies and other t-derivatives may emerge as the market evolves. 2. **$TNODE Liquidity Vaults** provide liquidity for the $TNODE token. They contain $TNODE:cryptocurrency pairs to enable the native token exchange against mainstream crypto assets. 3. **Partner Liquidity Vaults** Trusted Node will cooperate with emerging PoS projects to provide liquidity for their native tokens against $TNODE tokens. Through DAO governance, community members can suggest and vote on creating liquidity pools and vaults for specific PoS projects. # DAO Escrow Contract Any user interested in joining the Trusted Node DAO and participating in Trusted Node governance can deposit any amount of $TNODE tokens into the **DAO escrow** for a period from **1 day to 1 year**. Depositing coins is necessary for governance functionality. It lets the network know which users have a right to vote. DAO members receive **voting power** proportional to their deposit and valid for the period that $TNODE tokens remain in the escrow contract. They also receive other **member benefits** based on the period and amount of $TNODE they submit: * A share of Trusted Node **transaction fees** * A **yield multiplier** for liquidity vaults, and * **Member discounts** on Trusted Node services (the PoS Portal and Liquid Staking). Currently, the DAO Trusted Node is stored in a smart contract. In the future, the capital could theoretically be invested into liquidity vaults or DeFi portfolios to enable more revenue streams for DAO and its members (tbd). # Staking Rewards Trusted Node enables users to stake (or delegate) any amount of native tokens through an intuitive interface to earn a share of validator rewards. Users do not need to run validator nodes. The Trusted Node DAO rents out services with the third-party providers (see **Partners**) to run a trusted network of nodes. The rewards can be withdrawn at any time. Based on the platform feature used, users may receive payouts in native tokens, derivative tokens, or $TNODE tokens. For withdrawing the base capital, unbonding periods may apply depending on the underlying network’s requirements. # Liquidity Yields Users who decide to provide liquidity for the Trusted Node infrastructure, whether in native tokens, liquid derivatives, or $TNODE, earn yields depending on vaults’ current APYs. If they also deposit $TNODE tokens in the DAO escrow, they can boost their liquidity yields and earn additional, non-monetary rewards listed below. # DAO Benefits **Voting Rights** Users who deposit their $TNODE tokens into DAO escrow for 1 week to 4 years claim their DAO membership and gain the ability to vote on crucial Trusted Node decisions. They can also govern the community's position on various PoS proposals for chains in which Trusted Node offers staking services. **Yield multipliers** DAO members receive a yield multiplier on the liquidity vaults, paid out in $TNODE tokens. The level of APY boosts will depend on the amount of $TNODE deposited and the length of time for which it’s deposited. **Protocol Fees** DAO members partake in the share of protocol fees generated from the use of Trusted Node services, net of maintenance and hosting costs. **Fees Discount** DAO Members pay lower fees on all Trusted Node services offered through the platform. **DAO Treasury Yields (tbd)** In the future, the $TNODE tokens deposited into the DAO escrow and other revenue may be used to generate additional yields from DeFi protocols, with a share of those yields then being distributed to token holders. # DAO Governance Trusted Node DAO will likely be built on the Aragon platform, the most robust and longstanding DAO creation tool. Aragon provides a variety of capabilities, including auto-execution and dispute resolution, and is actively developing additional tools. Trusted Node is governed by $TNODE token holders. The intention is for Trusted Node to leverage its DAO participants to design and develop a more interactive and actively managed governance system that incentivizes participation and addresses known problems existing today, potentially by implementing quadratic voting and other mechanisms. Users need to deposit one or more tokens into the DAO escrow to inform the network that they are eligible to participate. They can then vote through the Trusted Node Governance Portal on current DAO issues or the PoS proposals currently on the DAO agenda. Their tokens need to remain in the DAO contract during the voting period for their vote to be valid. Token holders can also submit their own proposals to the community. For example, to create new validator nodes for a specific PoS blockchain. Proposals go through a screening and vetting process that requires a minimum amount of support in order to go on to a full voting mechanism. Majority-approved proposals are automatically executed or brought to the management team for manual implementation. # DAO Architecture The goal of Trusted Node is to be decentralized, self-sustaining, and independently governed by the community. In order to do that, Trusted Node DAO needs streams of revenue to cover its operational costs. It also needs mechanisms to gather, store, and distribute funds. Many tools and features offered through the Aragon network will be tested and implemented over time. Initially, the DAO will begin with a simple multi-sig treasury. Main revenue streams will include small transaction fees on Trusted Node services. Main costs will consist of infrastructure development and maintenance, ecosystem growth and network security. A supply of $TNODE tokens will be reserved for bounties, network security, and ecosystem growth to take the strain off the DAO until the transaction fees can support the network. #### Service Fees Fees are the main source of revenue for Trusted Node DAO. The network charges a small fee for services offered on the platform. Eventually, a share of DAO service fees may be distributed to DAO members as an additional incentive. #### DAO Treasury DAO treasury will begin as a simple multi-sig wallet on Gnosis and develop into a fully operational DAO feature during project development. Initially, treasury will not play a major role as the maintenance costs (development, infrastructure, security) will be covered by the token sale and the token supply allocated for these specific purposes. Eventually, the treasury and the fee model will take over the maintenance cost of the Trusted Node platform. #### Network Maintenance (Cost) Trusted Node DAO and its partners own and operate validator nodes and incur infrastructure and hosting-related fees. The private and public token sale will fund the initial cost of infrastructure and launch the first DAO-owned nodes. #### Network Security (Cost) The team behind Trusted Node is conscious of security risks in the DeFi and PoS space and working to minimize potential threats and enable a safe and autonomous system. To that end, Trusted Node reserved 10% of the total $TNODE token supply to cover the cost of security experts, auditors, and advisors before, during, and after the launch. Trusted Node will have an audit of its smart contracts completed by reputable auditor Obelisk prior to its token launch and may employ other firms to audit its smart contract releases and updates going forward. # $TNODE $TNODE token is a **governance token** built on the Ethereum network using an ERC-20 standard. It is also the lifeblood of the Trusted Node network, providing a means of exchange between native assets and derivatives and the necessary liquidity across all vaults. The $TNODE tokenomics model includes a 5-year vesting schedule and was designed to create a self-sustaining operation by the conclusion of the vesting period. After the first 60 months, $TNODE will reach its maximum circulating supply, by which time the network reliance on the fee model should be established. At that time, a portion of the overall supply should be deposited into the DAO escrow for governance, and the rest used to provide dynamic liquidity to assets across the platform. The usage of $TNODE tokens will be tied to the increase in functionality offered by the platform. As a governance token, $TNODE is also effectively collateralized by the power of the DAO-owned validators, the DAO treasury, and the underlying PoS staking rewards, continuously adding Total Value Locked (TVL) to the network. Depositing $TNODE into the DAO escrow has many added benefits for users. However, they cannot use the same tokens to provide liquidity to the vaults. Users are, therefore, incentivized to deposit only the minimal necessary tokens into DAO and/or find the best ratio of DAO vs. Vault deposits to obtain a maximal yield boost for the Vaults. # Token Supply and Allocation A capped total of 1 billion $TNODE tokens will be generated at the token launch. The majority of tokens will be locked and gradually released over a 5-year vesting period. ![](https://1815433019-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FWNvyNUMwIxg7MJFRxs0N%2Fuploads%2FnruXsbe8PsnZAllrlkS4%2Femissions-schedule.jpg?alt=media\&token=06a099aa-0690-4bbe-8e0f-bbc234c32637) Token allocations and emissions have been designed to stimulate the Trusted Node infrastructure in the first 60 months of growth. Initially, only 6% of tokens will be released into circulation, with only the public sale allocation fully distributed at launch. 12% of the total token supply is allocated to private and public sale (IDO). A further 10% will be vested and distributed over the course of 4 years as bounties to the Trusted Node partners, auditors, advisors, and marketing influencers. Another 10% will finance ongoing product development. Trusted Node team members will receive a total of 15% of the token supply. After the 12-month vesting period, linear vesting will apply, with approximately 4% of tokens released per month for 24 months. 53% of the total $TNODE supply will initially be held in Gnosis Safe and ultimately transferred into smart contracts to be released over the span of 5-years as liquidity vault rewards (43%) and staking rewards (10%). ![](https://1815433019-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FWNvyNUMwIxg7MJFRxs0N%2Fuploads%2FBhqQf8NEfDJcfpCeU5nt%2Ftoken-allocation.jpg?alt=media\&token=99728b64-3fc9-4168-b504-dbadb9d866e2) # Token Sale The Trusted Node private sale was successfully completed in Q3 2021. Public sale will be launched Q4 2021 through an Uniswap IDO (Initial DEX offering) with a token price of $0.02. Initially, Uniswap will offer liquidity pools of $TNODE paired with ETH or USDT. Private sale proceeds of $2M will be used for the following purposes: * Development * Infrastructure costs * Platform and token launch * Initial token liquidity (Uniswap, TVaults) * Marketing and communications * Administrative costs # Roadmap Q2 2021 - 1st validator nodes launched. Community pages active Q3 2021 - Cosmos integration. Smart contract audits. Q4 2021 - Audits completed. Trusted Node Launch. White paper, website, $TNODE token, PoS Portal Live. Q1 2022 - Governance Portal Q2 2022 - Liquid Staking. Partner Vaults. ![](https://1815433019-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FWNvyNUMwIxg7MJFRxs0N%2Fuploads%2FOdiYpvJwzolmhgSBlHFF%2Fimage.png?alt=media\&token=9bb9bd5a-2d7c-4139-98dd-37af6bde92df) # Generalities Blockchain is an emerging technology and a global socioeconomic experiment. Cryptocurrencies, crypto assets, derivatives, and protocols, including PoS blockchains and DeFi smart contracts, are in their infancy. No one can predict how they will develop or which coins, tokens, and networks will eventually thrive. The best example of this unpredictability is the unexpected and unprecedented 2019-21 growth of DeFi protocols and yield farming which were also fostered on platforms and sandboxes that encourage and incentivize open-source development. Many new crypto ecosystems are designed to foster such robust innovation. The niche may carry many avenues yet to be explored. DeFi, PoS, and the modern blockchains ecosystems carry various risks to users and to networks that communities have to tackle together. Some known risks that could affect the current project include: # Validator/PoS risks #### Slashing Risks Slashing is a PoS protocol punishment for nodes not validating transactions. It can happen when validators lose connection to the network, for example, during power outages or wifi downtimes. Trusted Node minimizes downtimes by using high-availability high-performance infrastructures to run nodes. Although Trusted Node users are guarded against many risks related to running their own validator nodes, the whole network of validators is still subject to each PoS blockchain’s protocol requirements, like bonding periods. Withdrawing initial native assets from nodes may cause slashing risks for the whole network, which is why some assets have a bonding period on the Trusted Node platform. The base capital can be withdrawn ahead of time only through swapping or selling derivative tokens at their market price. #### Validator Node Security Risks Validators are responsible for their infrastructure security. Running validator nodes requires an understanding of the software and security risks involved to prevent hacks, bugs, and phishing attacks. Deploying validator nodes through third-party providers minimizes security risks and often comes with contractual assurances from the providers. # DeFi Risks #### Smart Contract risks Hackers are working incessantly to find vulnerabilities in smart contracts’ code and exploit DeFi protocols that hold substantial amounts of capital. Once launched, smart contracts cannot be changed or updated like standard software, so the code needs to be thoroughly vetted ahead of time. To minimize contractual risks, Trusted Node employs industry experts such as Obelisk to audit the smart contracts across the network. # Network Security **Liquid Staking Risks** could result in slightly lower network security due to staked capital being available for purchase rather than locked. **DAO Risks** DAOs are still an experiment in governance that may lead to many unforeseen situations. Trusted Node minimizes the risks by utilizing an established DAO platform, such as Aragon, with access to multiple governance tools and tested smart contracts. **Centralization Risks** Any governance can be subject to centralization if there are not enough participants. Trusted Node prevents voting power accumulation through DAO incentives, intuitive governance UX, and promoting awareness. # Market Risks **Market fluctuation** No one can accurately predict the market demand for the tokens once they are released. Trusted Node maximizes the potential for $TNODE utility and growth by tying its function to the network of validator nodes. **Market manipulation and rug pulls** Pump and dump schemes and other marker manipulations are widespread among projects that don’t enable vesting periods or where the team holds the majority of tokens. Trusted Node limits that risk by imposing a detailed token release schedule with strict vesting periods for the team. Additionally, 53% of $TNODE tokens are locked in smart contracts and available to users who stake capital or provide liquidity to Trusted Node vaults. # Disclaimer **This Document is not a Prospectus.** This document does not constitute nor imply a prospectus of any sort. No wording contained herein should be construed as a solicitation for investment. Accordingly, this whitepaper does not pertain in any way to an offering of securities in any jurisdiction worldwide whatsoever. Rather, this whitepaper constitutes a technical description of the functionality of the Trusted Node initiative and the development and deployment of the Tursted Node platform. The information in this document is given in good faith, but no warranties, guarantees or representations are made by Trusted Node with regard to the accuracy, completeness or suitability of the information presented. Trusted Node expressly disclaims any and all responsibility, and Recipients expressly waive any claim, for any direct or consequential loss or damages of any kind whatsoever (whether foreseeable or not) arising directly or indirectly from: (i) reliance on any information contained in this document or any information which is made available in connection with any further inquiries, (ii) any error, omission, or inaccuracy in any such information, (iii) any action resulting therefrom or (iv) usage or acquisition of products. This disclaimer applies notwithstanding any negligence, default or lack of care. The Company may update, modify or correct this document in its sole discretion, without notice or incurring any obligation or liability to any recipient hereof. This document is strictly confidential and intended to be viewed exclusively by those recipients (“Recipient(s)”) specifically authorized by the Company. This document shall not bind, convey any rights, obligations, terms, performance, covenants, representations or warranties on behalf of the Company to Recipient, or create any relationship between the Company and any Recipient or any other party.