[RFP] Staking and Keeper Incentive Mechanism Proposal - Blockdudes

[amritj]

Introduction

Shutter Network stands at the forefront of blockchain privacy and security, providing a critical layer of protection in decentralized transactions. Our mission, deeply ingrained in every line of code and community interaction, is to safeguard our users from malicious entities like MEVs through cutting-edge, decentralized mechanisms.

However, as with any evolving ecosystem, Shutter Network faces a unique set of challenges that, if unaddressed, could threaten the stability and efficiency of our operations.

One challenge is the rising selling pressure caused by token unlocks, along with the need to incentivize and decentralize the keypers. This highlights the critical necessity for a strong incentive and staking system. Such a system should aim to encourage active participation from our keypers and promote community support through the delegated staking of SHU tokens.

Solution

In response to the RFP issued by the DAO to address identified challenges, our team is proposing a comprehensive solution aimed at strengthening the Shutter Network. The proposed Keyper Incentive Mechanism and Delegated Staking System are crafted to not only mitigate immediate concerns, such as selling pressure, but also to foster long-term network growth and enhance security.

Keyper Incentive Mechanism

The Keyper Incentive Mechanism is tailored to recognize and reward the vital role that Keypers play in the Shutter Network. By staking SHU tokens, Keypers demonstrate their commitment to the network’s integrity and operational efficiency. In return, they receive incentives in the form of system-generated fees (e.g., ETH) and/or SHU tokens. This reward system is designed to:

• Encourage active and ongoing participation of Keypers in the network.
• Compensate Keypers for their role in maintaining and running nodes.
• Promote long-term commitment by rewarding Keypers based on the duration of their token lock-up, thereby aligning their interests with the long-term health of the network.

Delegated Staking Framework

Parallel to the Keyper Incentive Mechanism, the Delegated Staking Framework empowers SHU token holders to actively participate in the network’s security and decision-making processes. Token holders can delegate their SHU tokens to support specific Keypers, enhancing the network’s decentralization and security. This framework:

• Allows token holders to contribute to the network’s security without the need to run a node themselves.
• Facilitates a more engaged and participatory ecosystem, where token holders can back Keypers they trust and support.
• Provides an additional layer of incentive for token holders, offering them a share of the fees generated by the system and/or rewards in SHU, based on the time their tokens are locked.

Some Technical Details

To actualize the Keyper Incentive Mechanism and Delegated Staking System, we built a high level technical layout. This layout is designed to be both robust and flexible, allowing for future adaptations while ensuring security and efficiency from the onset. It encompasses the development of smart contracts, a user-friendly frontend, and an API for data indexing.

Smart Contracts

At the core of our technical strategy are three smart contracts, each serving a critical role within the ecosystem:

1. Staking Contract:

   • Purpose: Serves as the foundation of the staking mechanism, securely managing the staked SHU tokens.
   • Inspiration: Draws upon proven staking mechanisms from established DAOs (e.g., Curve), incorporating elements that reward both the quantity of staked tokens and the level of commitment, i.e. locking period.
   • High level functions:
     • stakeToken(): Enables users to stake their SHU tokens.
     • unstakeToken(): Allows for the withdrawal of staked SHU tokens.
     • delegatePower(): Delegates power to a Keyper, involving a call to the Keeper Contract to verify the Keyper’s eligibility and record the delegation.
     • undelegatePower(): Reverses the delegation of power.
     • selfDelegate(): A special function for users who are also Keypers to delegate power to themselves.
   • Interaction with Keeper Contract: Holds special permissions to add or remove power from a Keyper in response to user actions.

2. Keeper Contract:

   • Purpose: Manages the delegation of user power to Keypers, storing data on active Keypers selected by the DAO (with potential for future automation).
   • Unique Feature: Only the Staking Contract can invoke its delegate and undelegate functions, ensuring controlled and secure power distribution.

3. Rewards Contract:

   • Purpose: The most dynamic of the contracts, dedicated to experimenting with and implementing new reward and incentive mechanisms.
   • Functionality: Reads data from the Staking and Keeper Contracts to calculate and distribute rewards to users, without holding special permissions within the ShutterDAO contract ecosystem, ensuring flexibility and adaptability in reward distribution strategies.

Frontend Development

The frontend interface is designed with user interaction and decision-making in mind, offering a seamless and intuitive platform for engaging with the staking and delegation processes. Features include:

• User-Friendly Interface: Simplifies the interaction with smart contracts, making staking, unstaking, delegating, and claiming rewards straightforward.
• Data Display: Integrates real-time data from the smart contracts to provide users with comprehensive insights, enabling informed decision-making.

Data Indexer

To support the frontend and ensure the availability of accurate, up-to-date information from the smart contracts. This component plays a crucial role in:

• Data Indexing: Efficiently processes and organizes data from the blockchain, ensuring timely updates and accuracy.
• Frontend Integration: Serves as the backend for the frontend, supplying the necessary data for user interfaces and decision-support tools.

Impact

Strengthening Network Security and Decentralization

Decentralization is paramount for enhancing network security against attacks and failures. By diversifying the distribution of Keypers and enabling wider community participation through delegated staking, the Shutter Network significantly increases its resilience. This is achieved by creating a more robust and failure-resistant infrastructure, where attacks on individual nodes do not compromise the network’s integrity.

Benefits: A more secure and decentralized network attracts a broader user base, fostering trust in the Shutter Network’s capabilities. This trust, in turn, can lead to increased adoption and use cases for SHU tokens, enhancing their utility and value.

Mitigating Selling Pressure and Promoting Long-term Commitment

Selling pressure, particularly following token unlock periods, can destabilize token value. By introducing staking incentives that reward long-term commitment, the network can stabilize token value and promote a healthier economic environment.

Benefits: Reduced volatility in SHU token prices leads to a more predictable economic model for developers and users alike. Stability attracts enterprise and developer interest, leading to new applications and increased demand for SHU tokens.

Fostering Community Engagement and Support

Community engagement is critical for the success of decentralized networks. By empowering SHU token holders to support specific Keypers, a deeper sense of community and collective ownership is fostered.

A more engaged community leads to higher network participation rates, improved network health, and a vibrant ecosystem where innovation and support thrive. It also enhances the network’s reputation, attracting more users and developers.

Driving Technological and Economic Innovation

The implementation of the Keyper Incentive Mechanism and Delegated Staking System positions the Shutter Network at the forefront of blockchain innovation. It showcases a scalable model for rewarding participation and securing network operations.

Benefits: By leading in technological and economic innovation, Shutter Network sets a benchmark in the industry. This leadership attracts partnerships, developer interest, and investment, fueling further innovation and growth.

Budget & Milestones

We request a total budget of 35,000 USDC and 70,000 SHU Tokens to support the development of this initiative, with a supplemental recommendation for the DAO to allocate ~10,000 USDC for an external audit.

Milestones and SHU Token Disbursement Schedule

1. Project Planning and Technical Architecture

   • Completion Time: 1.5 weeks
   • Objective: Develop a comprehensive project plan and outline the technical architecture. This initial phase sets the project’s foundation, detailing the scope, objectives, and technological framework, ensuring all components are aligned for seamless integration and functionality.
   • Payment Released: None

2. Frontend UI Design

   • Completion Time: 1 week
   • Objective: Design the user interface and experience for the frontend. This step involves creating intuitive and engaging designs that will facilitate user interaction with the staking and delegation functions, emphasizing ease of use and clarity.
   • Payment Released: 5,000 SHU Tokens

3. Smart Contracts Development

   • Completion Time: 4 weeks
   • Objective: Code and refine the Staking, Keeper, and Rewards Contracts. This critical development phase focuses on creating secure and efficient smart contracts that will underpin the staking and rewards mechanisms, incorporating best practices in smart contract design and security.
   • Payment Released: 20,000 SHU Tokens

4. Testnet Deployment and Testing

   • Completion Time: 2 weeks
   • Objective: Deploy the developed smart contracts to a testnet and conduct thorough testing. This phase aims to identify and rectify any issues in a controlled environment, ensuring the contracts operate as intended under various scenarios.
   • Payment Released: 10,000 SHU Tokens

5. Data Index API Development

   • Completion Time: 1 week
   • Objective: Develop an API for indexing and retrieving data from the smart contracts. The API will serve as the backend for the frontend application, enabling real-time data display and interaction, enhancing the user’s decision-making process.
   • Payment Released: 5,000 SHU Tokens

6. Frontend Development

   • Completion Time: 2 weeks
   • Objective: Build the frontend application based on the designed UI/UX. This phase involves integrating the frontend with the smart contracts and Data Index API, creating a seamless and functional user interface for interacting with the staking and delegation system.
   • Payment Released: 10,000 SHU Tokens

7. **Internal Audit of Smart Contracts **

   • Completion Time: 2 weeks
   • Objective: Perform an internal audit of the smart contracts to ensure their security and efficiency. This crucial step involves a comprehensive review and testing of the contracts to identify vulnerabilities and confirm adherence to security protocols, safeguarding against potential exploits.
   • Payment Released: 10,000 SHU Tokens

8. Launch

   • Completion Time: ~
   • Objective: Mainnet launch of the product
   • Payment Released: 10,000 SHU Tokens + 35,000 USDC

External Audit Recommendation

• Budget: 10,000 USDC recommended for allocation by the DAO.
• Objective: Conduct an external audit of the smart contracts by reputable individuals. This independent review is essential for validating the security and robustness of the contracts, providing an additional layer of assurance before deployment. We will help the DAO in finding the best individuals for this task
• Completed Time - 3 weeks

We are committed to delivering this project and fostering a long-term partnership with the Shutter Network. In demonstration of this commitment, we are not requesting any upfront payments. Moreover, the majority of the payment will be disbursed upon completion of key milestones, and we will not receive stablecoin payments until it is launched on mainnet. This structure is designed to align our incentives with the goal of building trust and developing the highest quality product for the Shutter Network

Gantt Chart (starting from 1 May 2024):

Expected Launch Time: ~3 Months Total Cost: 35k USDC + 70k SHU (+10K USDC Auditing)

Why Us: The Blockdudes Team

Experience and Expertise

At Blockdudes, my team and I have established a solid track record in the blockchain space. Our work spans developing and enhancing the infrastructure and applications across various chains and platforms, showcasing our capability to deliver complex projects successfully.

Team

I, Amrit Kumar Jain, am the CEO and Founder of Blockdudes and the Project Lead for this initiative. My extensive experience in blockchain places us in a unique position to spearhead this project. Other than me four other team members from Blockdudes will be joining us to execute this project:

1. Darab Ahmad Khan, our Frontend Developer, specializes in creating seamless user interfaces, ensuring an intuitive user experience.
2. Chirag Kumar, Blockchain Developer, specializing in smart contract development and blockchain development.
3. Parth Kshirsagar, our UI/UX Designer, focuses on the design aspect, making sure the product is not only functional but also visually appealing and easy to navigate.

Our team’s diverse skills and collaborative approach guarantee the comprehensive development and execution of this project

Social Media Links:

1. Amrit Kumar Jain

   • GitHub: amritkumarj
   • LinkedIn: Amrit Kumar Jain

2. Darab Ahmad Khan

   • GitHub: kingdarabahmad
   • Linkedin: Darab Ahmad Khan

3. Chirag Kumar

   • GitHub: chirag9899
   • Linkedin: Chirag

4. Parth Kshirsagar

   • Behance : Parth Kshirsagar

Proven Track Record

As a collective, the Blockdudes team has successfully executed a range of significant projects, a few of which are:

1. Decentralized Bridge: Worked with Vitalik Buterin to develop a decentralized layer 2 bridge.
2. Mask Network: Integrated new features into the Mask Network browser extension.
3. Unstoppable Domains: Assisted in integrating their service into various DeFi projects like Balancer, Enkrypt,zksync wallets, etc.
4. Messari: We have worked with Messari on multiple projects, including developing several DeFi subgraphs that can be viewed at subgraphs.messari.io, this website is also built by us. We are currently working with them on building a large data project like Dune tables for multiple chains from scratch, which includes all Cosmos Chains, Filecoin, etc.
5. Reserve: Developed DeFi collateral plugins.
6. Verge: Developed ISO 20022 Application for Verge. Helping them integrate Smart Contracts in their chain
7. Osmosis: Collaborating to build DeFi Vaults and strategies.

These examples represent a fraction of our work. We’ve completed several other projects, and our collective experience and success will be instrumental in the development and success of our proposed project

Long-Term Vision

Beyond this project, Blockdudes aims to help in strengthening the Shuttle Network ecosystem, aiming to attract more users and increase revenue through our innovative products. Our objective is to not only grow the user base but also to enrich the ecosystem and significantly enhance the user experience for everyone involved with Shutter Network

[Baer_DAOplomats]

Hey @amritj, I appreciate the effort you’ve put into this proposal. Could you provide more details on the following?

1. Can you explain Blockdude’s experience and understanding of Shutter and the Keeper architecture more fully?

@amritj

Proven Track Record

As a collective, the Blockdudes team has successfully executed a range of significant projects,

2. Have you worked ‘‘with’’ them on worked ‘‘on’’ the different projects that you have mentioned. Please add relevant resources and announcements post for us.

3. Can you provide some more information to Blockdudes? I can’t find much information online, and you have a low Twitter presence. This information is helpful to DAOplomats, as we are crossing paths on 1inch, too.

@amritj

Messari: We have worked with Messari on multiple projects, including developing several DeFi subgraphs that can be viewed at subgraphs.messari.io ; this website is also built by us. We are currently working with them on building a large data project like Dune tables for multiple chains from scratch, which includes all Cosmos Chains, Filecoin, etc.

It seems you have been working with Messari “on building a large data project like Dune tables for multiple chains” since July 2023. Haven’t there been any developments since then?

@amritj

High level functions:

• stakeToken(): Enables users to stake their SHU tokens.
• unstakeToken(): Allows for the withdrawal of staked SHU tokens.
• delegatePower(): Delegates power to a Keyper, involving a call to the Keeper Contract to verify the Keyper’s eligibility and record the delegation.
• undelegatePower(): Reverses the delegation of power.
• selfDelegate(): A special function for users who are also Keypers to delegate power to themselves.

The Curve’s lockup contracts have more specificities. Can you provide more info on the functions you offered, especially their customizability around the amount and the duration of tokens staked?

[amritj]

Hey @Baer_DAOplomats, Thank you for reading our proposal!

About Blockdudes

Think of Blockdudes as a shadow dev agency. We work with blockchain companies to help build their products

Our team consists of 8 members, and we’ve been working in this field for 2 years. Before that, we were a web2 company that built web2 products like websites and apps for clients, just like any normal dev agency.

We shifted our focus to blockchain 2 years ago and never looked back.

We have worked with big names like Vitalik, Messari, Unstoppable Domains, and many other major companies on many projects, but we can’t name them due to our NDAs.

Lately, we’ve been working to build our brand, which is why we’re openly applying for grants from DAOs. We were recently awarded a small grant from Alchemix Finance.

And in process with many other grant committees from different chains for building products for their protocols

Quicksnap finance that posted this proposal in Shutter DAO is one of our client too

Regarding announcements, as I mentioned, we are a shadow dev agency and haven’t focused on promotions and marketing. This has been our biggest flaw, and we are working on improving by building in public.

Messari

Yes, we have been working with Messari for quite some time. There have been many developments since then; the project I mentioned is now less focused, and newer products that Messari is working on in the background are now the main focus. These products are also data products but using SQL and are much more efficient and accurate than the subgraphs.

Brief about Shuttle

The Shuttle network allows users to submit encrypted transactions that won’t be revealed until they are included in the block.

It has its own chain, “Shuttlemint” whose main use case is key-generation and communication between keypers.

There is only one mint chain, which can be connected to any number of main chains to provide encryption services to them.

Users use epoch keys to encrypt transactions and send them to the Batcher contract.

These transactions are fetched and decrypted by the keypers and sent to the Executor, which executes the transactions.

Keypers’ role is to decrypt the user transactions, send them to the executor contract, and also serve as the validator of the Shuttlemint chain.

Curve Lockup Contract

The veCRV token is a complex contract, and I wanted to make this proposal understandable by everyone, which is why I didn’t go into much technical detail here.

My only goal in mentioning these high-level functions was to add some clarity around the role of the contract.

The exact architecture for the contract will be discussed with the team and then built later on.

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I hope this answers your questions. Please let me know if I missed anything—I’ll be happy to answer.

Looking forward to building on the Shuttle Network. Thanks!

[Baer_DAOplomats]

Your answer isn’t convincing enough for me; I checked your GitHub to see where you have ‘‘worked’’ with the parties above.

many of those PRs are part of some hackathons or independent contributions you made to the code base for example `working with Unstoppable Domains and an L2; all I can see is a PR you made for the wallet to resolve UD domains; IDK if you can call it ‘worked with’ UD or with Zksync.

@amritj

Reserve: Developed DeFi collateral plugins.

It was part of the Gitcoin bounty the Reserve.org put up, and nothing happened out of it. I’m too lazy to allocate DAOplomats’ internal resources on this proposal and go through every claim you made, like the Vitalik & Aztec one. If you have referrals or other mentions that you don’t want to share publicly, DM us privately

Furthermore, it’s more about convincing the community that we are a minority voter here, so the more public details there are, the better.

[amritj]

Hey @Baer_DAOplomats

I really appreciate your honest feedback and sincerely apologize for the oversight in not providing sufficient references for our contributions. I understand the importance of transparency, especially in open and collaborative projects like this.

Here’s a direct reference to a transaction made by Vitalik from his wallet to ours, acknowledging our contributions: Etherscan tx

Additionally, I’ve worked closely with Tommy Endres (LinkedIn) and Jordi Mele (LinkedIn) from Unstoppable Domains, as well as Justin, founder of the Verge Blockchain (Twitter). You can contact anyone and ask about us.

Due to confidentiality commitments, I’m limited in the details I can share publicly. I understand this can result in the DAO not selecting us as the team for this project but I also have the responsibility of maintaining my clients privacy that I can’t forget

But to be honest I am very interested in working with Shutter Network. It truly stands out among the common DeFi apps like DEXs and lending protocols. You have a unique vision for solving significant and important problems like MEV, and I want to help solve these challenges together.

I even been deep diving into Shutter Network code and writing this guide to help anyone understand what Shutter Network is and how it works easily (WIP)

I am ready to prove anyhow why we have the experience and capability plus the motivation to build and execute this proposal better than anyone, just the need chance to showcase our skills to everyone!

I understand our mistake in not being a public company with a very low online presence, and am ready to work on the initial milestones without any payment as mentioned in the grant. This will build initial trust between the Shutter community and us. You can easily cancel the grant if you are not satisfied with what we are building, how we are building it, our code quality, or if trust issues persist.

I understand there might still be concerns about our legitimacy, but I want to let everyone know that we are committed to contributing to building the Shutter Network. Even if we don’t receive this grant, we will continue to contribute. Thanks!

[luis]

Cool to see this proposal!

Have you thought about how this can be deployed and the front-end hosted for the next couple of months? Could you guys host it? Would that increase the budget needed? Or would the DAO need to do another proposal for this?