SIP-13: Rewards for Streamr 1.0 testnets

Background

The imminent arrival of Streamr 1.0 marks a significant milestone, with an expected release by the end of 2023. In preparation for the mainnet launch, we are planning to conduct three incentivized testnets using a beta version of the Streamr 1.0 node software and related smart contracts.

These testnets serve dual purposes: they allow the community to gain experience as Streamr node operators or delegators, and they enable the development team to assess the network's real-world performance and address any issues before the official launch. The three distinct testnet periods allow the team to address problems in between the phases.

For context, during the previous milestone, Brubeck, 2 million DATA tokens were minted for testnets through SIP-5. The Brubeck testnets were active for approximately one month combined.

The Brubeck mainnet mints tokens at a rate of around 20 million DATA per year (roughly 2% annual supply increase), or 1.6 million per month.

Proposal

• Mint a supply of 5 million DATA tokens for Streamr 1.0 testnet rewards. This represents a one-time supply increase of approximately 0.5% compared to the current supply or about 0.25% against the maximum supply.
• Distribute the 5 million DATA tokens across the testnets as follows: allocate 1 million DATA for the first incentive period, 1.5 million DATA for the second, and 2.5 million DATA for the final third one.
• Stop Brubeck rewards upon the launch of the first incentivized Streamr 1.0 testnet.

Reasoning

The primary consideration of this proposal is the allocation amount. Here are some considerations that led to the recommendation of 5 million DATA tokens:

Looking back at the Brubeck testnets, 2 million DATA tokens were minted during a bull market when DATA's value was around $0.13, resulting in testnet rewards worth approximately $260,000. This incentive structure yielded strong engagement and results, suggesting that a somewhat lower amount may suffice.

However, due to the current lower market price, a higher number of DATA tokens is needed to achieve a comparable dollar value. At present, 5 million DATA is valued at just over $100,000.

Encouraging Brubeck node operators to swiftly transition to Streamr 1.0 is crucial. This not only provides valuable insights into the new network's operation at scale but also ensures that nodes engage in meaningful real-world activities on the network rather than contributing to artificial incentivized streams on Brubeck.

To motivate this transition, the community should employ a dual approach: offering a substantial 5 million DATA distribution during the testnets (with an assumed duration of 1-2 months), which surpasses the rewards available on the Brubeck mainnet (1.6 million DATA per month). Simultaneously, ceasing Brubeck rewards upon the launch of the first testnet provides an added incentive for users to make the switch.

Avoiding overlapping reward distribution also has the benefit of preventing two networks from competing for the same token stake simultaneously.