RDDL Network Token Flows
The business model and token flow in the context of the RDDL Network (Registry of Decentralized data and signals as Distributed Ledger) depends on some general considerations:
Decentralization of existing machine-centric business models: The RDDL network aims to decentralize existing business models that involve intermediaries by leveraging blockchain technology and tokenization. For example, in the energy industry, there are intermediaries such as energy retailers or aggregators who facilitate the buying and selling of energy between producers and consumers. With the RDDL network, these intermediaries will be bypassed, allowing producers and consumers to transact directly using tokens as a medium of exchange, thereby reducing the need for middlemen and associated costs.
Unifying decentralized business models for machines: The RDDL network also aims to enable decentralized business models for machines that may not be well-organized enough to function as standalone businesses. For example, machines such as home appliances, electric vehicles, or renewable energy systems are tokenized on the RDDL network, allowing them to participate in the token flow ecosystem and generate value. These machines earn tokens by providing data, services, or other forms of value, which can then be used for various purposes, such as incentivizing desired behavior, trading on token exchanges, or redeeming for goods and services.
Token flow ecosystem: The RDDL network's token-flow ecosystem involves the flow of tokens between different participants, such as machine owners, energy producers, energy consumers, different blockchain networks and other stakeholders. Tokens can be earned, traded, swapped, or redeemed within the network, creating a circular economy of value exchange. For example, machine owners can earn tokens by allowing their machines to participate in the network and share data or services, energy producers can earn tokens by selling energy directly to consumers, and consumers earn tokens by adjusting their energy consumption patterns based on incentives provided by the network.
Tokenomics and revenue streams: The RDDL network generates revenue through various mechanisms, such as transaction and swapping fees, token issuance or burning, token staking as governance or other value-added services. For example, the network can charge transaction fees for token transfers or other operations within different blockchain networks within the ecosystem (energy, material, supply chain, automotive …), and it issues and sell its own native token to generate revenue for network maintenance, development and interoperability. Additionally, the network offers value-added services, such as data analytics, energy optimization algorithms, machine identity creation and management, machine data and signal protection, trusted and confidential exchange of machine data or other premium features, which will be monetized to generate revenue.
Use Case Examples
The following use cases exemplifies the general considerations and demonstrate token-flows accordingly. Both use cases are fully implemented and further developed into general business solutions at this moment in time.
Energy vouchers as micro-investment
Energy companies sell part of their future energy production to energy voucher companies at a reduced price. The voucher companies then resell the strongly reduced right to consume kWH to retail companies for home appliances. The retailers use this kWH vouchers as a reward system for consumers buying home appliances like washing machines, dish-washers, heat-pumps, etc. The voucher gives the end-consumer the right to consume the amount of kWH on the voucher for free.
Tokenizing and managing the green energy voucher system on a blockchain brings several benefits, including increased transparency, efficiency, and decentralization.
Specific use case with generic token-flow:
Tokenization of the machine - attestation: For a citizen solar power plant there are two possibilities to get tokenized. Either on the level of the central inverter via a so called smart-logger or on the level of the individual solar power panels via microinverters or in between via string inverters. At any level it is possible to extend the inverters with Trust Anchors (TA). TA are nothing else but special purpose hardware wallets. When a TA gets connected to an inverter the first time it creates an internal private key that gets immediately stored inside a Secure Element (SE). SE are tamper-proof and tamper-evident ASICS for the management of key material. Most of them are operated with the JavaCard OS, as it is known from personal identity, banking abnd credit cards as from access cards. This way the powerplant get its tamper resistant network and blockchain identity. From the secret key a public key gets derived, which immediately gets attested against the Liquid network. To finish this transaction the TA as a wallet comes already preloaded with RDDL network tokens to pay for the attestation transactions fee.
Tokenization of the machine - issuing asset token: Once the solar power plant is successfully attested against the blockchain the plant’s TA serves to issue an kWH token as asset token which is required to implement the decentralized voucher mechanism. Therefore, the estimated lifetime productivity of the plant in kWH is translated into a fixed amount of tokens. This amount of tokens will then be issued again on Liquid as an asset token. The TA with its wallet functionality becomes therefore the issuer of the asset. It is an important aspect that technically the issuer of the machine asset becomes the machine itself. The settlement of the token issuance transaction will result in setting up wallet, controlled by the machine itself holding its complete future value in tokens. Also the issuance process has to be paid in RDDL tokens. Although the result will be a completely independent new asset class.
Tokenization of the machine - energy vouchers: The energy vouchers gets tokenized as digital assets on Blockstream’s Liquid. Each voucher represents by a unique digital token with a specific value denominated in kilowatt-hours (kWh). The voucher asset is nothing else but a dedicated percentage of the machines kWH assets. This kWH assets get turned into voucher assets every time the power plant’s TA notarises successfully the production of energy. As the TA is directly connected to inverters, it has direct access to the energy-production data. The TA translates the measured kWH directly into asset tokens and triggers the distribution of all these tokens to the beneficiary wallets. Which is possible as the machine manages its own wallet and the wallets of all its beneficiaries. This means that the sale of a voucher becomes synonymous with deriving sub-wallet for voucher owners of a machines main wallet. The machine becomes the custodian of the beneficiary wallets and stays the custodian till voucher owners decide to transfer their kWH tokens to their private Liquid wallets or decide to swap the kWH token agains other tokens.
Decentralized management of vouchers: This way the RDDL network serves as a decentralized ledger to manage the issuance, transfer, and redemption of energy vouchers. Smart contracts define the rules and logic governing the voucher system, such as the terms and conditions of voucher issuance, transferability, and redemption. This eliminates the need for a central authority or intermediary to manage the vouchers, resulting in a more decentralized and transparent system in the long run. Short term in enables complete new business models for voucher systems.
Ownership and transferability of vouchers: Energy vouchers can be owned and transferred by various entities, such as energy companies, voucher companies, retail companies, and end-consumers, using their respective wallets on the blockchain. Vouchers can be bought, sold, or traded among these entities, creating a secondary market for vouchers. This provides flexibility and liquidity to the voucher system, allowing entities to efficiently manage their voucher inventory and optimize their operations. As vouchers modeled as digital assets on Liquid are at any time swappable against vouchers of other systems the RDDL network token can enable and guarantee constant token economic. To explain further. As mentioned above, just a percentage of the expected energy consumption is pre-sold as vouchers. Another part of the plant’s kWH assets can be turned into a green bond and be offered as a token. Holders of the voucher token are than enabled to swap their voucher token against a green-bond-token and vice versa. … and as the machine can issue kWH tokens it can use the TA and its capabilities to create and issue data-market tokens on top of its production data.
Ownership and transferability of vouchers - wrapped token swap: The RDDL network not only offers services to tokenize machines and their data to Liquid, but practically to any blockchain of choice. Which makes a lot of sense as other blockchain networks offer perfect special value token services. E.g. the Ocean network token and its power to enable data markets or the Nevermined network and its federated AI capabilities or Fetch and its AI-driven analytical capabilities, … Therefore, the RDDL network in coordination with its TA as hardware driven data oracles are capable to interact with third party chains via a policies. Policies are part of the consensus mechanism as a precondition that the RDDL network even tries to fulfill a smart contracts. The policies consider the external state of a blockchain and its transactions. The have the capability create and settle transactions on third party blockchains. In case that a machine-owner or -operator decides for a machine to also take part in a token based data market, the TA can create and sign transactions accordingly. Be reminded that the machine is a wallet signing its own transactions and is therefore also its own custodian. Now to avoid that the machine has to hold all the different crypto assets/coins of other networks it intends to interact with the RDDL network created and creates escrow accounts with the the third party networks. Within these escrow accounts the RDDL network stocks enough third party tokens to automate the settlement of transactions. For each non-RDDL token the RDDL network itself issues a wrapped token on Liquid. In case a machine taking part in the RDDL network intends to settle a data-market on Ocean it doesn’t have to own Ocean tokens. It can simply swap RDDL tokens against “wrapped-ocean-tokens” and the RDDL networks policies will handle the rest. They will burn the wrapped-ocean-tokens and then release the necessary amount of Ocean tokens from the RDDL-Ocean-escrow-account and settle the data market creation transaction for the machine. This machine-TA-policy-wrapped-token-escrow mechanic is another important pillar of the token economy and token flow of the RDDL network.
Redemption of vouchers for energy consumption: End-consumers can redeem their vouchers for free energy consumption by submitting the vouchers to their energy retailer or directly to the energy grid. The vouchers can be verified and validated using the smart contracts on the blockchain, ensuring that the redeemed vouchers are valid and have not been tampered with. This can streamlines the voucher redemption process, reduces fraud, and enhances transparency and trust for both consumers and energy providers.
Incentivization and reward system: The voucher system can be used as an incentivization and reward system for consumers purchasing home appliances. Retailers can offer energy vouchers as rewards to consumers who buy appliances like washing machines, dishwashers, or heat-pumps, encouraging them to choose energy-efficient appliances or use them during specific periods of the day when green energy is abundant. This can promote sustainable energy consumption behavior and create a positive feedback loop for energy efficiency.
Transparency and audit-ability: The blockchain provides transparency and audit-ability to the energy voucher system by recording all voucher transactions and activities on an immutable and transparent ledger. This allows stakeholders, such as energy companies, voucher companies, retailers, and regulators, to verify and audit the voucher transactions and ensure compliance with the system rules and regulations. This can enhance trust and accountability in the voucher system. and helps to enable token based voucher systems as non-banking instruments.
Token Staking, Governance and Voting
The other important token-flow running side by side with the machine token-flow is about staking, governance and voting. As the RDDL network is built on top of Liquid and Tendermint/Cosmos it follows the generic capabilities of Cosmos applications.
Token Acquisition: Users typically acquire the native token of the Cosmos/Tendermint-based network, such as the RDDL network, through various means, including buying from exchanges, participating in token sales, or earning through staking rewards or other network activities. → Proof of Productivity , earning tokens by contributing machine data and signals to the network and creating token based systems on top of it.
Token Staking: Once users have acquired the native token, they can choose to stake their tokens in the network's staking mechanism. Staking involves locking up a certain amount of tokens for a specified period of time to support the network's security and governance. In return, stakers may receive staking rewards, which are usually a portion of the transaction fees and newly minted tokens.
Governance Participation: Staked token holders also participate in the network's governance process, which involves voting on proposals that determine the future development and direction of the network. This includes voting on changes to the network's parameters, upgrades, or funding proposals.
Voting and Proposal Outcome: Staked token holders typically cast their votes on governance proposals using their staked tokens as voting power. The outcome of the vote is determined by the weighted voting power of the staked tokens. If a proposal is approved, it will be implemented by the network's validators or developers, depending on the specifics of the network's governance model.
Governance Rewards: The RDDL networks also incentivizes participation in governance by providing additional rewards to staked token holders who actively participate in the governance process, such as voting or proposing changes. These rewards are in addition to the staking rewards and are designed to encourage active participation in the network's governance.
Unstaking and Withdrawal: Staked token holders may choose to unstake their tokens if they wish to withdraw their tokens from the network or transfer them to other accounts. The unstaking process typically involves a waiting period during which the tokens are locked, and after the waiting period, the tokens become available for withdrawal.
Finally, the last token flow is built around the PoP - Proof of Productivity - consensus mechanism, which defines the sourcing of token into the RDDL network, which is in detail explained inside the whitepaper.
To sum it up:
Revenue streams and tokenomics: The RDDL network generates revenue through various mechanisms. For example, the network can charge transaction fees for token transfers, token issuance or burning, and other value-added services such as data analytics or premium features. The revenue generated from these mechanisms can be used to maintain and develop the network, as well as to provide incentives for machine owners to participate in the network by tokenizing their machines and generating value. Additionally, the network's native token, RDDL, can be used as a means of exchange within the network, and its value may fluctuate based on market demand and supply dynamics.