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# Home of Dumplings / \$DPL Tokenomics
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## 1. Overview
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The Home of Dumplings protocol deploys AI agents that solve optimization problems for DeFi users and protocols, addressing tasks such as liquidity management and parameter tuning. The ecosystem operates through **Tasks** hosted on-chain and populations of solution programs evolved off-chain by the Optimizer Pool.
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**\$DPL** is the native token powering this ecosystem. Its primary roles include:
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1. **Payment**: Clients pay invocation or subscription fees in \$DPL.
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2. **Staking and Governance**: Token holders stake \$DPL to secure the protocol, join the optimizer pool or participate in governance.
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3. **Rewards**: Optimizer Pool nodes earn \$DPL for validated contributions to the evolution of programs.
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---
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## 2. Token Supply and Distribution
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### Fixed Supply
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- **Total Supply**: \$DPL has a fixed supply (e.g., 100M tokens), minted at genesis.
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- **No Inflation**: No further token minting or emission beyond the initial allocation.
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### Allocation of Supply
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1. **Uniswap V3 Liquidity Pool**
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- All of the supply is allocated to a Uniswap V3 liquidity pool over a wide price range.
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- Multiple price ranges hold extra liquidity to ensure stable price discovery.
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2. **Team**
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- A vesting contract purchases a small portion (e.g., 10-15%) of the cheapest tokens from the pool right after deployment and allocates them to the team.
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3. **Treasury**
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- An NFT minting contract purchases a small portion (e.g., 5-10%) right after the vesting contract before other buyers come in. The tokens are packaged into nice-looking NFTs.
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- These NFTs are sold on marketplaces like OpenSea, redeemable for tokens. The proceeds are transferred to the team multisig, forming the treasury.
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---
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## 3. Revenue Model
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### Fee Structure
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1. **Invocation Fees**
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- Charged for AI agents evolved with synthetic data.
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- Paid in \$DPL or other currencies auto-converted into \$DPL and routed to the protocol reward pools.
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2. **Subscription Fees**
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- Charged for AI agents evolved with synthetic data initially, but are continuously improved by backtesting with real data.
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- Periodic payment in \$DPL or other currencies auto-converted into \$DPL and routed to the protocol reward pools.
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### Reward Allocation
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- A portion of the fees collected funds rewards for the Optimizer Pool nodes that contribute validated solutions to Tasks.
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- Governance determines the exact split between:
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- Optimizer Pool rewards.
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- Treasury for operational funding.
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- Potential staking rewards.
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---
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## 4. Staking
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### Types of Stakers
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1. **Council Node Stakers**
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- Nodes in the Optimizer Pool stake \$DPL to become eligible for selection to the Council.
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- Council members validate and vote on improved solutions to Tasks.
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- **Slashing Mechanism**: If a Council member votes against the majority decision, they are penalized by slashing a portion of their staked tokens.
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2. **Investor Stakers**
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- Investors stake \$DPL to earn a share of the protocol’s revenue.
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- Revenue is comprised of invocation and subscription fees, a part is distributed as staking rewards.
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### Risk Backstop
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- Stakers collectively backstop potential risks associated with the AI agents.
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- If an AI agent malfunctions (e.g., outputs suboptimal or incorrect decisions due to flaws in the algorithm), affected users may be compensated via the staking pool, reducing the system’s reputational and financial risk.
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- Governance defines the conditions for such compensations, ensuring fairness and transparency.
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---
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## 5. Governance
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Voting weight is proportional to the amount of \$DPL staked.
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### Governance Mechanics
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1. **Voting Rights**
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- All stakers can participate in governance, regardless of whether they are nodes or investors.
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- Proposals focus on:
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- Adjusting fee parameters (e.g., invocation and subscription fees).
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- Allocating Optimizer Pool rewards.
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- Defining compensation rules for Risk Backstop events.
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2. **Council Randomness**
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- Optimizer Pool nodes with staked \$DPL can be selected for the Council via a verifiable random selection process.
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- The Council validates and votes on improved solutions to Tasks.
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---
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## 6. NFT-Based Early Bird Mechanism
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1. **Purpose**
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- Raise initial funding and incentivize early supporters.
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2. **Mechanics**
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- NFTs represent the right to claim a specified quantity of \$DPL at a discounted rate.
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- Sold on marketplaces like OpenSea.
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3. **Redemption**
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- Upon redemption, the NFT is burned, and the holder receives their allocated \$DPL.
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- Vesting or time locks may apply to align with protocol growth.
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---
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## 7. Fee Usage and Distribution
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- **Optimizer Pool Rewards**: A fraction of collected fees funds rewards for Optimizer Pool nodes.
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- **Treasury**: Supports operations, development, and marketing initiatives.
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- **Stakers**: Receive a share of fees as staking rewards, subject to governance decisions.
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---
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## 8. Launch and Go-to-Market Strategy
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### Initial Liquidity Deployment
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- Deploy a majority of \$DPL supply into Uniswap V3 pools.
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- Use multiple concentrated price ranges to establish liquidity depth and facilitate market stability.
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### Early Bird NFT Sale
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- Launch a curated NFT collection for discounted \$DPL rights.
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- Drive initial funding and engage early adopters.
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### Target Customers
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- Position DeFi protocols as key customers for SoLUSH’s optimization services.
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- Focus marketing on showcasing cost-saving and performance-enhancing use cases.
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---
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## 9. Conclusion
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The \$DPL tokenomics framework is designed to:
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- Provide immediate utility through payment and staking mechanisms.
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- Incentivize Optimizer Pool participation via rewards for validated solutions.
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- Ensure sustainable growth through fixed supply, governance, and clear fee allocation.
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This structure ensures the long-term viability and scalability of the SoLUSH ecosystem, while fostering community involvement and alignment with protocol goals.
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@@ -1,53 +1,202 @@
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# SoLUSH: Running Intelligence On-Chain
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# Sovraigns: Verifiable Optimization for DeFi Protocols
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In decentralized finance, systems often involve tasks such as determining optimal liquidity ranges for automated market makers, allocating staking rewards in a way that balances fairness and participation incentives, or dynamically adjusting collateralization ratios to minimize risks in lending protocols. These challenges are critical for ensuring the efficiency and stability of protocols, yet they are particularly difficult to address without centralization. Off-chain solutions often rely on external computation and centralized entities or oracles, introducing trust dependencies and undermining the decentralized ethos of blockchain systems.
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## The Problem
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Artificial intelligence is increasingly being explored in decentralized finance to enhance token ecosystems and liquidity management. This shift represents a practical application of AI tools aimed at addressing complex optimization problems directly within blockchain ecosystems. While large language models (LLMs) dominate discussions around AI innovation due to their general-purpose capabilities, they are poorly suited to the demands of decentralized adaptive systems. In contrast, **genetic algorithms** (GAs) offer a more natural and efficient fit for systems requiring iterative improvements, combining computational simplicity with adaptive behavior.
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DeFi protocols lose approximately $1.5B annually through inefficient parameter settings. Uniswap V3 liquidity providers lose ~$400M from suboptimal position ranges. Lending protocols forfeit ~$300M by maintaining overly conservative collateral ratios. MEV extraction costs protocols ~$800M due to predictable parameter updates.
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## **Introduction to Genetic Algorithms**
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Protocols need optimization algorithms, but current approaches require trust:
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Genetic algorithms (GAs) are optimization techniques inspired by the process of natural selection. They operate by evolving a population of candidate solutions over multiple generations, using mechanisms such as mutation, crossover, and selection.
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- External consultants (Gauntlet, Chaos Labs) operate as black boxes with enterprise-only access
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- AI services require sharing sensitive protocol data with third parties
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- On-chain execution is prohibitively expensive - a simple neural network would cost millions in gas
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- **Population:** A set of potential solutions to a problem.
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Protocols must choose between inefficiency or centralization.
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- **Fitness Function:** A way to evaluate how well each solution performs.
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- **Selection:** The process of choosing the best-performing solutions to carry forward.
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- **Crossover and Mutation:** Methods to combine and modify solutions, creating new ones that explore the problem space.
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Through repeated iterations, GAs converge toward optimal or near-optimal solutions, making them highly effective for solving complex, dynamic problems. GAs have recently gained momentum with the development of the [Push 3 language](http://faculty.hampshire.edu/lspector/push3-description.html) by Lee Spector. Push 3’s compact and efficient architecture shares similarities with stack-based virtual machine systems like the Ethereum Virtual Machine (EVM). Although not designed specifically for EVMs, Push 3’s simplicity and flexibility make it conceptually compatible with blockchain execution environments. Push 3 has achieved milestones such as evolving [programs for quantum computers](https://faculty.hampshire.edu/lspector/aqcp/) and supporting autoconstructive evolution. A Push 3 VM could facilitate the deployment of genetic algorithms in decentralized systems, leveraging Push 3’s support for expressive program evolution and adaptive behavior in tasks like resource optimization.
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## Our Approach
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## On Agents
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Sovraigns enables verifiable optimization through genetic algorithms, zero-knowledge proofs, and based rollups:
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An agent is defined as an entity capable of perceiving its environment, processing information, and taking autonomous actions to achieve specific objectives. LLMs can be structured into agents using frameworks that provide memory and feedback loops, but they do not fit on-chain and, at the same time, cannot securely manage secrets like private keys. Without either of these capabilities, LLM-based agents require external key management, increasing risks and undermining decentralized security principles. In contrast, genetic algorithms exhibit agentic characteristics by evolving their behavior over time to meet specific goals. When deployed on-chain within smart contracts, GAs can autonomously adapt to real-time inputs and optimize decisions, all while operating entirely within the secure and deterministic framework of blockchain systems.
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1. Algorithms evolve off-chain through competition between optimizers
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2. Zero-knowledge proofs verify correct execution without revealing the algorithm
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3. A based rollup coordinates requests and stores proven results
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---
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Protocols receive optimized parameters with cryptographic proof of correctness, without trusting any party.
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## **Genetic Algorithms vs. LLMs for Decentralized Systems**
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## Market Size
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|
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1. **Efficiency and Feasibility for Blockchain Execution**
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Current DeFi inefficiencies:
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- **LLMs are resource-intensive:** The computational complexity and size of LLMs make them impractical for direct execution in decentralized environments, where every operation incurs costs. Running even the simplest inference for an LLM would require off-chain computation and trust in external oracles, undermining decentralization.
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| **DeFi Inefficiency** | **Annual Value Lost** | **Root Cause** |
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- **GAs are lightweight:** Genetic algorithms, by design, are computationally efficient. Their iterative, population-based approach to optimization fits naturally into resource-constrained environments. This efficiency ensures GAs can evolve and execute entirely on-chain, preserving transparency and trustless execution.
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| Uniswap V3 LP Losses | ~$400M | Suboptimal position management |
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| Lending Protocol Inefficiency | ~$300M | Conservative parameters |
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| MEV/Arbitrage Extraction | ~$800M | Predictable protocol behavior |
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| **Total Market** | **$1.5B+** | **Lack of intelligent optimization** |
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2. **Evolution vs. Training**
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With DeFi TVL at $50B, we estimate the optimization market at $2-3B annually today, potentially reaching $10B as protocols become more complex.
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- **GAs evolve in parallel:** Genetic algorithms enable evolutionary processes to run across distributed populations simultaneously. This parallelism contrasts with the centralized training required for deep neural networks, which demand synchronized computation and significant infrastructure. GAs’ decentralized nature aligns well with blockchain environments.
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### Current Solutions vs. Sovraigns
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- **Deep neural networks require centralized training:** Neural networks demand substantial computational resources and centralized coordination to train effectively.
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| **Aspect** | **Current Solutions** | **Sovraigns** |
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|---|---|---|
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| **Trust Model** | Centralized (Gauntlet, Chaos Labs) | Trustless ZK proofs |
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| **Accessibility** | Enterprise contracts only | Permissionless for all protocols |
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| **Transparency** | Black box optimization | Fully auditable algorithms |
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| **Cost** | High consulting fees | Pay-per-optimization |
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| **Adaptability** | Manual updates | Continuous evolution |
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| **Security** | Single point of failure | Decentralized validation |
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3. **Auditability of Evolution vs Training**
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|
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- **Training LLMs is opaque:** The progress of training deep neural networks is often difficult to evaluate and verify because testing its capabilities relies on secret data, which cannot be audited by external parties.
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## Why Genetic Algorithms Over LLMs
|
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- **GAs offer transparent evolution:** Genetic algorithms allow the progress of evolution to be easily audited against a target fitness function. This process is fully observable and can be verified at each step with minimal effort.
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|
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|
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---
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Technical comparison for decentralized systems:
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|
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## **Theoretical Framework for Decentralized Algorithm Evolution**
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| **Aspect** | **LLMs** | **Genetic Algorithms** |
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|---|---|---|
|
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| **Computational Requirements** | GPUs, massive memory, centralized inference | Lightweight, runs anywhere |
|
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| **Blockchain Compatibility** | Impossible on-chain, requires external APIs | Efficient ZK-proof verification |
|
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| **Trust Model** | Black box, external dependencies | Fully verifiable with cryptographic proofs |
|
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| **Cost** | $1000s per complex optimization | Pennies per optimization |
|
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| **Adaptability** | Fixed after training | Continuously evolves to market conditions |
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| **Determinism** | Non-deterministic, unreliable | Deterministic, predictable outputs |
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| **Decentralization** | Requires centralized providers | Fully decentralized execution |
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|
||||||
A protocol providing agents as a service could leverage genetic algorithms to address complex problems within blockchain environments. Read through this [real-life usecase explaining the applicability of agents to DeFi](example.md). Central to such a system would be the development of a Push 3 Virtual Machine (VM), enabling efficient execution of genetic algorithms. An "Optimizer Pool", an network of nodes could collaboratively train and evolve these algorithms offchain. These nodes would compete to improve the fitness of the algorithms. Once an improvement, a measuruable better solution to the fitness function is found in off-chain computation, a node would submit it to be accepted into the population of solutions registered on chain, in exchange for a rewards payment by the protocol. The nodes of the optimizer pool would run under an incentivization model simira to proof-of-work systems.
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Genetic algorithms provide the optimization capabilities of LLMs while remaining verifiable, deterministic, and cost-effective for blockchain environments.
|
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## Technical Architecture
|
||||||
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|
||||||
|
Three core components enable verifiable optimization on Ethereum:
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|
||||||
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1. **Based Rollup Coordination**
|
||||||
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- Manages algorithm registry and optimization requests
|
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- Batches proofs for cost-effective verification
|
||||||
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- Inherits Ethereum's security model
|
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|
||||||
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2. **OpenVM Execution Environment**
|
||||||
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- Runs genetic algorithms in a provable VM
|
||||||
|
- Generates STARK proofs for each optimization
|
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- Ensures deterministic execution
|
||||||
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|
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3. **Optimizer Network**
|
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- Independent nodes compete to evolve better algorithms
|
||||||
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- Council validates quality before on-chain registration
|
||||||
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- Economic incentives tied to algorithm performance
|
||||||
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|
||||||
|
### Architecture Overview
|
||||||
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|
||||||
|
The protocol operates across three layers:
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||||||
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|
||||||
|
```
|
||||||
|
┌─────────────────────────────────────────────────────────────────┐
|
||||||
|
│ ETHEREUM L1 │
|
||||||
|
│ • Final Settlement • Proof Verification • Protocol Updates │
|
||||||
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└────────────────────────────┬───────────────────────────────────┘
|
||||||
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│ State Bridge
|
||||||
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┌────────────────────────────┴───────────────────────────────────┐
|
||||||
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│ BASED ROLLUP (Sidechain) │
|
||||||
|
│ • Task Registry • Algorithm Storage • Coordination │
|
||||||
|
│ • Reward Pools • Version History • Batch Requests │
|
||||||
|
└────────────────────────────┬───────────────────────────────────┘
|
||||||
|
│ ZK Proofs
|
||||||
|
┌────────────────────────────┴───────────────────────────────────┐
|
||||||
|
│ OFF-CHAIN COMPUTE │
|
||||||
|
│ • Algorithm Evolution • OpenVM Execution • Proof Generation │
|
||||||
|
│ • Council Validation • Optimizer Competition │
|
||||||
|
└─────────────────────────────────────────────────────────────────┘
|
||||||
|
```
|
||||||
|
|
||||||
|
| **Layer** | **Purpose** | **Key Components** |
|
||||||
|
|---|---|---|
|
||||||
|
| **Ethereum L1** | Final settlement and security | Smart contracts, State verification |
|
||||||
|
| **Based Rollup** | Decentralized coordination | Task registry, Algorithm storage |
|
||||||
|
| **Off-Chain** | Computation and evolution | OpenVM, Genetic algorithms, ZK proofs |
|
||||||
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|
||||||
|
### Based Rollup: Decentralized Coordination
|
||||||
|
1. **Task Registration**: DeFi protocols register optimization tasks on the based rollup, including:
|
||||||
|
- Fitness functions (optimization goals)
|
||||||
|
- Evaluation parameters and constraints
|
||||||
|
- Reward pools for successful optimizations
|
||||||
|
|
||||||
|
2. **Algorithm Registry**: The best algorithms for each task are registered on-chain after council validation
|
||||||
|
- Algorithm hashes stored on-chain for verification
|
||||||
|
- ZK proofs verify the exact algorithm (matching hash) was executed
|
||||||
|
- Version history maintained for auditability
|
||||||
|
- Permissionless access for all protocols
|
||||||
|
|
||||||
|
3. **Execution Requests**: When protocols need optimization:
|
||||||
|
- Send request to based rollup with current data
|
||||||
|
- Request triggers off-chain execution
|
||||||
|
- Multiple requests batched for efficiency
|
||||||
|
|
||||||
|
### Off-Chain: Evolution and Zero-Knowledge Execution
|
||||||
|
1. **Algorithm Evolution**:
|
||||||
|
- Optimizers run genetic algorithms using standard Push 3 implementations
|
||||||
|
- Evolution happens on local high-performance infrastructure
|
||||||
|
- Best solutions submitted to council for validation
|
||||||
|
- No ZK proofs needed during evolution phase
|
||||||
|
|
||||||
|
2. **Zero-Knowledge Proof Generation** (triggered by on-chain requests):
|
||||||
|
- Registered algorithms execute in OpenVM with request data
|
||||||
|
- OpenVM verifies the algorithm matches the on-chain hash
|
||||||
|
- STARK proofs generated via Plonky3
|
||||||
|
- Proofs include complete execution trace and results
|
||||||
|
- Multiple proofs batched into rollup blocks
|
||||||
|
|
||||||
|
3. **Council Validation**:
|
||||||
|
- Distributed validators verify algorithm improvements
|
||||||
|
- Consensus required before on-chain registration
|
||||||
|
- Ensures quality without centralized control
|
||||||
|
|
||||||
|
### L1 Integration: Trustless Protocol Updates
|
||||||
|
1. **State Bridge**: Based rollup posts state roots to Ethereum
|
||||||
|
2. **Proof Verification**: Smart contracts verify STARK proofs
|
||||||
|
3. **Action Execution**: DeFi protocols execute optimizations based on verified results
|
||||||
|
|
||||||
|
### Key Components
|
||||||
|
- **Registry (based rollup)**: Task and algorithm management with ZK verification
|
||||||
|
- **OpenVM Runtime**: Custom Push 3 implementation for genetic programming
|
||||||
|
- **Optimizers (off-chain)**: Compete to evolve better solutions
|
||||||
|
- **Council (distributed)**: Validates algorithm quality before registration
|
||||||
|
- **Proof Aggregator**: Batches multiple ZK proofs for efficient verification
|
||||||
|
- **State Bridge**: Synchronizes rollup state with Ethereum L1
|
||||||
|
|
||||||
|
## Timing
|
||||||
|
|
||||||
|
Three technical developments make this feasible now:
|
||||||
|
|
||||||
|
1. **ZK Infrastructure**
|
||||||
|
- STARK proving systems now production-ready
|
||||||
|
- Proof generation costs decreased 100x since 2022
|
||||||
|
- OpenVM provides suitable execution environment
|
||||||
|
|
||||||
|
2. **Based Rollups**
|
||||||
|
- Ethereum's rollup infrastructure mature enough for production
|
||||||
|
- Provides coordination without sacrificing decentralization
|
||||||
|
- Cost structure makes continuous optimization viable
|
||||||
|
|
||||||
|
3. **Market Demand**
|
||||||
|
- Protocols reaching limits of manual parameter tuning
|
||||||
|
- Increased scrutiny requires auditable optimization
|
||||||
|
- Competition driving need for efficiency gains
|
||||||
|
|
||||||
|
## Competitive Position
|
||||||
|
|
||||||
|
**Technical Differentiation:**
|
||||||
|
- First implementation of ZK-verified genetic algorithms for DeFi
|
||||||
|
- Custom VM optimized for this use case
|
||||||
|
- Integration with Ethereum's rollup infrastructure
|
||||||
|
|
||||||
|
**Network Effects:**
|
||||||
|
- More protocols using the system improves algorithm quality
|
||||||
|
- Optimizer competition creates continuous improvement
|
||||||
|
- Registry accumulates valuable optimization history
|
||||||
|
|
||||||
|
**Barriers to Entry:**
|
||||||
|
- Requires expertise in genetic programming, zero-knowledge systems, and DeFi mechanics
|
||||||
|
- Complex coordination between multiple system layers
|
||||||
|
- Significant development time to reach production quality
|
||||||
|
|
||||||
|
We aim to become the standard optimization layer for DeFi protocols, addressing a multi-billion dollar inefficiency.
|
||||||
|
|
||||||
To evaluate the effectiveness of distributed evolution, a "Council" mechanism needs to be created. This Council would consist of validators who execute the latest evolved algorithms and assess their performance against a predefined target fitness function. Validators would then cast votes on whether the new algorithms deliver measurable improvements. This transparent voting process ensures that only the most effective solutions are rewarded and integrated, fostering trust and collaboration across the Optimizer Pool. By aligning incentives with measurable progress, such a framework provides a reliable and decentralized method for advancing algorithmic evolution.
|
|
||||||
|
|
||||||
Ultimately, this system creates a foundation for scalable agent development, aligning with the broader concept of agents as a service, where users and protocols in DeFi can deploy and leverage optimized, evolving algorithms tailored to specific tasks.
|
|
||||||
|
|
||||||
|
|||||||
Reference in New Issue
Block a user