Duties & Compensation

Node Operator Duties

Running a TACo node is not a passive activity, but the on-going responsibilities for participating stakers are very manageable. To supply a high quality service and sustain the utility of the Threshold Network, TACo node operators must:

• Keep the server/machine running TACo software online and accessible at all times; such that incoming decryption requests are verified and answered immediately, and there is no delay in reaching a threshold and supplying decryption material to qualifying data recipients.

• Ensure their machine is running the latest version of TACo. New version releases will be shared on the Threshold Discord #announcements channel – make sure you have notifications enabled.

Deauthorization Delay

Adopters of TACo require reassurance that the cohorts of nodes managing their users' data will remain intact for extended durations. Although cohort members can be securely replaced, while maintaining a persistent public key, it is preferable for economic reasons to minimize the number of node replacement rituals – particularly in the genesis era of the service. Hence, TACo service provision ideally involves a commitment to provide service for years, rather than months.

The deauthorization delay is the time one must wait between initiating a withdrawal from TACo service provision and being able to complete that withdrawal. From genesis, the deauthorization delay is set to 6 months (183 days).

Note that this delay is universal and independent of any other token lock-up or bonus mechanism.

Fees

The first version of TACo will launch with fee-paying adopters. They will each pay a duration-based fee upfront, which gets them 6 months of access to the TACo API and a corresponding cohort of nodes to manage access to their users' data. These fees are paid in DAI.

Fees will be collected and held by the Coordinator contract, which will be temporarily placed under the control of the Threshold Council.

Following a set of competing proposals and votes, the DAO will choose a fee distribution mechanism, which will use the accumulated fees in a way that is most beneficial to the network and participating stakers. Here are some ideas to consider ahead of this collective decision:

• Should fees be automatically converted to T, which would support the Threshold token price, enable compensation in a single token, and increase protocol-owned liquidity?

• Should stakers whose node is a member of more cohorts be compensated with commensurate fees, or should fees be distributed based purely on availability (i.e. stand-by nodes earn the same as nodes in active cohorts)?

Rewards

TACo node operators earn 3.75% APY as soon as they authorize to the TACo application. This yield is maintained, irrespective of the fluctuations to the staking rate, by the Stable Yield mechanism.

Please note that from January 1st 2024, stakers will not earn any yield if they only run a Proxy Re-Encryption node. Rewards will only be distributed to stakers who have authorized to TACo. PRE capabilities will be folded into the TACo application in a later update.