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Callisto Network Masternodes

Re-inventing the edge and cloud continuum for secure distributed application execution.

Introduction

With the advent of edge computing - a distributed computing paradigm that brings processing and storage closer to the point of data generation - the execution of applications with strict latency requirements was enabled.
The edge resources consist of personal computers, GPUs, mini data centers, etc., and are distributed across the network. In contrast, cloud services use data centers distributed in a limited number of locations worldwide. In this cloud edge continuum, edge resources execute the time-critical tasks while the abundant cloud resources are leveraged to execute large workloads with relaxed latency requirements.
Taking advantage of such an architecture, we aim to create a new market of highly secure distributed cloud-edge computing infrastructure. This infrastructure is designed to offer financial incentives to the participants; by providing resources, they will receive rewards from the applications running on the Masternode infrastructure. We could see it as next-generation mining in which users provide hardware and networking resources that can be used for many applications instead of solving complex puzzle problems for validating transactions.
The nodes that take part in this model, called Masternodes, form a distributed computing and networking infrastructure. To ensure secure execution in a permissionless environment, the Masternodes will be collateralized. The model is designed so that the economic loss will be higher than the profit in case of malicious behavior. In contrast, the malicious nodes are slashed from the network, ensuring increased security and decentralization.
To ensure the increased security of the infrastructure along with the required decentralization, minimum and maximum collateral limits are set. While the minimum collateral limit ensures the security of the offered services, it can be increased up to the max upper limit, further increasing the safety and, therefore, the received rewards.
To ensure security, 21 masternodes will be created initially, 11 held by Callisto Enterprise and 10 held by the community. The minimum required collateral will equal 500,000 CLO, 25,000 SOY, 150 000 CLOE, and the maximum 10 times more.
Depending on the price of the related asset, the minimum threshold can be hard to be met by users. For this reason, Masternode pools will be created. These pools will enable users to combine their funds to meet the minimum requirements set or further increase their collateral and receive higher rewards. When a masternode receives a reward, it will be split between the participants in the pool in a ratio proportional to the user's stake (a part will be also kept for the hardware owner).

Masternodes Based Cross-chain Bridge

The first use case of the Callisto Masternodes will be the verification of the transactions performed over the cross-chain bridge with the goal of making it further decentralized.
Considering the interest the DeFi ecosystem has attracted in the last few years, the value of assets (coins/tokens/NFTs) transferred through blockchain bridges increases continuously along with the collected fees. As the volume rises, security becomes critical, and Masternodes can efficiently increase the bridge's safety and be rewarded for their services.
The bridge operation is based on a set of smart contracts. A deposit is made to the bridge's smart contract to transfer a given crypto asset from its native blockchain to a different one. The deposited assets are frozen, and the equivalent assets are created on the destination blockchain. The native coins/tokens remain locked into the native chain's smart contract. On the other hand, when value is transferred from the destination blockchain to the native blockchain, the related "wrapped" tokens on the destination blockchain are burned, and the native ones are unlocked from the smart contract.
Figure 1. The interaction of the Masternodes network with the different blockchains for the transfer of value verification.
In the model we introduce, Masternodes play an essential role in the bridge operation by providing the processing power needed to validate the transactions performed. Specifically, the bridge operation will be based on a set of smart contracts (run at layer one on the Callisto Network blockchain). This allows for protocol-level trustless validation of bridge transactions, leveraging the offered computing, storage, and networking resources from the Masternodes that form a distributed computing and networking infrastructure.
The Masternodes will be responsible for validating the transactions and ensuring the security of the bridge in this trustless environment (Figure 1). Each time a transaction is performed over the bridge, a set of Masternodes is selected to perform the validation based on a given set of rules described below.
Everyone will be able to create a collateralized masternode and receive fees for providing resources to the decentralized bridge operation. Notably, the Masternodes will compete over time by providing their resources to validate more transactions.
The probability of a masternode being elected to validate a bridge transaction will be proportional (i) to the deposited collateral, (ii) to the Masternode’s uptime, and (iii) to the latency of previous validated transactions. Higher collateralized Masternodes with higher uptime and lower verification latency will be prioritized towards offering higher quality services.
Assuming two Masternodes with the same hardware and networking capabilities but different collaterals. One with the minimum collateral and the second with the maximum. According to the proposed Masternode selection model, the masternode will be selected proportionally more often in the long term, resulting in higher rewards. Hence, those who want to maximize their hardware revenue are incentivized to increase their collaterals with time towards reaching the maximum collateral.
After masternodes that will validate the transaction are elected, the masternodes forward signatures to the bridge contract. The smart contract checks the signatures, and the funds are sent to the receiver if they are correct. If bad actors are found during this process, they are slashed from the distributed infrastructure and penalized for their malicious behavior, in the most extreme, the collateral can be burned. A fee is paid for each performed transaction over the bridge, which is equally split among the selected masternodes.

Next Steps

The masternodes infrastructure will not be limited to validating the bridge’s transactions. We are building a secure computing and networking infrastructure that will enable the permissionless process of algorithms for layer two applications. Also, through the support of the Kubernetes applications, we plan to build a scalable environment for secure decentralized execution of applications, which will further increase the masternode rewards with time. Use cases such as video encoding can also be highly profitable. The low transaction cost on Callisto Network can offer significant advantages compared to Ethereum competitors (e.g., Livepeer).

Priority Queue Until Full Launch

As the number of masternodes will be limited, the masternodes will be selected on a first-come, first-served basis from a waiting list established for this purpose.
On September 5, 2022, we will launch a waiting list available to everyone. The participants will be invited to provide their wallet address from which they wish to set up the Masternode. The rank in the queue will be based on Callistonian Points.
The Callistonians points will be calculated according to the amount of Callisto Network coins held in the participant’s wallet; Each day, the participants will receive 1 Callistonian Point for each CLO coin held in their wallet.
As the first wave of masternodes includes 10 community masternodes, the first 10 positions at the end of the campaign will be eligible to run a masternode, and additional community masternodes will be introduced at a future date.
Technical requirements and application details for participation in the campaign will be published on August 31, 2022.
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ℹ️ Update on the 31st August 2022.

Technical Specification (How does it work?)

As a transaction is performed via the cross-chain bridge, the bridge's smart contract solicits signatures from randomly selected masternodes plus one of the two primary masternodes.
Every transaction must be validated by 5 masternodes at least, including a primary masternode. Therefore, the bridge requires signatures from the primary masternode and 4 masternodes for transaction approval..
Note: The minimum threshold is likely to be increased as we will onboard additional Masternodes in the future.

Masternodes Rewards

Callisto Network Masternode operators will receive a share of the Soy tokens minted by the Soy Finance global farm.
Callisto Network guarantees a minimum 50% APR for the first 21 Masternodes during the first year, thus making the Callisto Network Masternodes the most profitable on the market at this date. The rewards will be paid out to the Masternodes owner's address on a daily basis .
At the same time, Masternode owners can increase their masternode reward further by optimizing following parameters:
(i) deposited collateral size (ii) Masternode’s uptime (iii) latency of previously validated transactions.
Based on the above mentioned parameters, masternodes will be rated, and will get reward tokens allocation due to their rating. This will further increase their APR, and encourage masternode operators to allocate premium hardware and resources for masternodes, thus increasing the bridge's security and operation.
To ensure a high level of bridge operation decentralization, Masternodes number will be increased with time, while the existing reward mechanisms will be extended to offer additional rewards to the Masternode operators.
Note: Described reward mechanism allows the cross-chain bridge to remain free of charge for users and increase its usability and adoption for the long term.

Technical Requirements

As it was stated above, the first use case for Callisto Network Masternodes is improvement of the security of Soy and NFT Bridges by incorporating the Masternodes in the transaction validation process.
Validation of Soy Bridge transactions does not require the Masternode operator to purchase, provide, and manage backend servers. Instead, designed as a serverless function, it enables operators to take advantage of the “pay-as-you-go” plans and be charged based on real usage.
As Masternodes do not require significant computational power, running Masternodes on cloud computing services (Amazon Lambda, Azure, etc...) will be of zero cost in most cases with the advantage of the free plans of the providers. Masternodes are open to everyone without requiring any particular technical specifications.

Join the Priority Queue & Effective Launch

Everyone can join the priority queue by filling out the form available here. On September 5, a dedicated page listing participants' wallets and their Calliston points will be available online.
The first ten profiles in the priority queue as of December 1, 2022, will be whitelisted in the smart contract and therefore be allowed to run Masternodes in the Callisto Network.
The first Masternodes are expected to be launched by December 15; if an eligible Masternode is not successfully set up before this deadline, the whitelisted address will be removed in favor of the following one in the queue.
A step-by-step guide will be provided prior to launch, to assist operators in the process of configuring Masternodes.

Withdrawing a Masternode Collateral

If a Masternode operator wishes to withdraw locked funds and deactivate the node, operator should make a request at least 15 days in advance to the following email: [email protected]
After the verification process has been completed, the operator's address will be removed from the whitelist and the operator will be able to withdraw locked funds.

ℹ️ Update on the 30th of November 2022.

Masternodes Tokenomics

Typically, masternode owner's rewards depend on the number of applications that utilize the masternode resources. Over time the Callisto Network ecosystem is set to expand, and new applications will be added, further strengthening the early masternode owners’ profits.
Initially, Masternodes will be mainly utilized to enable the distributed operation of the Callisto Bridge enabling at the same time seamless transfer of assets and NFTs between blockchains; SOY Finance and Callisto Bridge are two applications tightly connected with the Callisto Bridge being utilized mainly by SOY Finance users at the time of writing. Therefore, Masternode owners will initially be allocated 5,791,000 SOY tokens to be distributed annually as a reward.
Masternodes will be managed by a limited number of users who meet specific collateral requirements and have been ranked in the top 10 of the priority queue on the 1st of December 2022. Additionally, 11 masternodes will be maintained by Callisto Enterprise to ensure the bridge's security until its complete decentralization.
The community's Masternodes will be awarded the largest share of the rewards, with 60% of the total. In comparison, masternodes held by Callisto will receive 40% of the rewards, even though they outnumber masternodes owned by the community.
Rewards will be accumulated and distributed to masternode owners based on the number of assets deposited and their weighting. Therefore, the higher the deposit, the higher the expected rewards, while in case all masternodes have the maximum of collateralized assets, they will share the same rewards. The weighting is detailed in Table 2.
Table 2. Reward allocation to the different assets.
This selection of assets is designed to ensure that Masternodes' collateral is not based solely on a single asset. Their weighting ensures a fair reward distribution in line with the market capitalization of the selected assets, as shown in Figure 1.
Figure 1. Market cap ratio versus SOY market cap.

What To Expect In The Future

We firmly believe that Masternodes are essential for the next generation of high-computing distributed infrastructure. Through Masternodes, Callisto Network aims to increase the decentralization of related products, such as the Callisto Bridge, to create a decentralized market of computing nodes that are rewarded for offering their resources to run decentralized applications. In contrast to mining, resources are only used when needed, and energy efficiency is thus achieved, setting the base for enabling the distributed execution of applications in untrusted environments.

Masternodes Launch Timeline

  • 30/11/2022 - Launch on Callisto Network testnet.
  • 6/12/2022 - Launch on Callisto Network mainnet & release of Masternode set-up tutorial.
  • 15/12/2022 - Official Launch of the 1st batch of Callisto Network Masternodes.
  • Q1 2023 - Masternode Pools Launch.
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