Farming V2 to V3 — the what and the why

ThreeFold recently introduced a third generation farming model, which also creates a change in tokenomics. Here, I’ll be explaining the shift and what it means to farmers as well as the larger community. I hope also to open a discussion around any questions and concerns that remain.

Reviewing V2

Let’s start by looking into the old farming V2 model. Under V2, farmers receive diminishing rewards over time according to a “difficulty level” that’s based on the number of tokens already minted and the amount of capacity connected to the Grid. There is a limited supply of TFT that will ever exist, so no more tokens would be minted when that cap was reached. This model assumed that cultivation income from Grid utilization would eventually replace farming rewards as the sole source of income for farmers.

Like many projects offering token rewards to network participants, V2 was designed to bootstrap the Grid by providing meaningful rewards to early participants, even without significant adoption to drive cultivation income. This was a success, driving the Grid to already become the largest decentralized storage and compute network in existence. However, utilization has not grown to match the available capacity, and there were no incentives under V2 to drive the sales of Grid capacity.

Moving to V3

A shift in the farming model was necessary to sustain the long term viability of the Grid and ensure that there is also a proper incentive to grow utilization. Farming V3 provides stable rewards for farmers over a five year period, with the possibility that rewards will taper off after five years. This means that while farmers may receive fewer tokens per month upfront, they will have a predictable return over five years. At the same time, a portion of tokens spent to deploy workloads to the Grid are burned, ensuring that more tokens can be minted to reward farmers on an ongoing basis.

The other piece of V3 is providing incentives for those who sell Grid capacity. This includes farmers who sell their own capacity. By directing some revenue to “sales channels”, we balance incentives among those providing capacity and those bringing users for that capacity. As with V2, a small part of tokens spent on capacity go to the ThreeFold Foundation for marketing, promotion, and supporting growth of the Grid.

A final piece of V3 is that farmed tokens are staked, either until the 3Node reaches 30% utilization for three months, or until the node has been online for 24 months. Cultivation revenue is still made available to farmers immediately. This has been done in order to scale the release of tokens with the growth of Grid utilization and demand for TFT. Farmers who want their tokens unstaked sooner will be motivated to find uses for their capacity. Another consequence is that farmers whose capacity in high demand will be encouraged to add more capacity when their tokens are unlocked.

Ultimately, the farming models have always been designed with consideration for the best interests of all stakeholders in the network. This shift is intended to provide sustainable rewards for new farmers on an ongoing basis, while also bringing utilization to the Grid through sales incentives. Farmers can calculate the rewards for a specific hardware configuration using the calculator spreadsheet, with confidence that these rewards will be stable for five years.

So, what questions and concerns do you still have about the new ThreeFold farming model?

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Thank you for the explanation - well written and easy to understand. I understand V3 is coming soon - and all new farmers will be rolled into the v3 model by default and have no option to “select” v2, correct.

Secondly, I think for simplicity we need to get everyone on the V3 model eventually, do you have an idea what the “grace” period will be?

As of now, new farmers are already put onto V3 without an option to choose V2.

I’m not aware of any plan to force all farmers to V3. Making it optional seems like the right choice to me, avoiding the sense that farmers are at the whim of internal decisions to change the farming model. Let’s see if we can gather more perspectives on this.

The only concerns of mine that there are various ways to workaround this model and unlock yourself, like by reducing cost of your capacity and buying from your self that 30 percent also you can reduce capacity and then reduce price and buy from yourself and then increase later. And it doesnt help TFT nor the network. What I would suggest is lock 30% of tokens and rest give immediately. For example I am not planning on right away spending them and still will wait for price go up or project getting in better shape. But locking for years sometimes it is hard to predict for people theirs lives for such long. What also I would suggest like if you want to lock percent for years then allow make DIY certified, and we will recieve more but as price it will be locked for years. I would go for that.

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As I understand it, the ability for farmers to set their prices may be going away as part of this shift to v3.

Even so, farmer could rent 30% of their node’s capacity to unlock the tokens. Farmers only pay 25% of the usual fee to rent their own capacity, though buying at this discount may not count towards the check to unlock. Even so, farmers could rent their node’s capacity from a different 3Bot, paying full price.

This workaround, whatever the details, strikes me as okay. It essentially amounts to allowing farmers to unlock early for a fee, with the added benefit of encouraging farmers to find something useful to do with their node as long as they are paying for some capacity.

Does the vested tokens remain locked forever if the 30% utilization rate is not met, nor the 24 months continuous uptime in V3?
Is it possible for example that after 22 months of continuous uptime without 30% utilization, something cracks in the 3node, so you are unable to keep farming, and you lose all your progress, and won’t see any token rewards for the 22 months period?

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This case needs to be addressed, for sure. It is possible for a node to lose its id, say if the ssd fails, and I don’t think it’s fair for tokens to be locked forever if that happens. Perhaps a solution would be unlocking tokens 24 months after a node first comes online, even if it later goes down. It would still be unfortunate for the farmer, who would have their unlock period reset for essentially the same node, but I’m not sure if there’s a better solution.

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Good remark, actually what we can do is that the TFT unlocks anyhow after 24 months, independent how much uptime was achieved. So Farming effort is never lost.

We will make sure this is in our farming code on TFChain 3.0

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Please note there is update on farming wiki,

  • Farming 3 is only for TFGrid 3.0
  • Farming 2 is only for TFGrid 2.0

Exception:

  • Farmers who already today make their 3Nodes available for testing for TFGrid 3.0 will continue receiving Farming rewards gen 2 until farming is implemented on TFGrid 3.0 and they choose to upgrade.
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Hi @scott, “encouraging farmers to find something useful to do with their node as long as they are paying for some capacity”. What are the top 3-5 typical scenarios of doing something useful ?

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  1. Host a personal cloud server
  2. Run nodes for decentralized projects, like blockchains, social networks, and content delivery
  3. Contribute to scientific research like Folding@home
  4. … What else can you imagine?
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For me, as a general user, probably Folding@home and replace Google 1 100GB subscription are the options to go. I think technically advanced users might have more utilization options to consider. Would appreciate it if you would publish some guidance for the general users on how to utilize their 3nodes.

Sounds groovy :sunglasses: Publishing guides on how to utilize nodes at home is on my todo list but may need to wait until Grid 3.0. There are changes coming that will make these deployments simpler, and there’s a lot of work to do for the new release in the meantime.

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Hi @scott,would you pls give a concrete examples how to sell its own capacity.? To whom- retail or instutional … In return how would end user -Retail or instutional - demand the capacity or reach the grid.