Written by William Wright, Co-Owner of MiningStore & Mining Writer for Dapp.tech
Published on Dapp.tech September 13th 2018
How to get started setting up a LOKI Service Node
This article covers the following questions about LOKI Service Nodes…
- What is a Service Node?
- How do the Nodes provide greater functionality to the LOKI project?
- How do Nodes provide greater resilience to cyber attacks?
- How can you invest in a Service Node?
- What return on investment can you expect?
- What effects could the release of Nodes have on the price of LOKI?
LOKI service nodes are about to go live on the 20th of September at approximately 10pm EST. If you want a slice of the cake then you should start oganising your investment now. So what do you need to know before getting involved?
For readers that have not heard of the LOKI project before, head to, “What is Loki? Presentation and Q&A”. For those of you, who have been following the project and want to get involved with the projects promising service nodes, continue reading.
What is a Service Node?
Service Nodes together create a second layer on the LOKI block chain. The Service Nodes aim to increase the functionality of the LOKI network as well as increase the networks resilience to cyber attacks without running directly on the blockchain.
How do the Nodes provide greater functionality?
The main role of Service Nodes is to support the LOKI network by providing a greater level of privacy for both transactions and messages. During the initial introductory phase of the Service Nodes, the nodes will have limited responsibilities. However as the LOKI project progresses, the Nodes will adopt greater responsibilities.
Initial role: First 3 months
- Report to the block chain confirming uptime.
- Act as a routing service for transactions in order to increase privacy.
Medium term role: 3 to 6 months
- Communicate with other Nodes in order to run tests and collect data.
- Provide a decentralized message storage for Loki Messenger.
- Facilitate the release of LOKI messenger ensuring fast and secure transaction of messages.
Long term role:
- The bandwidth requirement of the nodes will increase as the nodes will be acting as a complete routing service enabling private access to the internet.
- At this point Service Nodes will provide the network with private messaging and access to the internet.
How do the Nodes provide greater resilience?
Service Nodes play an essential role in increasing the resilience of the LOKI network from cyber attacks. They achieve this by adding a proof of stake (POS) requirement to the block chain network. POS essentially means that in order to own a Node, the Node holder must stake 45,000 LOKI for around 30days. Every time a node is acquired this reduces the supply of LOKI and therefore increasing the price of LOKI. Hence it makes it exponentially more expensive to obtain enough Nodes to complete an attack.
How can you invest in a Service Node?
In order to own a service Node you need to meet a couple of requirements.
- You need purchase either 45,000 LOKI, or you can go though a trusted Node host service who will partner you with 4 other Node investors allowing you to stake ¼ of the total requirement.
- You will need to know how to run VPS Linux system in order to set up and run the node, or go through a trusted provider who will host the Node for you.
- You will need to set up a CLI LOKI wallet; a trusted Node host service will assist you with this if you don’t know how.
If you want to learn to setup and run the Node yourself, then the LOKI development team has made an exceptional guide on how to set up a Service Node.
However if you’ve never done coding or used Linux OS before, then another viable option is to hire a reputable node hosting provider such as MiningStore. Be sure that the node host you decide to hire has a good reputation and positive online reviews. MiningStore have a great track record and can take care of building, running and maintaining a LOKI Service Node, especially helpful for non-technical people. The best thing is that this can be done without having to give MiningStore (or other node host) access to your staked coins.
Your investment in a node can be virtually as simple as a term deposit, without having to trust a third party holding your funds.
For more information about MiningStore’s trustless hosted node services, get in touch with the team at MiningStore.com.au.
What return on investment can you expect?
The Loki development team has provided the following example for expected return on investment from Nodes in the first couple of months.
There are 720 blocks discovered in a day at ~60 Loki per block equates to 43200 Loki in a day. Divide that in half as the SN only receive 50% of the reward which gives us 21600 Loki a day. Now depending on the nodal count, if there is only 50 Nodes this 21600 Loki will be spread between this Operators. Therefore 21600/50 = ~ 432 Loki a day. Times the Loki per day by the month, 432 * 30 = 12960. So both of our maths are on the same path which is an ROI of 29%/month.
Keep in mind the report shows an ROI/year at 500 nodes. for the year analysis(and this is only a rough analysis) 720 blocks * ~50 loki(50 loki as the block reward drops over the year) = 36000 Loki Divide 36000 Loki in half as the SN gets half the reward = 18000 18000*365 days = 6570000 loki rewarded to SN per year Then if 500 nodes are running each node receives 6570000/500 = 13,140 Loki which is about 29% ROI/annum However if only 50 nodes are running 6570000/50 = 131400 Loki per node which is 292% roi/annum.
What effects could the release of Nodes have on the price of LOKI?
The answer to this lies in basic economics. Each Service Node is going to restrict the supply of LOKI by 45,000 LOKI. As the supply of LOKI is restricted, this will increase the price of LOKI.
Therefore for initial Node Holders, your 45,000 LOKI stake could be worth much more as more nodes are rolled out.
This creates a win-win situation for initial Node holders as if more Nodes enter, then the reward for holding a node is reduced, but the value of the 45,000 LOKI being held is increased as price will go up.
Summing it all up
The LOKI project and its private messaging service are ticking all the boxes that successful block chain projects need to tick. The main net Service Nodes are going live around the 20th of September, and should provide some upward pricing pressure on the value of LOKI coins.
LOKI Service Nodes are also looking like a very promising investment that, depending on the number of nodes set up by the public, we could potentially see large early day numbers of anything up to around 28% ROI but I’d say that would be best case scenario and only until more nodes are launched to meet demand raising confidence in the project’s long-term sustainability. For investors who are confident with coding you could run your own service node, for those who prefer to keep their investment passive, a trusted node host such as MiningStore can setup and host a ‘trustless’ node for you.
Written by William Wright, Co-Owner of MiningStore & Mining Writer for Dapp.tech | Decentralized Applications News. Disclaimer: This is not financial or investment advice. Please always do your own research. William Wright is one of the proprietors at MiningStore and is a respected member of the Dapp.tech community. Published on Dapp.tech September 13th 2018 Feature Image Source: LOKI Network - Loki Service Nodes: Brief Functionality Overview, Published Sep 10th 2018 - https://medium.com/@LokiNetwork/loki-service-nodes-brief-functionality-overview-2abea4846b38