Why PPIO Designed Coin Pool Nodes

PPIO (https://pp.io) is a decentralized storage project that Bill and I developed. It is an online storage and delivery platform, designed to provide users with greater affordability, speed and privacy.

When designing PPIO, I created a business role which I termed “Coin Pool”. In this article, I will share in detail my thought process regarding Coin Pool.

What is Coin Pool?
PPIO provides a node similar to a payment gateway node, called Coin Pool node. Each Coin Pool node is an individual business entity, responsible for its own profits and losses. Users or developers can sign contracts with the Coin Pool to purchase PPIO service packages selected from a variety of options. These service packages include cost, capacity and expenses. Following purchase, while using the services provided by PPIO, all payments will be handled by PPIO Coin, assuming they are within the scope of the agreed upon timing and capacity.

This is how Coin Pool works.
Coin Pool nodes have the following characteristics:

After purchasing the service packages, users will pay the agreed upon PPIO Coin amount (such as the annual cost for a given amount of storage space) to the Coin Pool.
All random payments of users are made by Coin Pool, while all data linking operations, such as uploads and downloads, are directly completed by the user nodes.
In order to maintain a relatively stable Coin Pool, each Coin Pool node must have a PPIO Coin deposit as collateral. If the Coin Pool node fails to fulfill its agent liability in a timely manner, the PPIO coin deposit will be confiscated and the service contract will be transferred to another qualified Coin Pool.
All information related to the Coin Pool nodes is made public on PPIO’s network so that users can see all relevant information when choosing Coin Pool nodes. This includes information such as the amount of the PPIO Coin deposit, the total number of PPIO Coins held by the Coin Pool, and the number number of users who have signed agreements with the Coin Pool.
PPIO’s network provides a set of development API for the Coin Pool nodes, enabling them to handle PPIO Coin payments for users.
Coin Pool developers can develop payment gateways which not only support cryptocurrencies such as Bitcoin, but also support fiat currencies, thereby greatly lowering the threshold for user accessibility.
Because each Coin Pool node is an individual business entity that is responsible for its own profits and losses, competition among multiple Coin Pools effectively lowers the price of storage service, attracting more users and helping to maintain healthy development of PPIO network’s economy as a whole.
Why did I design Coin Pool nodes?
The primary reasons for designing Coin Pool are as follows.

1. It is difficult for ordinary users to understand PPIO’s raw payment method.
   The raw payment method designed by PPIO is entirely accurate to the hard disk and traffic. All storage behaviors are made into smart storage contracts, and all downloading behaviors are also shaped to smart download contracts. Any costs incurred while under contract are paid based on the price stated in the contract. The cost is determined precisely according to the actual storage space, storage time and usage flow. The precise particle used is Gas. Each time a file is stored, each time a file downloads, the smart contract is be put into effect. When the smart contract agrees, it will predict the usage volume (including storage space-time and bandwidth) and determine the GasPrice. By using the formula Cost=Gas*GasPrice, this will precisely calculate the total cost. This mechanism is similar to Ethereum’s. Such a mechanism will be very inhuman if it were to be applied to PPIO’s business services.

Commercial service products are generally designed with ladder pricing and even offer limited amounts of free storage as well as trial periods to encourage users to try out their services, thereby leading to purchases. For example, Google Drive provides the following tiered payment structure:.

Free space below 15G
100G space — $5.99 for three months or $19.99 for 12 months
1 TG space — $29.99 for three months or $99.99 for 12 months
For merchants, as long as the sum of the fees paid by its few paying users exceeds the cost incurred by all users, this business model is sustainable.

In PPIO, I also wanted users to use this payment method, so I designed Coin Pool nodes. After the user has a one-time payment Coin Pool node, the user can get unlimited use within the specified space limitations. Users can sign contracts with Coin Pool nodes to purchase various storage service packages provided by the Coin Pool. When the service is used subsequently, the required amount of PPIO Coins are paid by the Coin Pool.

1. Ordinary users generally want stable pricing.
   As we all know, both ordinary users and developers hope to have a stable bid. when they buy services. No one want to purchase goods at one price today and find that the price has fallen the next day. When I designed PPIO, in order to stabilize the price, even though there is already a predicted price as a guide, the final transaction price on PPIO is always determined by the market. It is difficult to achieve absolute stability, but this allows the price to remain relatively stable.

With Coin Pool, users don’t have to check the price every time they use it, and don’t have to wait for the price to drop before making payments. They only need to make a one-time purchase of the service package from the Coin Pool node, and thereafter, the Coin Pool node will be responsible for making payments.. This way there is no price fluctuation for the user and the risk of price fluctuations is transferred to the Coin Pool node.

1. In the short term, not all users understand cryptocurrency; we have to give users the possibility of using legal tender to make payments.
   Not too long ago, cryptocurrency was a hot topic. Most users’ understanding of cryptocurrency stays in a speculative arbitrage, which is buying at low prices and selling at high prices. When the market was good, some argued that the value of one coin was equivalent to a mansion. However, amid the digital currency bubble burst, the price of coins continues to plummet, and many investors lost their fortune As a result, a large number of blockchain practitioners left the scene, even the people who had been actively trading suddenly disappeared. Subsequently, the cryptocurrency crisis has caused many social problems, legality issues, financial regulatory issues, and the protection of the interests of small and medium investors.

When I designed PPIO, I established it as a platform for shared storage. To simulate sharing, there must be incentives. Blockchain is primarily used to to ensure the fairness and transparency of incentives. The incentives which PPIO offers are not cryptocurrency in the traditional sense, but rather they are what I call utility coins. This is because when users use PPIO’s storage and distribution services, they must spend PPIO coins, and then they share storage and network resources, they can also earn PPIO coin.

I feel that at the present moment the majority of potential users have difficulty understanding these utility coins, and so I decided to incorporate Coin Pool nodes. Users make a one-time purchase of the usage package at the Coin Pool node, after which the Coin Pool takes on the responsibility of making payments each time the user uses the storage and downloading services. This allows the Coin Pool node to be able to accept payment in many forms outside of PPIO coins, including other cryptocurrencies (such as Bitcoin and Ethereum), and other legal forms of tender (such as US dollars and Euros).

This enables users and developers to use PPIO storage services without having to have any interaction with PPIO coins and provides a user experience just like any normal internet service. I am convinced that as long as PPIO is cheaper, faster, and more secure than other cloud services, the number of PPIO users will increase steadily.

1. Coin Pool provides developers with the option of paying on behalf of users.
   As a user, we enjoy a wide variety of free services online, such as free video and music streaming services. Such services do not cost us anything, but they consume bandwidth and storage space. The question is: Who bears the running cost? The answer is, the merchants, who are also the developers. Although users are not required to pay, the merchants are able to generate income through different sources, namely advertisements. This has developed into a very mature business model. Coin Pool, too, is designed based on this ideology. By adding a payment body, when a developer builds an application, Coin Pool is notified that all user-induced costs from downloads and storage are covered by the developer. All costs are settled by PPIO coins between the developer and the Coin Pool. This is similar to AWS. By using a rechargeable system, when the coins are used up, the developers are able to top up their coins to carry on. Furthermore, Coin Pool is able to provide developers with discounts to create incentives for developers.

Is Coin Pool profitable?
During the design process, the positioning of the Coin Pool was a self-financing business organization. Since it is self-financing, it does not guarantee a profit. The architecture of PPIO is designed to support an unlimited number of Coin Pools. Users and developers can choose the Coin Pool that suits them. The purpose of this design is to compete with each other and maintain the reasonableness of the price. The Coin Pool has its own pricing power. If the pricing is high, users and developers may choose other Coin Pools. Low prices may result in losses. Also, the Coin Pool should deal with the risk of currency price fluctuations.

The way I designed is to use the market economy means to let the pool nodes compete in a good competition, so that users and developers can get the most reasonable price, at the same time, it allows the Coin Pool service providers to maintain consistent profits.

How can Coin Pool be implemented?
Coin Pool nodes are essentially third party payment processors. Instead of users making payments directly, users sign monthly or annual agreements with Coin Pool. While under agreement, the Coin Pool nodes make all payments on behalf of the user, on the condition that the user acts in accordance with the agreement.

Initially, PPIO will make Coin Pool API available. Further developments can then be made on that foundation. This API mainly includes the interface between Coin Pool and PPIO. The full capabilities of Coin Pool can be realized when based on this API.

In addition, to deploy the Coin Pool, you need to mortgage a large number of PPIO passes. The Coin Pool first collects money from the users and then it makes payments for them. Therefore, we have very high credit requirements for the Coin Pool. Evil intentions within the Coin Pool will be punishable. If the Coin Pool is evil, and the money is collected from the user and the developer but kept from the payment operation, the Coin Pool must be punished. Not only will the mortgage of the Coin Pool be used for payment, but additional penalties will be imposed. Another potential problem is stability. The Coin Pool is a computer program, so in case of a bug or a fault, the service may be interrupted. Once the Coin Pool is hung up, it will cause a large number of users to use the service within a short period of time. So as long as the function of the Coin Pool is abnormal, it must be punished.

The Coin Pool can’t sign agreements with the user without limits. How much the PPIO Coin can agree on is determined by the amount of money that can be held as collateral in the Coin Pool. The more collateral in the Coin Pool, the more users use the service. When the Coin Pool and the user sign an agreement with each other, their usage and time will be made into a smart contract. If the collateral of the Coin Pool is limited, and the number of users, usage, and usage time are excessive, PPIO will prevent the signing of this smart contract until the Coin Pool contains more collateral.

Can I create my personal Coin Pool right now?
Not at the present moment, because the PPIO project is still in its earliest stages, and only partners are allowed to deploy Coin Pool in the early days. There are several reasons for this.

The token economic model of PPIO needs to be explored further. The Coin Pool is a critical node, so the relationship between its mortgage amount and the contracted amount still needs to be explored further. We cannot guarantee that the previous economic model is reasonable. If the economic model is unreasonable, it may lead to violations of the user’s interests. So I will not make the Coin Pool available until I have determined that the economic model is reasonable.
The Coin Pool is a node with extremely high credit requirements. Because there are many users of the Coin Pool service, once the Coin Pool has a problem, the impact will be huge. For example, what if after the Coin Pool receives the user’s money, the Coin Pool does not make the payment on behalf of the user. Therefore, in the early stage, in addition to the blockchain contract guarantee, the paper contract under the chain is required, and the qualification of the Coin Pool must be strictly examined.
The security of the Coin Pool is exceptionally high. Since the number of customers in the Coin Pool and the amount of PPIO Coin involved is quite high, the Coin Pool is easily targeted by hackers. To prevent Coin Pool nodes from being compromised and hackers from stealing funds, we must not only do an excellent job to eradicate security vulnerabilities, but also to conduct strict network security qualification examinations for early Coin Pool deployment partners. To be responsible for the user’s funds, we have not opened the deployment of the Coin Pool in these early stages.
PPIO will gradually open the deployment of the Coin Pool nodes:

In the beginning, Coin Pool will be open only to close partners. This is to ensure that the partners are trustworthy and reliable.
Then, Coin Pool will be open to big developers in PPIO. They are required to use a large amount of storage or a large amount of traffic.
After the three problems are completely solved, Coin Pool will finally be open to everyone.
Summary
PPIO is a decentralized data storage and delivery platform for developers who value affordability, speed, and privacy.

I designed the mechanism of the Coin Pool on top of PPIO. The Coin Pool provides users and developers with a simple pricing package. After the user and the developer have made a purchase and have activated PPIO services, the currency will be issued by the Coin Pool, which will be used for future payments.

Coin Pool is designed to match the usage habits of the Internet and allow the PPIO project to be truly established. I hope that developers can build a variety of practical apps on the PPIO network.
Article author：Wayne Wong

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