DKP Testnet Analysis Report & Data Valuation Discrepancy Insight

During the past month, MXC’s Das Kaiser Projekt “DKP” saw a wide spectrum of carefully selected participants receiving impressive low-power mining rewards in Bitcoin. Our final figure shows that during the DKP Testnet, an average of $38.60 USD worth of Bitcoin was mined per person, via break-through low-power mining, fueled by the MXProtocol. The average power consumption to mine this quantity of BTC was determined to be 60 watts per miner over the course of 30 days, resulting in a calculated average of close to 2 watts per day.

The DKP Testnet was a massive experimental success, the MXC development team has successfully proven that low-power BTC mining is indeed possible when the Proof of Participation model is leveraged through a bridge, in which the Supernodes carry the computation efforts rather than the miners themselves directly. As anticipated, the DKP was paused after the initial 30-day testnet. However, what the testnet demonstrated was that the DKP Testnet needed to be temporarily suspended due to data valuation discrepancies noted by MXC Foundation software developers and the MatchX hardware engineering team. Now, while the technical protocol on what fuels the DKP has not been fully revealed, we believe now is the time to show a portion of the technicalities and potential difficulties faced in order to pinpoint the reason the beloved DKP Testnet has been temporarily suspended.

Please note that the main driver of this decision is the noticing of data valuation discrepancies the team has flagged, which we believe is essential to resolve in order to invite more miners into DKP and to bring a level of stability within how the BTC rewards are calculated.

First, here is how the DKP interacts to give miners rewards in BTC.

Data Rendering at Data Source

A data source (in most cases, “sensors”) first produces a data set. This data could be carrying a variety of information eg: air quality or traffic flow. The data set is packaged into a data packet and brought into one of the data blocks to join the MXProtocol.

Data Enters the Mining Network

As the data packet is brought into one of the data blocks, the data packet has entered the mining network realm. The mining network is composed of M2 Pro miners that have successfully mined the previous data block (Data Block n-1). In the DKP Testnet, the mining network is composed of the selected M2 Pro miners based on their location, signal strength, and heartbeat.

Mining Network Output

Within the mining network, the output does not solely involve communication from the data packet to the data receiver. There are 2 different outputs that are computed from the activities within the mining network.

The first output is the total rmPower (relative mining power) which is a multiplier computed to measure the contribution of each miner within the mining network.

The second output is the data transaction record (dTx) which is a machine’s way of performing bookkeeping operations on how the data has traveled, built to offer full transparency and have a decisive impact on data validation.

Data Purchaser/Receiver and Data Validation

Once the data purchaser or receiver receives the data packet, it automatically feeds the data packet into a data validation process. Within the process, the dTx of the mining network is cross-checked in order to provide certainty on the origin of the data and to ensure that the data has not been tampered with or corrupted along the way.

Data Purchaser/Receiver and Data Source enters Data Auction

In order to determine how much the data purchaser should pay for the data packet, and how much the data receiver should pay for the network usage, the data packet is put into a data auction in which both the data source and the data purchaser/receiver enters. The result of the auction is almost immediate, thanks to MXC’s SMB (Smart Machine Bidding). In a way, the auction is simply a process in which the pre-set price range of the 2 parties involved is put into SMB to find an optimal price point.

The result of the data auction provides the total valuation of the data and therefore the total valuation of the network usage. The valuation of the network usage is largely dependent on the total valuation of the data, as MXProtocol would be deemed ineffective if the network usage fee is bigger than the total valuation of the data sent.

The settled value of the data packet is sent to the data source using MXC, while the settled value of the network usage (equivalent to the value of the dTx operation) is distributed to the miners within the mining network, based on each miner’s rmPower.

At this point, an average maximum of 1.8 seconds should have passed.

Measuring dTx Value in BTC

The DKP focused on measuring the dTx value in BTC. In order to ensure that the rewards are reflective of the volatility of BTC, a process had to be implemented to bid for the fair exchange of value between the determined dTx value from the data auction and the BTC blockchain.

Shortly before DKP was launched, an Automated Value Bidder (AVB) was created to perform the bidding process on behalf of the dTx value of the entire mining network involved with DKP. The purpose of AVB was to settle on a fair transited valuation of dTx within the BTC network.

Targeting the BTC Fee

The underlying notion of DKP focuses not solely on the Bitcoin “BTC” mining operation within the BTC network, but on the fact that the mined BTC would have to be moved. Most often, the mined BTC is distributed to multiple parties, as the rise of mining pools has shown.

Therefore, the notion also suggests that rather than having AVB perform bidding for big chunks of BTC, it would be more preferable to perform bidding for the fees that occurred during the movement of these freshly-mined BTC.

This way, the transaction size would be smaller, thus being able to target many fee occurrences at a rapid rate, not slowing down the speed of MXProtocol.

Swapping BTC for dTx Valuation in MXC

Since the dTx valuation is predominantly noted in MXC, the AVB would pool the dTx valuation in MXC and attempt a, what is determined as a “fair swap” with a portion of the fees in BTC that occurred during the BTC movement.

Once a fair valuation has been determined, the BTC would be accepted as WBTC using a BTC-ETH bridge already built thanks to the recent developments in DeFi, and MXC would be paid. Then, the WBTC would travel all the way up the chain, back to the miners within the mining network. When this WBTC is withdrawn, they are automatically unwrapped into BTC using custodial solutions.

The Cause of Discrepancy

The main cause of the discrepancy we have noticed is the high volatility of BTC as an asset, but also within the fees required to move BTC assets. As cryptocurrency adoption is blossoming, the range of fees paid to move BTC assets has been stretched far. While the volatility of asset valuation and the number of Satoshi (Sats) required to move BTC assets have continued to a significant lack of stability, the dTx value has been rather constant — as many miners involved in mining with M2 Pro would have realised, as their daily earnings are very stable.

The involvement of AVB has allowed the dTx value to be too dependent on the overall volatility from the BTC network to be relatively predictable. This led to an increased discrepancy between the dTx valuation and the data auction result, meaning that AVB was put into a place in which it had to choose between matching the dTx value to complete the BTC swap and thus going against the pre-defined notion of the dTx value being equal or less than the data packet valuation, and not completing the swap and thus having a failed Txn. Increasing the bidding time was not an option, as it could potentially slow down MXProtocol.

The dichotomy faced by AVB could have an overarching potential for further disruption within the entire network, and thus the DKP was suspended until this issue can be resolved.

Proposed Solutions

After noticing this issue, the team worked tirelessly to resolve it. The following are a sample of the proposed solutions that we have deemed viable at the moment:

1. Constructing an Automated Market Maker (AMM) between AVB and the BTC fee pool holder to streamline the process, thus reducing the workload of AVB and adding the ability to chart the latest trends within the BTC network to predict the acceptable range and completing the transaction on behalf of AVB.
2. Increasing the participation size to get a more standardised dTx value to peg a pair for the AVB AMM in order to anchor down a reference point for the AVB AMM to operate on.

As many may have noticed, these two solutions would be ideal when working in conjunction. Therefore, the team is currently working on a two-pronged approach to resolving the issue and thus decreasing the discrepancy, allowing DKP to continue.

This would take some time to develop and require a bigger number of participants to volunteer in DKP. Once the solution has been implemented, we will thus open the second round of DKP and invite a larger test group of miners to join and enjoy BTC profits while helping MXC Foundation to continue exploring uncharted territories in blockchain innovation. This DKP testnet will prove to be favourable for M2Pro Miners and MXC supporters, this is what ultimately drives us, as we continue to strive every day to make the impossible, possible.

Based in Berlin, Germany, the MXC Foundation is a purpose-built IoT Foundation with the mission to inspire fast, efficient, decentralized data exchanges using LPWAN, Blockchain, and Token technology. The MXC Foundation is pairing “MXC” — the pioneer IoT cryptocurrency — with advanced LPWAN technology, developing the next, vital step in the fourth industrial revolution, enabling secure, vastly scalable, lightning-fast transactions. Learn more at: www.mxc.org

For further information, media requests or comment, please MXC can be contacted directly at hello@mxc.org or via the www.mxc.org website.