SQD is entering Rollout phase

TL;DR: SQD is evolving, phasing out training wheels and onboarding consumers directly from the cloud to the decentralized network. Tokenomics 2.0 will align token and network adoption, reducing SQD issuance while increasing demand. SQD holders can earn stable rewards by lending their tokens to data consumers.

SQD’s mission has always been to provide real-time access to Web3 data at scale. To continue building towards that, we announced the Surge program a few months ago, which served as a framework for future success. 

After careful deliberation, we’ve chosen to go back to the roots and phase out Surge in favor of sharing updates in the form of our roadmap, consisting of multiple stages with the first being our bootstrap phase, which will be followed next by the roll-out.

In essence nothing changes, except for the names we use to refer to our future updates. 

In recent months, we’ve also expanded our product into AI - which was highlighted by the name for our first phase of the Surge program. So far we’ve delivered on increasing our reach into the AI innovation space with the creation of our Eliza plugin, and working in the background on meaningful partnerships with AI players. 

Early in March, we also shipped our first chain expansion for the SQD token on Base, increasing liquidity and availability, in preparation for further growth. 

We’ve come a long way since starting as a hackathon project to solve onchain indexing for a video streaming platform, to a full-fledged onchain data provider with hundreds of dApps served, and terabytes of data stored. 

During the bootstrap phase, we laid the foundation for a decentralized data access network. We bootstrapped the supply side with over 1700 worker nodes and facilitated the running of indexers with the SQD cloud. However, there were still multiple elements that aren’t as decentralized as our ideal vision. Our plan has always been to build something that works, scale, and decentralize it from there. 

We now serve terabytes of data to hundreds of dApps reliably, and are ready to enter the next phase to decentralize our stack further, and bring revenues onchain. 

As part of the rollout phase, we’ll migrate current cloud customers to permissionless onchain portals, bringing all current cloud revenue onchain. That also means that we’re very close to releasing our Portal - the interface for anyone to interact with SQD - to the public very soon, opening it up after rigorous testing while it was in beta. 

In addition to bringing revenues onchain, and launching permissionless ways to access SQD’s data infrastructure, we’re also working on delivering hot bocks: the real-time streaming service. 

What was the bootstrap phase all about? 

The big challenge for all two-sided marketplaces - SQD is among them as a platform that requires worker nodes to store (supply), and consumers to access data (demand) -  is overcoming the cold start problem. 

Without supply, there won’t be any consumers interested in accessing data. To solve that, we launched SQD with heavy incentives for early worker nodes, similar to how Uber paid its early drivers to ensure availability in its early days. At the same time, we provided corporate-grade cloud hosting to onboard dApps looking for more hands-on support in running their data backend. 

All the while, our engineers continued building out the decentralized network and the software client that would enable anyone to tap into the data in our data lake. We continue rigorously testing our Portal - a software client that acts as a gateway to our data platform - and once ready will onboard all our cloud customers to it. 

In a way, it’s a simple approach of progressive decentralization, where we’re ensuring that the network is highly resilient and stable and provides the bandwidth necessary for high-data use cases before onboarding all our existing and future customers. We’re proud to have grown a p2p data lake of more than 1700 worker nodes, among them renowned infrastructure providers such as Deutsche Telekom. 

Entering the Rollout Phase

During the Rollout phase, SQD’s focus pivots from bootstrapping the network to growing network adoption. Our expansion to Base is a first step in that direction, but more will follow. 

We’re still working hard to improve the user experience for SQD users consistently. With the release of Portal to the public, we’re kicking off a new phase where anyone can permissionlessly access data using  SQD Network, which in return is expected to drive demand for the native token. 

Currently, Cloud customers would settle their bills with Subsquid Labs, not affecting our network revenue. With us onboarding them to Portal, this will change drastically. For the first time in SQD’s history, our network adoption will be tied closely to the SQD token and its demand. 

To further nudge the flywheel, we expect this to kick off, we’ll deliver a significant update to our tokenomics. 

There will be more exciting things coming soon. We’re ready to ship. 

Tokenomics 2.0 

Soon, anyone wanting to access onchain data through SQD will be asked to lock SQD, depending on their bandwidth requirements. The more SQD locked, the more bandwidth they can consume. 

Alternatively, consumers can essentially borrow SQD against a fee to use the network from SQD providers. For enterprise customers the complexity will be abstracted to ensure a seamless transition while guaranteeing high quality of service.

For one, this means that all our current cloud customers will now be asked to directly purchase or borrow SQD and lock it, taking it out of circulation. 

Furthermore, this establishes a market where large SQD holders can offset some of the risks of holding by making it available for loans that serve a productive purpose: accessing the data in SQD’s data lake. 

That means they’ll be able to earn a fee paid in stablecoins for their service of lending SQD. 

50% of the fees consumers pay goes to the fee pool from where it’s distributed to the providers, whereas 45% are allocated to worker rewards. The remaining 5% are burned with the possibility to seamlessly replace this with more efficient mechanics for token value accrual in the future. 

On top of directly increasing demand for the SQD token and providing a new avenue for holders to productively leverage their holdings, the new tokenomics will also introduce a fee switch. 

This fee switch is initially set to zero but can be turned on later. Once it is, it will deduct a small amount from SQD locked in Portal contracts, imposing a usage fee distributed between the burn and reward pools. 

We’re looking forward to pushing our vision of progressively decentralizing the network and growing adoption. With this new release, we’re also one step closer to enabling agents to interact autonomously with SQD, paving the way for an autonomous AI economy. 

In the coming weeks, we’ll share further deep dives into different areas of the changes ahead. If you have further questions, find us on Telegram, and we’ll do our best to answer them quickly.