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The SPS validator node software is currently in the internal testing phase and we hope to open it up for public testing within the next few months, with the "mainnet" planned to launch in Q4 of 2022. In the meantime, we wanted to provide an overview of how the system will work as well as to announce the upcoming sale of validator node licenses.

First and foremost, the SPS validator software will be 100% open source and available for anyone to download and run without any costs or restrictions. We expect that it will have relatively minimal hardware requirements and we plan to initially release it as a docker container that can be run on Linux machines with Windows and Mac versions to follow. Exact system requirements and setup instructions will be provided as we get closer to the open beta launch.

## Delegated Proof of Stake (DPoS)

The SPS governance system will work via a Delegated Proof of Stake (DPoS) consensus model very similar to that of networks such as Hive, EOS, BSC, and many others. This means that any account with staked SPS tokens can vote for accounts that are running validator nodes in order to elect the people or entities that will be responsible for validating all of the SPS transactions and who will control the SPS foundation funds. Please note that it will not cost anything or use up staked SPS in any way to vote for validators. It will simply be an additional use for staked SPS tokens and a way for token holders to participate in the governance of the system.

Each block on the Hive blockchain will be randomly assigned to one of the validators running the software based on the amount of staked SPS tokens they have voting on them. When assigned a block, the validator will publish a hash of the data in that block to the Hive blockchain which can then be checked and confirmed by all of the other validators. Once confirmed, the validator will receive a reward in SPS tokens for validating that block. The more staked SPS that is voting for a particular validator, the more blocks they will be assigned, and the more rewards they will receive.

## SPS Validator Node Licenses

One potential issue with the above system is that there are only a relatively small number of accounts that will get the majority of the votes, and therefore the majority of the rewards. This means that there will not be much incentive for other people to run validator nodes. In order to try to address that issue we will be offering "licenses" which will allow anyone to earn rewards for running a node without needing to have any staked SPS votes.

The SPS validator node licenses will be purchasable with a combination of SPS tokens and VOUCHER tokens based on the pricing schedule outlined below. **80% of the SPS tokens and 100% of the VOUCHER tokens spent on node licenses will be burned** and the remaining 20% of the SPS tokens will be put into the SPS foundation and be reserved specifically to be used to continue to incentivize SPS validator node operation when the 3B SPS token cap is reached after roughly 5 years.

The licenses will be NFTs that can be freely bought/sold/traded on secondary markets, and it will be possible to utilize multiple licenses with a single SPS validator node software instance - meaning that if someone were to purchase multiple licenses, they only need to run the validator node software once to earn the rewards for all of their licenses.

This system is similar to the node license structure used by a number of other projects, which have generally been very successful, and in this case all of the value from license purchases goes directly into the SPS token ecosystem. With this system we hope to have many thousands of validator nodes running all over the world which will help decentralize, distribute, and secure the system as well as provide significant additional value for the SPS and VOUCHER tokens.

## Rewards

As mentioned in the [SPS Whitepaper](https://sps.splinterlands.com/rewards), there are 3,750,000 SPS tokens per month allocated to a reward pool for SPS Validator Node operators. 10%, or 375,000, of the monthly total will be allocated as block validation rewards for the accounts that receive staked SPS votes and are assigned specific blocks to validate, and the remaining 3,375,000 SPS / month will be split equally between all of the license holders that are actively running the node software.

While at first it might seem that only a small amount is being allocated to the voted validators, please keep in mind that there will only be a relatively small number of validators that receive the lion's share of the votes, so this 375k SPS / month will be split among a small group of accounts. Likely no more than 50 - 100 in total, with the top 10-20 receiving the majority of the rewards. If we assume 50 validators are splitting that equally, then they would each get 7500 SPS / month. In reality, the top voted validators will receive significantly more than that, as the rewards are proportional to the number of votes received.

Please note that it will also be possible to earn from *both* pools if you have one or more licenses and some staked SPS voting for you. It is expected that many, if not all, of the top voted validators will also hold licenses (though it is not required).

License holders will receive an equal share of the 3,375,000 SPS / month rewards per license they hold in their account as long as they are running an active validator node. The validator node software will periodically publish transactions to the Hive blockchain that will prove that the software is being run in order to receive the rewards.

In addition to the SPS rewards, a new pool of 20,000 VOUCHER tokens per day will be created and allocated to SPS validator node license holders in order to provide further incentive for purchasing licenses and running nodes. This pool will also be allocated equally per license to all holders that are actively running a validator node.

## License Presale & Pricing

The licenses are planned to go on sale in the Splinterlands shop in approximately one month. The exact date will be announced as soon as it is available. This will allow players and community members to begin purchasing licenses before the SPS validator node software launches (currently targetting Q4 2022) if they choose and secure a cheaper price. The licenses will be NFTs similar to Splinterlands booster packs or land claims and will be transferrable in-game as well as on the Hive Engine platform initially, with other platforms such as AtomicHub planned to be added in the future.

The pricing for the licenses is shown in the table below. There will be 60,000 licenses available in total, and as each phase sells out, the next phase licenses will be available at the increased price point. Please note that there will be no difference between licenses sold in the presale phase or any other phases other than the purchase price.

|Phase|Quantity|Price|VOUCHER Discount Rate|
|--|--:|:--|--:|
|Presale|2,000|$1,000 of SPS + 500 VOUCHERs|N/A|
|Tranche 1|3,000|$3,000 of SPS|$3.00|
|Tranche 2|5,000|$5,000 of SPS|$5.00|
|Tranche 3|10,000|$7,500 of SPS|$7.50|
|Tranche 4|10,000|$10,000 of SPS|$10.00|
|Tranche 5|10,000|$15,000 of SPS|$15.00|
|Tranche 6|10,000|$20,000 of SPS|$20.00|
|Tranche 7|10,000|$40,000 of SPS|$40.00|

While the presale phase may sell out rather quickly, we have structured the pricing model so that node licenses will be available for sale for many years to come. Initially, the market price of the SPS and VOUCHER tokens that each license will earn may not justify some of the higher pricing tiers, but if market prices increase over time then those tiers will start to become attractive.

It's important to note that licenses do not expire, so they are eligible to continue earning SPS and VOUCHER token rewards indefinitely. This means that the earlier you purchase licenses the lower the price you can "lock in" ahead of time and then take advantage of any price increases in the tokens for as long as the project is running.

While the presale will require 500 vouchers for each license purchase in addition to the $1,000 of SPS cost, the subsequent phases will not require vouchers but instead allow vouchers to be used to receive up to a 50% discount on the price. For example, in Tranche 1 the voucher discount rate is $3.00, which means that each voucher token spent will reduce the price by $3.00. Since the maximum discount is 50%, that means that you can spend up to 500 vouchers to reduce the price from $3,000 to $1,500. This allows voucher tokens to always have value when it comes to buying licenses, while also not making them required.

## Value to the Ecosystem & Community

Overall this system lays out a path for nearly a billion dollars worth of SPS and VOUCHERs to be burned over a number of years, which is many times the entire current market cap of the token! Additionally, there's over a hundred million dollars worth of SPS tokens that can be earned by the DAO and be used to facilitate trading and additional rewards for node holders over time.

Lastly, and perhaps most importantly, you may notice that not even a single dime worth of value from these transactions is going to the Splinterlands corporation. This is the real power of "web3". Rather than money and value flowing from customers to business owners, as it has in the past, instead money and value now flow into the ecosystem in which both customers and businesses are equal participants.

We invite you to pick up one or several of these node licenses early as supplies are quite limited and prices will increase as more licenses are sold.  If you thought land was scarce at 150,000 plots you will realize that with only 60k node licenses ever available that nodes are essentially the scarcest assset type in the game, and they will be able to earn SPS, vouchers, and potentially other rewards in the future for as long as the game is running.

We think this is a great opportunity for our player base and our broader community of partners and supporters that want to purchase licences to support the platform and generate rewards for their services. Thank you for helping us secure and decentralize the Splinterlands and we hope you're as excited by this opportunity as we are!

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## Stay tuned for more updates from the Splinterlands!

**[Website](https://splinterlands.com) | [Blog](https://peakd.com/@splinterlands) | [Discord](https://discord.gg/CAFJRjY) | [Telegram](https://t.me/splinterlands) | [Shop](https://steemstyle.io/collections/splinterlands)**


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*NOTE: All rewards from this post will be burned.*

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