Constellation Network is a feeless, scalable blockchain ecosystem where projects can build their own custom blockchains (metagraphs). It has everything you’d expect from a blockchain—tokens, decentralized applications and wallets—but with a unique architecture that makes it faster, more efficient, and highly flexible.

How It Works

• Any projects, company or even person can build on Constellation by creating their own metagraphs—custom blockchains tailored to their needs.

• Users interact with these projects using websites, decentralized applications, crypto wallets and tokens.

• The network itself does not impose fees to users, meaning each project can decide if any fees are charged to their users

• It’s flexible scalable and interoperable, metagraphs can be as simple a token or evolve to complex enterprise usecases, on Constellation there are virtually no limits for what can be built.

Core Components

To understand how Constellation works, here are the key building blocks of the network:

Metagraphs (Custom Blockchains)

Metagraphs are independent blockchains built on Constellation. They can be simple (like a single token) or complex (powering enterprise applications). Each metagraph has full control over its rules, data, and fee structure.

Hypergraph (Global L0)

The Hypergraph is the foundation of Constellation. It acts as a secure, scalable, and interoperable layer that connects all metagraphs, allowing them to communicate with each other and external blockchains.

DAG Token

DAG is the native currency of Constellation Network. It powers the ecosystem by enabling:

• Feeless peer-to-peer transactions

• Rewards for node validators who secure the network

• Collateral for running nodes, ensuring network integrity

• Interaction with decentralized applications (dApps) and metagraphs

DAG is the backbone of Constellation, fueling both network operations and user interactions

Wallets & Applications

Users can store and manage tokens, interact with metagraphs, and access decentralized applications through crypto wallets that support Constellation Network.

Why Constellation?

• No Gas Fees – The network itself doesn’t charge fees; projects set their own rules.

• Unlimited Scalability – The system grows with demand, ensuring speed and efficiency.

• True Flexibility – From simple tokens to enterprise-grade applications, anything can be built.

• Interoperability – Projects on Constellation can seamlessly interact with each other and external blockchains.

Bringing It All Together

Constellation Network is a feeless, scalable, and highly flexible blockchain ecosystem where anyone—from individual developers to enterprises—can build and interact with decentralized applications, custom blockchains (metagraphs), and digital assets.

With its unique architecture, interoperability, and limitless scalability, Constellation provides a powerful foundation for innovation. Whether you're looking to launch a token, build a complex application, or explore new blockchain use cases, Constellation gives you the tools to do it.

All the details about the network’s components, technology, and how to build on it are covered in detail in the rest of this Documentation. Dive in to learn more! 🚀

Blockchains are powerful, but they often force developers to play by someone else’s rules. What if you could build a blockchain designed specifically for your application, with its own logic, scalability, and data processing?

That’s exactly what metagraphs offer.

A metagraph is a custom, application-specific blockchain built on Constellation Network. Unlike traditional blockchains, where multiple projects share the same infrastructure, each metagraph operates independently. This gives developers full control over rules, data processing, and scalability—allowing them to create networks optimized for real-world applications.

Metagraphs function as decentralized backends, supporting a wide range of use cases, from AI training and data verification to decentralized identity and finance.

How Metagraphs Differ from Traditional Blockchains

Most blockchains rely on smart contracts for application functionality, but these come with limitations:

• Rigid constraints – Smart contracts must follow the rules of the blockchain they run on.

• Reliance on third-party oracles – They require external data sources to process real-world information.

• Scalability bottlenecks – High network usage impacts all applications equally.

Metagraphs remove these restrictions by offering:

• Custom execution environments – Developers define their own consensus, fee structure, and logic.

• Native real-world data integration – No need for external oracles to verify information.

• Independent scalability – Each metagraph runs on its own infrastructure, ensuring consistent performance without network congestion.

Instead of competing for resources on a shared blockchain, metagraphs act as tailored, decentralized networks built for real-world applications.

Metagraph Flexibility

Metagraphs can be designed to fit the exact needs of a project, from small-scale applications to enterprise-grade solutions.

Simple Metagraph (Small Project or Token)

• 3+ validator nodes

• A single token for transactions

• Minimal computational needs

• Ideal for basic token economies and P2P transactions

Advanced Metagraph (Enterprise & Data-Heavy Use Cases)

• Multiple validators for decentralization and scalability

• Custom processing pipelines for AI, finance, healthcare, or IoT

• Cross-chain interoperability for seamless metagraph and blockchain integration

• Ideal for data verification, decentralized AI, identity solutions, and large-scale apps

Metagraphs are not just for tokens—they can handle data tagging, trust scoring, predictive analytics, and more.

Metagraph Tokens & Customization

Each metagraph can issue its own token, which powers transactions within its network, incentivizes validators to process and secure data, and assigns value to verified data streams. Since metagraphs have full control over their tokenomics, projects can customize how their token is distributed, used, and governed to fit their specific needs.

Why Build a Metagraph?

Metagraphs unlock a new level of blockchain customization, allowing developers to create scalable, decentralized networks optimized for real-world applications. With a metagraph, developers can:

• Build a blockchain tailored to their exact needs without the limitations of a shared network.

• Process and verify real-world data natively, eliminating reliance on external oracles.

• Scale independently, avoiding congestion from other applications.

• Create new use cases beyond tokens and DeFi, enabling innovation in AI, supply chain, identity, and more.

Metagraphs provide the flexibility, efficiency, and control needed to bring groundbreaking blockchain applications to life.

Metagraph Architecture

Learn more about how metagraphs work!

Build a metagraph

Build your own metagraph using the Euclid SDK

DAG is the native utility token of Constellation Network, serving as the foundation for its feeless, scalable, and decentralized ecosystem. Unlike traditional cryptocurrencies that act solely as a store of value or payment method, $DAG is designed to:

• Secure the network by incentivizing validators and delegators.

• Power metagraphs by covering snapshot fees for validation and storage.

• Support ecosystem growth through funding, development grants, and incentives.

As the economic engine of Constellation, $DAG ensures network security, sustainability, and long-term adoption.

How DAG is Used

Powering the Network – Snapshot Fees

Transactions on the Constellation Hypergraph do not rely on traditional gas fees. Instead, metagraphs pay snapshot fees in $DAG to validate and store data, enabling a scalable and feeless user experience.

Securing the Ecosystem – Validators & Delegators

Validators stake 250,000 $DAG per node to participate in securing the network and processing transactions. Non-technical users can delegate their $DAG to validators, earning passive rewards while contributing to network decentralization.

Driving Ecosystem Growth – Grants & Incentives

$DAG fuels ecosystem expansion by funding developer grants, open-source tools, marketing initiatives, and community rewards. This ensures continued innovation and adoption of metagraphs.

Enabling Trading & Liquidity – Exchanges & DeFi

$DAG is actively traded on 15+ centralized and decentralized exchanges, including PacaSwap DEX, where it powers token swaps, liquidity pools, and DeFi applications within the Constellation ecosystem.

Sustainable Tokenomics: The Adaptive Supply Model

Unlike fixed-supply blockchains that can struggle with long-term sustainability, Constellation follows a flexible supply model (Metanomics) designed to:

• Continuously reward validators and delegators.

• Fund ongoing network expansion and innovation.

• Maintain decentralization and economic stability.

Balancing Inflation & Deflation

To ensure a sustainable ecosystem:

• New $DAG is minted at a controlled rate to reward network participants.

• Snapshot fees paid by metagraphs are burned, gradually reducing inflation.

This dynamic supply model incentivizes participation while keeping the token economy balanced.

Feeless Transactions

Most blockchains rely on gas fees, which can be costly and unpredictable. Constellation eliminates this issue by allowing:

• Zero transaction fees for users. Sending $DAG or interacting with metagraphs is completely feeless.

• Custom fee structures for projects. Metagraphs cover network costs, allowing developers to set their own pricing models.

This lowers barriers to entry for new users and businesses, making blockchain adoption more accessible and scalable.

How to Get Involved

You can participate in the Constellation ecosystem today:

• Delegate or run a validator node – Help secure the network and earn rewards.

• Hold, trade or use DAG – Swap tokens, provide liquidity, and engage with DeFi applications.

• Build with metagraphs – Create scalable, decentralized applications using Constellation’s technology.

Get Started with a Wallet

• Download Stargazer Wallet to store, buy, swap and send DAG and other tokens.

• Supports iOS, Android and Chrome.

Get DAG

• Buy from 15+ supported exchanges (e.g., KuCoin, Gate.io).

• Purchase directly in Stargazer Wallet with a credit card.

• Buy DAG on the BASE network.

Stake & Delegate for Rewards

• Stake 250,000 DAG to run a validator node.

• Delegate DAG to validators or metagraph nodes and earn DAG incentives at the DAG Explorer.

Trade & Swap

• Trade on centralized exchanges or PacaSwap DEX (coming soon).

• Use DAG for liquidity pools and DeFi applications.

Delegated staking on Constellation Network allows any $DAG holder to participate in network security and validation by staking their tokens with validators—without needing to run a node. This enables more users to contribute to decentralization and governance while earning staking incentives.

By choosing a validator, you help secure the network, support metagraph projects, and receive $DAG incentives for your participation. Some metagraph validators even offer additional L0 token rewards, increasing your potential incentives.

Why Delegate Your $DAG?

• Earn Network Incentives – Receive a fixed 3% APR, plus a share of 45% of inflation emissions and potential extra rewards from metagraphs.

• No Technical Setup Needed – Stake without running a validator node.

• Support Projects You Believe In – Choose validators aligned with your interests or metagraphs that offer additional rewards.

• Flexible & Transparent – Easily switch validators, track performance, and adjust your strategy at any time.

How Delegated Staking Works

1. Connect your Stargazer Wallet to the DAG Explorer (here)

2. Choose from available validators based on fees, performance, or project alignment

3. Delegate your DAG tokens (no minimum requirement)

4. Monitor your delegations through the dashboard

Key Features

• Transparent Fees: Validators (the individuals or metagraphs you delegate too) charge between 5-10% of rewards

• No Lock-up Period: Change validators without waiting periods

• 21-Day Unwinding: When fully withdrawing a delegation position there’s a 21-day unwinding phase. During this time, tokens are temporarily locked as the network processes the withdrawal, ensuring a smooth transition without sudden shifts in liquidity

• Multiple Positions: Create different delegation positions across individual validator nodes and metagraphs.

Delegating your DAG tokens allows you to earn rewards by supporting network validators without running a node yourself. Follow this step-by-step guide to begin delegating your DAG tokens on the Constellation Network.

Step 1: Prepare Your Wallet

1.1 Install a Compatible Wallet

To delegate DAG, you need a compatible wallet that supports Constellation Network, such as Stargazer Wallet.

• If you don’t have Stargazer Wallet, download and install it here.

• Follow the instructions to set up a new wallet or import an existing one.

1.2 Fund Your Wallet with DAG

Ensure your wallet has enough DAG tokens for delegation.

• If you need DAG, check all the available options at "How to get DAG".

• Confirm that your DAG balance appears correctly in your wallet.

Step 2: Access the DAG Explorer

2.1 Open DAG Explorer

• Visit DAG Explorer in your browser.

• Click on "Delegated Staking" from the top menu.

2.2 Connect Your Wallet

• Click "Connect Wallet" at the top right corner.

• Select Stargazer Wallet and approve the connection.

• Your DAG balance and any previous delegations will now be visible.

Step 3: Choose a Validator

3.1 Browse Available Validators

• Scroll through the list of validators.

• Use filters to find a validator by name, performance, or delegation fees.

• Click on a validator’s name to view details like total delegated DAG, commission rate, and validator description.

3.2 Select a Validator

• Pick a validator that aligns with your preferences.

• Consider factors such as:

  • Validator Commission Rate (5%–10%)

  • Total Delegated DAG

  • Metagraph Affiliation (if delegating to a project validator)

Step 4: Delegate Your DAG

4.1 Initiate Delegation

• Click the "Stake DAG" button on your chosen validator.

• A pop-up window will appear to enter your delegation amount.

4.2 Enter the Amount to Delegate

• Type the amount of DAG you want to delegate.

• You can also use quick selection buttons (50%, Max) to allocate your DAG.

• Confirm that your available balance is sufficient.

4.3 Confirm & Approve Transaction

• Delegating DAG requires two transactions on the network

  • Lock DAG

  • Delegate to Validator

• Click "Lock DAG" to initiate delegation.

• Approve the transaction in your wallet.

• After the transaction is confirmed click "Delegate DAG"

• Wait for confirmation; your delegation will be recorded on the network.

Step 5: Monitor & Manage Delegations

5.1 View Your Delegated Positions

• Navigate to "My Delegations" in DAG Explorer.

• Here, you can see:

  • The total DAG you have delegated.

  • Your active delegation positions.

  • Your unlocking delegation positions

5.2 Receiving Rewards

• Rewards are automatically compounded into your delegated position.

• To access your rewards, you must undelegate your position and wait for the 21-day lock-up period to complete.

Step 6: Unstaking or Changing Validators

6.1 Unstake DAG

• Go to "My Delegations" and select the validator you want to unstake from.

• Click "Unstake DAG" and confirm the transaction.

• Your DAG will enter a 21-day unbonding period, after which it becomes available for withdrawal.

6.2 Change Validators

• To switch validators without unbonding:

  • Click "Change Validator" next to your current delegation.

  • Choose a new validator and confirm the transaction.

  • Your DAG will be reallocated immediately, avoiding downtime.

6.3 Stake more DAG to a validator

• To stake more DAG on a validator:

  • Click "Stake DAG" next to your current delegation.

  • Choose the ammount of DAG you want to add and confirm the transaction.

  • Your DAG will be added immediately to that postion, without any downtime.

Frequently Asked Questions

Q1: How long does it take to start earning rewards?

Rewards start accruing immediately after delegation and are automatically compounded into your delegated position.

Q2: Can I delegate to multiple validators?

Yes! You can split your DAG across different validators to diversify your staking positions.

Q3: What happens if the validator goes offline?

If a validator experiences downtime, you still receive your rewards.

Conclusion

Delegating DAG is a simple way to earn rewards and support the Constellation Network. By following this guide, you can securely delegate, monitor your rewards, and manage your staking positions efficiently.

Ready to get started? Delegate your DAG now! 🚀

Validators play a critical role in securing the Constellation Network and processing transactions. While some validators operate as part of metagraphs, individual node validators can also attract delegators and grow their stake by offering incentives, transparency, and reliability.

For those looking to run a single validator node or form a small group of validators, there are several strategies to attract delegation and maximize participation.

Single Node Validators

As a single validator, your goal is to build trust, demonstrate reliability, and offer incentives to attract DAG delegators. Here’s how:

Set Competitive Fees

• Validators charge a 5-10% fee on delegator incentives.

• Lower fees can attract more delegators, while higher fees may allow for additional rewards.

Demonstrate Reliability

• Validators with high uptime and consistent performance are more likely to attract delegators.

Maintain Transparency

• Share performance metrics, validator status, and updates with the community.

• Keep an open communication channel through social platforms and forums.

Engage with the Community

• Active participation in Telegram, Twitter, and community discussions builds credibility.

• Validators who engage with the DAG ecosystem often gain more delegation support.

Offer Incentive Programs

Validators can differentiate themselves by providing extra incentives:

• Loyalty Bonuses – Additional rewards for long-term delegators.

• Referral Programs – Encourage new delegators with incentives for both parties.

• Bonus Periods – Temporary boosts in rewards to attract new delegations.

• Milestone Rewards – Additional incentives for delegators who stake for a set duration.

• Network Growth Rewards – Validators increase rewards as the overall delegation network expands.

Validator Tribes: The First Step to a Metagraph

A Validator Tribe is a small group of trusted nodes (3+ validators) that work together as an early-stage metagraph. While most metagraphs are built for specific applications, a Validator Tribe may initially exist just to validate transactions without additional on-chain functionality.

Forming a Validator Tribe

1️- Three or more validators come together to create a metagraph. 2️- The metagraph can issue a native L0 token (optional) to reward delegators. 3️- Validators within the metagraph coordinate how to attract delegators and distribute incentives.

DAG Holders Creating a Metagraph

DAG holders can launch a Validator Tribe metagraph by securing three node slots on the mainnet.

• This provides an early entry point into metagraph validation.

• Participants can issue a metagraph token to reward delegators and expand their staking network.

Metagraphs

Validators operating within a metagraph have additional ways to attract and reward delegators:

Exclusive Features & Services

• Some metagraphs offer governance rights, premium features, or exclusive access to delegators.

Additional Token Rewards

• Metagraphs can distribute native L0 tokens to delegators, enhancing total incentives.

Redistribution of Delegation Fees

• A portion of delegation fees can be shared with delegators, increasing returns.

Using Fees for DEX Liquidity

• Metagraphs can commit delegation fees to liquidity pools on PacaSwap DEX, benefiting both traders and stakers.

• More liquidity = reduced slippage, making it easier to trade tokens.

• Metagraphs can earn a share of DEX transaction fees, which can be redistributed to delegators.

🚀 Explore validator opportunities and grow your delegation network today!

Node validators are the backbone of Constellation Network. They run the infrastructure that processes transactions, secures the network, and validates data, ensuring that Constellation remains scalable, decentralized, and trustless.

Validators don’t mine blocks like in traditional blockchains. Instead, they reach agreement (consensus) on the network’s state by validating snapshots—bundles of transactions and data—before storing them on the Hypergraph.

In return for their work, validators earn DAG rewards based on their contributions to the network.

What Do Node Validators Do?

Process Transactions & Secure the Network

Validators ensure that all transactions and data submitted to the network are valid and trustworthy before they are permanently recorded.

Earn Rewards in DAG

Validators are compensated in DAG for their role in securing the network and processing transactions. Rewards are distributed from network emissions and in the future from metagraph fees.

Validators can also get extra rewards through delegation fees from delegated DAG to their node.

Types of Validators in Constellation Network

Validators operate at different levels, depending on their role in the ecosystem:

A single node can participate in multiple layers, earning rewards from both the Global L0 and individual metagraphs.

Delegators & Validators: How They Work Together

Not everyone needs to run their own validator to participate!

Users who hold DAG can delegate their tokens to a validator to:

• Support network security.

• Earn incentives.

• Help determine which validators receive more network emissions.

Validators, in turn, earn a percentage of the rewards from their delegators, creating an incentive for them to operate efficiently and attract delegations.

Why Become a Validator?

• Earn DAG.

• Play a key role in securing a decentralized network.

• Support metagraphs and innovation on Constellation.

Whether you want to run your own node or delegate your DAG, validators are critical to the success of Constellation Network.

Introduction​

This document is a high-level overview and framing of Constellation’s Hypergraph Network (HGTP): A decentralized network economy where consensus is run on the Global L0 (Hypergraph) and L1 Metagraphs (previously referred to as “state channels”). The intention of this paper is to educate individuals on the fundamentals of HGTP with an explanation of the metrics used across the Hypergraph network to yield an incentivization structure for key stakeholders in the economy: Validator Nodes and Metagraphs. Additionally, the aim of this overview is for individuals and businesses to gain a better understanding of how to navigate the Constellation Ecosystem with the goal of attracting them to join one or both of these stakeholder groups.

The Hypergraph’s current economic model is a fixed incentivization token emission schedule, denominated in the Hypergraph’s native currency DAG, rewarded to node operators for securing and maintaining the decentralized infrastructure. In 2018, this model was established, along with zero transaction fees, as a placeholder to promote adoption of our mission while creating a low barrier to entry.

The intention is that less complex transactions, like sending/receiving DAG and one-off snapshots sent by Metagraphs (subnetworks built on top of the Hypergraph), would remain feeless. Since the validation of these types of transactions would never clog our network, these use cases should not be limited, even if there is immediate value exchange between users and node operators of the Hypergraph. However, if the frequency of low-complexity transactions becomes too large, a fee will be instituted to prevent spamming or DDoS-type attacks on the network. Fees incentivize security and proper up-time for a network, but these costs still need to be manageable for Metagraph businesses. Keeping a healthy balance will be a primary focus as the team continues iterating to measure the network fees for a more complete tokenomics model for the Hypergraph.

This overview will cover how the Hypergraph Economy operates with Metagraphs, using the network for validation services, and the fundamental baseline formula measuring scalable economics around the DAG and Metagraph networks.

Hypergraph​

Hypergraph Transfer Protocol (HGTP) is the decentralized network developed by Constellation Network, Inc. and governed by the community. HGTP consists of the Hypergraph, a global layer zero network with Validator Nodes that maintains and secures the network, orchestrated by the Proof of Reputable Observations (PRO) consensus mechanism, and Metagraphs, or subnetworks that make up HGTP, that include networks, applications, and businesses.

HGTP is a decentralized protocol composed of multiple independent networks, known as Metagraphs. Each Metagraph is flexible and customizable to validate and process data according to its user-defined business logic. Furthermore, each Metagraph leverages custom consensus mechanisms to validate data before submitting its “state” as snapshots to the Hypergraph. The Hypergraph performs final validation and then adds the Metagraph snapshot to the ledger. This approach is how microservice state isolation is used in traditional digital and web2 environments where microservices cross-communicate with one another. Metagraphs are like traditional microservice development environments where the state of data is managed by exclusive logical service boundaries. By cryptographically securing any data type in its entirety, our vision is to make web3 tooling composable with the digital world of web2.

Figure 1. HGTP architecture overview.

This structure enables multiple states of data to exist, some with custom consensus, others leveraging global consensus, and other Metagraphs doing the validation themselves. Furthermore, with custom consensus, companies can deploy their own blockchain that orchestrates Validator Nodes to validate custom logic and the state of data while being able to create dependencies and incentives for validating a transaction. Individuals and entities will come to rely on the Hypergraph for the speed of validating data in realtime, assigning an incentive to the validator for validating under their customized consensus, and the security of knowing that the data was not tampered with.

This paper will break down how to measure network fees to further align stakeholders, validator nodes, and Metagraphs for the scalability of our ecosystem. Using metrics like the number of “workAmount” a transaction requires, how many resources are available to process a transaction, the frequency of transactions being sent, latency, staked DAG, and peer validation weight will be used to determine DAG fees. DAG fees will align both users of the Hypergraph Network: Validator Nodes and Metagraphs.

Validator Nodes​

Validator Nodes are the backbone of the Hypergraph’s decentralized network as they provide the resources to validate and confirm transactions. The Proof of Reputable Observation (PRO) consensus mechanism organizes the Validator Node operators and secures the network. This combination of a healthy network of nodes and PRO Consensus provide security, throughput, and uptime for application developers.

Validator Nodes will have limited resources tied to their node and can choose to support the Global L0 and one or more Metagraph Networks based on computing resources.

Figure 2: Metagraph L1 does the initial validation and bundles the transaction into blocks. The blocks are sent to the Metagraph L0 layer to be bundled into Metagraph snapshots to the Global L0. All metagraphs must have an L0 layer composed of 1 or more nodes (almost always more). Those L0 metagraph nodes must be hybrid nodes that are running both the Global L0 process and the Metagraph L0 process on the same node/server.

Metagraphs​

Metagraph L0 nodes, which are responsible for submitting snapshots to the Global L0, must all be run as hybrid nodes, supporting both Global L0 and their Metagraph L0 processes on the same node. Thus, Metagraphs can recruit from the existing pool of Global L0 validators to run their Metagraph processes, or recruit new ones. Since Metagraph networks with greater total staked DAG within their L0 network pay lower snapshot fees, they are incentivized to set DAG staking requirements as a prerequisite to joining their network. It is conceivable that DAG staking incentivized by Metagraph networks would allow for a reduction in Global L0 collateral requirements while maintaining high levels of locked value on the network. This opens the network for node participation with less than 250k DAG collateral requirement.

Beyond attracting Hypergraph validators with staked DAG, Metagraphs must incentivize participation in their own networks. Validator Node operators will choose which Metagraph processes to run with their node’s limited resources. Metagraphs with more attractive rewards for validators relative to their resource requirements will draw the most nodes to their network. Ultimately, Metagraphs will compete with each other to offer the greatest incentives to recruit the nodes needed to support their network or application.

Our goal is to make Metagraph deployment cost-competitive with web2 legacy services, while creating further utility demand around the DAG token. Furthermore, enabling Metagraphs to incentivize Validator Nodes to stake additional DAG to their network use case, further increases the potential for total value locked (TVL) on the network. These are the following ways that Metagraphs can leverage the Hypergraph:

Snapshot to Hypergraph​

All Metagraphs will send snapshots to the Hypergraph, which include associated fees. Each snapshot is capable of containing many individual transactions. Currently, snapshots sent to the Hypergraph are capped at 50kb; these snapshots can include Metagraph Token transactions and other raw data points. Metagraphs may choose to pass the incurred snapshot fees to their users within their own tokenomics (like a gas fee to use their Metagraphs network) or to pay them through other means. As mentioned earlier, other factors, such as the computational power needed to validate the transaction and attached priority fees, will determine the total cost.

Figure 3: Lifecycle of a Metagraph token transaction from creation to finality.

Deflationary Effects​

Metagraphs pay fees for data validated on the Hypergraph, which could create a deflationary effect on the ecosystem. Because these fees are irrecoverable, if incurred fees are greater than or equal to any value distributed to Validator Nodes, the ecosystem will experience a balanced (or even deflationary) token economy.

Metagraph Tokens​

It is equally important to point out that Metagraphs can issue their own Metagraph tokens as rewards for Validator Nodes that support their network. The majority of excess node rewards can be generated by these Metagraph tokens while maintaining DAG emissions to provide security and maintain the global state.

Metagraph: Network Fees​

In order to use the Hypergraph, Metagraphs must contribute fees to the network for each snapshot of state submitted. Metagraphs have the option of passing these fees on to their users or not, giving them the flexibility to organize their networks to meet the needs of diverse use cases. Snapshot fees are submitted to the Hypergraph in DAG, and these fees are irrecoverable. This mechanism could create a deflationary pressure on the network that will counteract rewards distributions to Validator Nodes. The first Metagraphs launching at the end of the Hercules era and the beginning of the Gemini era will pay no fees to the network and be limited to a snapshot size of 50kb or less. In this early stage, Metagraph snapshots without fees will trigger on-demand global snapshots, allowing high throughput for Metagraph data.

During the Gemini era, a snapshot prioritization function will be released that will introduce a fee mechanism for Metagraphs on the network. Snapshots without fees will still be accepted but they will be limited to one Metagraph snapshot per global snapshot. Feeless snapshots will not trigger on-demand consensus once the prioritization function is released which will effectively rate limit free snapshots to a rate of one every few seconds. Snapshots with fees will be processed on-demand and will allow for significantly higher snapshot throughput.

Fees will be calculated based on the amount of work required by the network to validate the data contained in each snapshot. The work amount is then adjusted with a multiplier that takes into account two additional metrics: staked DAG on the metagraph and PRO score. The multiplier discounts fees for Metagraphs also provide valuable attributes to the network outside of fees, such as incentivizing users to stake DAG in order to create a stable and secure network measured through PRO score.

The following formula will be used to determine the required fees:

Please note:

As features roll out there will be a need to adjust the weights to ensure optimization.

workAmount = byteSize x computationalCost

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multiplier = 1 / (stakedDAG x stakingWeight) + (averageProScore x proWeight)

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fee = (baseFee * workAmount * workMultiplier) + optionalTip

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The fee structure outlined above and the 50kb snapshot size limitation will increase with the rollout of future development releases in future eras, allowing for more complex data types validated by the Hypergraph, and additional value for Validator Nodes.

Below are the description of the inputs (outside of the limitless potential inputs of PRO score):

Work Amount​

Work amount is a measure of the amount of work the Hypergraph must perform to validate a transaction. This is composed of the byteSize which is the size of the data being validated, and computationalCost which is the time and resources required to run the validation function. The combination of these two factors estimates the actual effort required of the network to validate a transaction.

Computational Cost​

This is the time and effort it takes to run the validation function. Computational cost will be the combined measure of time and memory (RAM) resources required to run a validation function for a given transaction. A validation function that takes 100ms and 1GB of RAM is less costly to the network than a function that takes 2s and 8GB of RAM. This measures that time and resource cost. A simple transaction, like sending DAG to a peer, does not take as much time or resources compared to something complex like a cross-chain swap or Metagraph-to-Metagraph transaction (which may include multiple variables and Metagraphs deciphering different data types).

Multiplier​

The multiplier functions to calibrate the transaction cost of a Metagraph in relation to its valuable contributions to the overarching Hypergraph. This adjustment takes into account two primary factors:

1. stakedDAG: The total amount of staked DAG within the Metagraph, which represents locked value helping create a stable and secure network.

2. averagePROScore: The mean PRO score of the Validator Nodes present in the Metagraph, which is indicative of the trust and security of the network.

By incentivizing a higher PRO score, the multiplier aims to enhance the overall trustworthiness and security of the Hypergraph.

Staked DAG​

Staked DAG will be defined as the combined DAG staked by all nodes that sign a given metagraph snapshot. That could result in variable fees depending on the signers but fees could be controlled by metagraph networks enforcing DAG staking requirements on their networks. Metagraphs will need to set minimum DAG staked amounts to prevent their fees from varying too much.

Base Fees and Optional Tip​

The base fee is a constant that adjusts the overall cost of fees on the network. It is not a dynamic value but could be changed over time to optimize the overall fees burned by the network.

To enhance snapshot prioritization beyond the mandatory validation fees, an optional tip value can be appended to the snapshot fees. This additional value augments the snapshot’s priority compared to those without a tip. Tips prove advantageous in congested networks, facilitating prompt processing for Metagraphs that require swifter finality times, ensuring their snapshots receive precedence over others in the network.

Summary​

HGTP is an evolution of blockchain technology that brings the immutability and transparency of Web3 technology into Web2 digital infrastructure. The goal of this litepaper is to gain a better understanding of the fundamentals of our economics and the key stakeholders of the Hypergraph. With Metagraphs, businesses and individuals can leverage the Hypergraph, the Euclid SDK, and Validator Nodes to bridge conventional business logic with Web3 incentives and immutability.

HGTP will provide the infrastructure to build Metagraphs while creating an economy that keeps peer-to-peer transactions feeless while including proper incentives to attract both Validator Nodes and Metagraphs. Beyond peer-to-peer transaction fees, we can begin to calculate fees on our network by looking at these parameters: workAmount, computational cost, multipliers, stakedDAG, and tips/base fees. Using these metrics, we can create a calculator to predict the cost of deploying a Metagraph and the cost associated with sending snapshots.

Metagraphs will be required to create incentives for their own network while also placing DAG staking and resource requirements to attract Validator Nodes. It is conceivable that in a future release, variable rewards could be emitted based on the workload, thus reducing (or increasing) staking requirements to the network. As PRO scoring is released, new inputs will be added in the Network Fees calculator which will further incentivize active node management and network participation. This paves the way for the Hypergraph to usher in more use cases into the web3 industry at large.

For Metagraphs, entities can create their own network with tokenomics that correlate real-time data validation from existing legacy technology with Metagraph tokens. By having baseline network fees and requirements, and flexible development environments for Metagraphs, Metagraphs can build networks and incentivization structures that meet their industry’s needs while simultaneously connecting commerce to create data-driven insights that correlate to needs in the real world (vs. solely creating a web3 business that doesn’t impact the gross national product). The outcome of this design approach provides composable web3 technology with web2 infrastructure and economics enabling applications to drive exponential adoption of products and services outside of the web3 market.

Glossary​

Proof of Reputable Observation (PRO)​

Hypergraph’s unique consensus algorithm that enables more flexible application development, high transaction speeds, and throughput capacity by measuring each node’s reputation. A node's reputation or PRO Score can be based on a combination of factors like past performance, DAG staked, up-time, etc.

byteSize​

The size of the code that's being run to validate the transaction/data type.

computationalCost​

This is the time and effort it takes to run the validation function. You can imagine that a validation function that takes 100ms and 1GB of RAM is less costly to the network than a function that takes 2s and 8GB of RAM. This measures that time/resource cost.

workAmount​

The size of the code being run and the amount of time/effort it takes to run combined. This is the actual amount of work the network is doing to validate the data.

unitMultiplier​

This adjusts the cost of the work up or down depending on the metagraph's other contributions to the network (staked DAG and trust/stability score-PRO). Higher staked DAG + PRO score results in a lower multiplier which means that fees are cheaper for the same amount of work performed.

stakedDAG​

Defined as the combined DAG associated with all nodes that sign a given state channel snapshot. That could result in variable fees depending on the signers but fees could be controlled by metagraph networks enforcing DAG staking requirements on their networks. Metagraphs will need to set minimum DAG staked amounts to prevent their fees from varying too much.

baseFee​

We need some DAG value in the equation to make the result a DAG price. This could be 1 datum or higher depending on what we want the final fee to come out to. This is not meant to be a dynamic value but a constant that we set when we implement this.

optionalTip​

This is the same thing as the priority fee or the DAG fee that we currently have. Snapshots with a tip have higher priority over snapshots without a tip.

Introduction​

This document seeks to further the discussion on Constellation Network's economic model by introducing specific metrics and frameworks for the implementation of fees within the network. It draws connections between the network's commitment to free peer-to-peer transactions and the broader trend towards "pay as you go" systems in cloud computing. Furthermore, it explores the tokenomics of the network in relation to these fees, presenting a revitalized vision for leveraging Constellation Network's unique incentive and reward mechanisms to cultivate self-sustaining, generative economies.

We introduce a framework for snapshot fees that is integral to the economic model, underpinning the network's ability to incentivize positive activity, support scalability at various stages, and ensure network security. This framework involves a strategic introduction of fees to benefit the entire network, motivate positive activities, and bolster the network's capacity to scale.

By introducing fees in a way that stimulates efficient network utilization, fortifies against potential security threats, and generates a utility marketplace, this paper discusses the creation of a robust platform that encourages innovation without sacrificing security or scalability. In the following sections, we present a comprehensive approach to maintaining a vibrant ecosystem that benefits all stakeholders—underscoring our commitment to accessibility, sustainability, and collective prosperity within the Constellation Network.

Network Fees​

Constellation Network adheres to the core principle that most network actions should be feeless, fostering a low-fee environment to support the diverse use cases it aims to nurture. While we clarify that low-fee does not mean no-fee, the careful application of network fees, denominated in DAG, is crucial for network scalability and security. These fees play a pivotal role in the decentralized tokenomics of the network, not only by determining the cost of actions and incentivizing certain behaviors but also by deterring malicious attacks. Striking a careful balance between fees and rewards is vital for the network to attract diverse economic models for our metagraph layer, and to scale and accommodate innovation over the years, while simultaneously supporting robust network security.

Moreover, it's important to note that our approach to low or zero fees functions as a subsidy to stimulate network participation and growth. By minimizing fees, Constellation Network aims to lower barriers to entry, making it more accessible for users and encouraging broader adoption of both DAG as a utility token and metagraphs as a platform for development. This strategy is designed to support the network's expansion by fostering an environment that is attractive to new users and developers, ultimately contributing to a self-sustaining and growing ecosystem.

Fees are utilized on the network for the following purposes:

• Securing the network against attacks: by making certain patterns of behavior more expensive, such as DDoS or spam attacks, the economic viability of attacking network vulnerabilities is reduced.

• Efficient resource utilization: introducing cost mechanisms encourages users towards more resource-efficient behaviors, optimizing network resource usage without imposing limitations. An illustration of this principle is the implementation of metagraph snapshot fees, which attach a tangible cost to data storage on the Hypergraph. This incentivizes metagraph teams to innovate, such as by storing only data notarizations (hashes) on-chain rather than the full data sets, leading to more efficient network space utilization.

• Creating a utility marketplace: network fees serve to facilitate a transaction space where users compensate resource providers for their services, effectively creating a marketplace for the exchange of utility. For example, metagraphs pay snapshot fees for the utility of validation, consensus, and storage on the ledger while validator nodes generate rewards for their work validating transactions, reaching consensus, and providing access to on-chain data.

Furthermore, fees fall broadly into two categories:

• Required: A minimum fee is necessary for certain actions to proceed, particularly for essential network operations or those involving tangible costs, like snapshot processing and storage. These mandatory fees ensure that critical functions are supported and maintained across the network. Without meeting this fee requirement, the specified actions will not be executed.

• Optional: a dynamic or market-rate fee that allows actions to be performed with enhanced priority or speed. Such fees act as incentives for transaction prioritization and overcoming network-imposed limitations, like transaction rate limits. This approach resembles a "tip" to validators, rewarding them for expedited processing of blocks or metagraph snapshots.

Next, we examine the use of fees in two critical areas of the network: peer to peer transactions and metagraph snapshots.

Peer to Peer Transactions​

As the native utility token of the Constellation Network, DAG is used as a method of exchanging value between users through peer to peer transactions on the network. While primarily a feeless currency, DAG has always had the concept of optional fees which can be used to prioritize a transaction over others. For the vast majority of network users, there is no need for prioritization, effectively allowing them to operate within a free usage tier while senders with specific throughput or latency requirements pay a small fee for their usage of the network.

For example, an optional fee can be provided to a DAG transaction as a way to prioritize it over other transactions within the mempool and trigger on-demand consensus on the network. This significantly increases transaction throughput for individual wallets and is useful in bulk sending use cases, such as airdrops or distributing to many wallets at once. The optional nature of DAG fees allows those fees to act as a rate limiting mechanism, forcing heavy users of the network to pay for the relatively greater impact of their actions on network resources.

In the coming months, Constellation will be rolling out a small number of limited restrictions for DAG transactions in order to enhance security and scalability of the currency. Like with the optional priority fee, these restrictions can be overridden with a small fee. Each fee targets a specific vulnerability in order to enhance security by making these vulnerabilities too slow or too expensive to exploit. An example of such a fee is enumerated below.

Low Balance Rate Limit​

DAG wallets will be rate limited by the network based on their DAG balance in order to prevent spamming or address splitting attacks which seek to create many low balance wallets quickly to overwhelm network state storage and memory resources.

The rate limiting formula is as follows:

rateLimit = 1 hr / (DAG wallet balance / 20)

For example, if a wallet has 5,000 DAG (~$250 at time of writing) it would be able to send a transaction every 1/(5000 / 20) of an hour, or every 14 seconds.

A wallet with a 1 DAG balance (~$0.05 at time of writing) would be able to send 1/(1/20) hours, or once every 20 hours.

The above rate limit can be overridden, in much the way that DAG transactions can be prioritized, by providing a 0.002 DAG fee (~$0.0001 at time of writing) or higher.

This rate limiting mechanism effectively deters spam attacks by making it impractical to execute large volumes of transactions from low-balance wallets without incurring significant costs. This mechanism also ensures that the average user will rarely, if ever, encounter these rate limits unless they are attempting to use accounts with very low balances while sending a large volume of transactions. It's worth mentioning that this approach is not unique to Constellation Network but is a convention established in several other feeless network implementations. This strategy has been adopted as a practical solution to maintain network integrity and prevent abuse while ensuring accessibility for genuine users.

Metagraph Snapshot Fees​

In Constellation’s economic model, metagraph snapshot fees are the primary point of fee collection and the only current source of required fees. This structure pushes the responsibility of fee payment to metagraphs rather than users, as is the case in most other decentralized networks. Metagraphs are able to individually design their own economic models that pass these fees on to their users, or pay the fees through other means such as community grants or node rewards. We believe this fee structure creates an ecosystem optimized for novelty and flexibility at the metagraph layer.

Metagraph snapshot fees set the expenses associated with operating on the network which in turn influences the economic viability of individual metagraphs and the sustainability of the network as a whole. By directly linking fees to the operational throughput of metagraphs, the system ensures that the economic burden is proportionate to the usage and benefits derived from the network. This approach fosters a scalable and self-regulating ecosystem, where the cost structure is transparent and aligned with the growth and development of metagraphs.

Objectives​

The fee structure for metagraph snapshots was crafted with several key objectives in mind:

• Limited Fees: Ensuring that the costs associated with using the network remains low and manageable for projects of all sizes.

• Flexibility for Metagraphs: Fees are imposed only for data submitted to the Global L0, allowing metagraphs freedom to determine the fee structure for their users, if any.

• Staking for Reduced Fees: Staking encourages long term network participation and commitment, and as such is rewarded with reduced snapshot fees.

• Fixed Fees: Required fees have a fixed cost that does not fluctuate due to network activity, allowing for accurate cost projections for metagraph projects.

• Slow Network Inflation: In the current era, fees are irrecoverable, effectively working to slow DAG inflation.

• Inflation Replacing: Once DAG max supply is reached, future fees will be redistributed as validator rewards.

Formula​

Snapshot fees are set based on the following formula:

Fee = (baseFee × WorkAmount × workMultiplier) + optionalTip

The elements of the formula are calculated in the following way:

workAmount = kbyteSize x computationalCost

workMultiplier = 1 / (1 + (stakedDAG x stakingWeight) + (proScore x proWeight)

The formula relies on the following inputs:

• kByteSize: The size of the data submitted in the snapshot represented in kilobytes. The size of the snapshot itself influences the cost of long term storage by validators and archive nodes.

• stakedDAG: The amount of DAG that the metagraph has in their designated staking wallet.

• proScore: The PRO score of the metagraph, to be rolled out in future eras.

• optionalTip: An optional addition to snapshot fees to prioritize snapshots over others in a congested network.

The formula also includes the following constants:

• baseFee

  • Description: The foundational fee unit of the network represented in datum. This represents the cost of validation and storage for 1 kb of data.

  • Value: 100,000 datum

• computationalCost

  • Description: The computational cost of validating snapshot contents is determined by the required actions, with operations demanding more resources incurring a higher computational cost. It is important to note here that this only applies to operations run during Global L0 validation, and to storage of metagraph snapshots. Metagraphs can implement operations of arbitrary complexity internally, which would only incur a fee if re-validation was required during Global L0 processing of the snapshot, effectively making full validation an opt-in process.

  • Value: 1 for custom data snapshots and for L0 token transactions within snapshots.

• stakingWeight

  • Description: A constant influencing the amount by which stakedDAG reduces required fees.

  • Value: 0.0000002

• proWeight

  • Description: A constant influencing the amount by which proScore reduces required fees. Initially set to zero until PRO score is live on the network.

  • Value: 0

Fee and Staking Wallets​

In order to facilitate collection of snapshot fees, metagraphs will be required to designate a wallet for their fees to be deducted from. A wallet can be designated by signing a message to prove ownership of the wallet, having that message additionally signed by a majority of metagraph L0 nodes, and then submitting that message to the network. Fee wallets can be changed at any time by signing a new message in the same way.

Fees are denominated in DAG and will be automatically deducted from the fee wallet as a metagraph snapshot successfully undergoes consensus on the Hypergraph. A record of this balance change is stored on the metagraph snapshot itself.

Similarly, a staking wallet can be designated by a metagraph utilizing a similar process to the fee wallet. A message must be signed by the staking wallet and a majority of metagraph L0 nodes, then sent to the network. Staking wallets must be globally unique among metagraphs which ensures that staked DAG is not counted for a metagraph more than once.

It is important to note, the collateral that metagraphs must provide to run their Hypergraph nodes on the network is not counted as staked. Only the balance in the staking wallet at the time of snapshot processing will be considered for the calculation.

Staking​

Staking benefits the network by reducing circulating supply and thereby increasing the demand for in circulation tokens. Staking also enhances network security, as participants have a vested interest in the integrity and performance of the network, discouraging malicious activities. Metagraphs that stake significant sums of DAG are rewarded by the network with reduced snapshot fees, providing them bandwidth at a lower per-snapshot cost.

In the fee calculation, workMultiplier is a hyperbolic decay function which approaches zero at high values of stakedDAG but never reaches it. In practice, this means that staking can only reduce snapshot fees but never fully eliminate them. This design ensures that while staking significantly incentivizes participation and investment in the network, it also maintains a minimal level of fee generation crucial for the network's sustainability and security.

Examples​

Here we will look at two examples to illustrate the application of snapshot fees on different metagraph use cases. The first, the Dor metagraph, illustrates data usage by the network’s first MainNet metagraph, and uses data based on real usage trends. The second, the Ethereum Blockchain is presented to describe the hypothetical fees a project could expect to pay to host a metagraph duplicating Ethereum blockchain data on the Hypergraph.

All examples assume a DAG price of $0.10 USD for USD calculations. Outcomes show fees both with and without staked DAG.

Dor Metagraph​

The Dor metagraph validates foot traffic data from a network of IoT sensor devices. Sensors send their data or “check in” with the metagraph once per hour. At the time of writing, there are over 800 sensor devices active on the metagraph.

Sensor data is received by the metagraph in a custom binary format, formatted into internal data schemas, and enriched by data from external sources, namely the Dor REST API. A primary goal in the design of the metagraph data structure was to maintain a low on-chain footprint in order to allow the metagraph to scale to support many thousands of devices. As such, the contents of each check in is hashed, and this notarized value is stored on-chain which significantly reduces the data needs of the metagraph compared to storing full data on-chain.

The metagraph also hosts an L0 token, DOR, which is used to incentivize users to maintain the network of sensors. In testing, the largest snapshot sizes were logged when bulk batches of L0 transactions were validated, with a maximum observed snapshot size of 35kb. Snapshots had a minimum size of 5kb, with an overall mean of 10kb.

Inputs:

Outputs:

Ethereum Blockchain Metagraph​

To illustrate the costs associated with a metagraph with greater data throughput and an interesting future metagraph use case, we examine a hypothetical metagraph that stores Ethereum block data on the Hypergraph.

For the purposes of this example, the average snapshot size is set to 180kb. This takes into account the recent average of Ethereum block sizes at the time of writing (170kb) and a 10kb overhead for the snapshot schema (5kb) and additional metadata stored along with the blocks (5kb). We assume one snapshot per block and a rate of 213,000 blocks per month.

Inputs:

Outputs:

To extend the comparison, we can calculate the total number of L0 token transactions that would fit in the same snapshot size (180kb) which is roughly 257 transactions per snapshot, resulting in a monthly total of 54,741,000 transactions. This is, of course, not a directly fair comparison but still serves to illustrate the stark difference in fee structure between Constellation Network and Ethereum.

The table below compares the cost of 54,741,000 transactions on each network. Estimated Hedera and Solana fees are included for reference.

Calculator​

We make available an interactive calculator designed to help you explore the impact of different values on snapshot fees. This tool allows you to dynamically adjust parameters such as kByteSize and stakedDAG to understand how these parameters impact snapshot fees and to visualize the economic and operational impact of different combinations of metagraph throughput and DAG staked.

Snapshot Fee Calculator

Tokenomic Impacts​

In 2018, Constellation Network launched the Hypergraph with an economic model based on a fixed token emission schedule for its native currency, DAG. Tokens are distributed to validator node operators for their work maintaining the underlying infrastructure of the network, and other pools that support network activity. Rewards are distributed by the network at a distribution rate based on a preset schedule of epochs, each lasting for roughly two and a half years, depending on the real rate of snapshot creation on the network. In each new epoch, the rewards are cut in half compared to the previous epoch. After the final epoch ends, at a total token supply of less than 3.69 billion DAG, the network will cease to create new rewards entirely. In this way, network rewards are distributed rapidly in early epochs, and then more slowly as the ecosystem matures to limit total supply.

Epochs and Monthly DAG emissions

Reward distributions are an inflationary force, increasing the circulating supply of tokens with each snapshot of network activity towards a capped total supply. This inflationary force supports the maintenance and infrastructure costs of the network by introducing new tokens into the supply at a regular rate. Once the final rewards are distributed and the total supply stabilizes, new mechanisms will be needed to compensate validators and support network infrastructure and development.

Fee Distribution​

Up until now, the collection of fees on the Hypergraph has been minimal, having little overall impact on the network's tokenomics. With the introduction of metagraph snapshot fees, along with additional DAG fees, fee collection will greatly increase and have the opportunity to impact network tokenomics in more significant ways.

In order to benefit the network as a whole, fees are irrevocable, removing them from circulating supply as each metagraph snapshot is processed. In this way, they will become a deflationary countermeasure to the network inflation that the current rewards structure relies on. Their impact will slow the rate of inflation in each epoch and ultimately reduce total supply after the final epoch ends.

After the last snapshot of the final epoch, inflationary rewards will end and a new source of value will need to be unlocked to support node validators and other network infrastructure in a fixed supply environment. At this point, any new fees collected will remain in circulation and be redistributed to the validators and other network rewards pools. As the network matures towards this stage, snapshot fees are likely to grow to become a significant source of value, meeting or exceeding the rewards distribution rate of the final epoch. We believe this transfer of value from resource users to resource providers in the form of rewards will create a self-sustaining network without the need for an ongoing inflationary supply.

Generative Economics​

The foundational goal of Constellation Network’s technical and economic model is to foster dynamic systems with a built-in tendency towards social equity, sustainability, and mutually beneficial economic outcomes for all participants. This foundation is influenced by the concept of generative economics, which focuses on creating economic systems that inherently produce positive results for society, the environment, and the global economy.

In our model, we focus on interactions between the various stakeholders of our platform: metagraph networks, validator nodes, users of the platform, and community members. The following sections highlight examples of applied generative economic theory within the network.

Metagraphs as Producers and Consumers​

A crucial mechanism built into the network’s fee structure is the requirement that metagraph L0 nodes are run as hybrid Global L0 nodes. In the current era, each metagraph is granted 3 slots on the global network seedlist in order to run their Global L0 nodes. These nodes generate network rewards by validating snapshots for the host metagraph, as well as snapshots from other metagraphs and blocks from the DAG L1. With this mechanism, each metagraph is both a producer of utility on the Hypergraph through their work in network validation and consensus, and a consumer of utility through their submission of data to other network nodes.

For metagraphs with low throughput, the DAG earned from snapshot fees will be greater than the DAG spent on snapshot fees. Conversely, metagraphs with higher throughput will spend more DAG on snapshot fees than they earn in network rewards from their work as a validator.

Monthly reward output of 3 Global L0 validator nodes in epoch 2 compared to snapshot fees assuming 100 kb average snapshot size and a computational cost of 1.

To the left of the intersection of the two lines in the graphic above, validator rewards outpace snapshot fees - effectively creating a free usage tier. This provides an economic onramp for metagraph projects to validate their idea and reach scale before having to allocate capital to snapshot fees. It also allows them time to mature their own internal economic model to generate fees from their users if they choose to finance their network fees in that way. We believe this mechanism significantly lowers barriers to entry for the ecosystem while encouraging healthy growth and experimentation with novel economic structures.

Heterogeneous Validator Configurations​

Initially, validator nodes in the Constellation Network were uniformly structured to run both the Global L0 and DAG L1 layers. This configuration was essential for bootstrapping the network and ensuring it could handle real-time transaction loads effectively. However, uniform configuration is suboptimal, primarily because the two layers have distinct resource requirements— notably, L0 processes demand significantly more RAM than L1—and they achieve consensus through different mechanisms. L1 layers can reach consensus in parallel within clusters of three nodes, whereas the L0 layer requires unanimous consensus across all participating nodes.

With the introduction of metagraphs, the network now has the need for additional layers to operate either in conjunction with or independently from the Global L0 and DAG L1 layers. For example, a metagraph built using the Currency Framework and utilizing custom data as a Data Application has 3 additional layers: Metagraph L0, Currency L1, and Data L1.

A minimal Currency Framework metagraph running the Global L0, Metagraph L0, Currency L1, and Data L1 layers in parallel on three individual nodes.

Each layer, whether metagraph-specific or global, can scale horizontally in similar fashion to a microservice. This means they can expand in capacity and efficiency to match network demands and data processing needs and thereby achieve optimal performance. Specifically, the scaling of metagraphs predominantly occurs on the L1 layers, which utilize a directed acyclic graph architecture and can facilitate parallel consensus operations at significant rates of throughput. Just as microservices can be independently scaled to meet the needs of different applications, metagraphs can adjust their capacity based on their unique use cases and workload.

The ability of a metagraph to scale each layer independently offers opportunities for community members to actively participate in running nodes as metagraphs expand to match the needs of their specific use cases. For metagraph L1 layers, there is no requirement that nodes must also run validation for the Global L0 layer which means a broader base of the community can participate as node operators, surpassing previous limitations. Nodes run by a diverse group of participants distribute control and reduce central points of failure, making the metagraph more resilient against attacks and manipulation.

Future protocol updates, namely enabling validator reward distribution to L1 nodes, will allow the DAG L1 to scale independently of the Global L0 layer by introducing an independent reward structure on that layer. The DAG L1 can be scaled down significantly while still handling many multiples of the current transaction workload. We believe the current optimal cluster size to be in the range of 12 to 24 nodes. In practice, this would mean that most Global L0 node operators could reduce their infrastructure costs by scaling down their instances to support just the Global L0 layer, without compromising security or scalability on the network, and while continuing to earn rewards.

Homogeneous node configurations transitioning to heterogeneous configurations to support independent scaling of the Global L0 and DAG L1, as well as metagraph layers.

As the network evolves to further support independent scaling of network layers, it paves the way for a more sustainable economic model with new opportunities to contribute as a node operator. This model not only rewards participants fairly but also ensures that the network remains robust against external threats and scalable in the face of growing demand. Node operators will have the flexibility to serve as validators in independent global network layers and metagraph layers, either individually or as hybrid nodes that validate for multiple layers simultaneously. This flexibility will significantly expand the pool of node operators, thereby enhancing the network's overall strength.

Incentivizing Builders​

In order to support a thriving ecosystem, Constellation Network relies on the active engagement and contributions of many network participants. We believe the network will function optimally with higher levels of participation rather than lower. This mindset of abundance is core to the idea of an efficiently functioning Hypergraph; that more interconnected metagraphs and more data throughput will result in a more efficient ecosystem for all participants. As such, there is a need to incentivize network participation in general, and specifically to lower barriers to entry for metagraph project teams to be first movers within the ecosystem, given that they occupy such a critical role in the architecture.

Metagraph project teams need various kinds of support to be able to effectively launch and contribute to the Hypergraph. As a platform with a relatively high learning curve for new developers, resources need to be made available to encourage development teams to choose Constellation Network for their project, and to make them successful once they begin building. These resources come in many forms including developer tools, documentation, and direct support from core developers to answer questions and debug issues. Creating an effective onboarding strategy for these teams is an essential task.

Also critical, is the task of lowering barriers to entry for these projects. Barriers to entry are often economic in nature, and as such require economic solutions such as grants and subsidy agreements to reduce initial costs as projects attempt to scale. Two primary sources of financing exist for project teams interested in building on the Hypergraph: Stardust Collective and the Data Pool.

The Stardust Collective was launched at network genesis as a community group, primarily made up of node operators, with a shared vision to catalyze the network’s growth through proactive community engagement and to spearhead its widespread adoption. Central to their ability to be effective is the Stardust Tax, a 10% tax on all network rewards which is diverted to a holding wallet for use by the collective. Recently, Stardust Collective has legally formalized their organization which has enabled them to channel resources into pivotal projects, from providing loans that boost metagraph project viability to investing in the education of HGTP-centric developers. The Stardust Collective is a powerful force in pushing the network forward.

The Data Pool, launched in early 2023 to support early metagraph builders on the network through a pool of network rewards set aside for distribution through Lattice. This pool initially helped to support the Dor metagraph, the first metagraph to launch on the network. At the time, Dor was already a fully mature company with an existing customer base and a core focus on data analytics. By open sourcing their codebase along with supportive tooling, Dor significantly contributed to the ecosystem, encouraging the development of additional metagraph projects. As the next cohort of metagraph projects prepare to launch, the Data Pool is being made available to project teams to bootstrap their efforts on the Hypergraph.

In a partnership between the core team and Stardust Collective, the following kinds of support from the Data Pool can be made available on a case-by-case basis:

• Node collateral for launching MainNet nodes

• Funds to offset snapshot fees for project scaling

• Project development funds

Through this partnership, we aim to incentivize positive participation in the network, expand open source contributions to critical tooling, and to provide a catalyst for the launch of metagraph projects with strong utility. By actively lowering barriers to entry and providing strong support mechanisms for builders, these programs encourage innovation and sustainable growth within the Hypergraph ecosystem.

Conclusion​

Constellation Network’s vision continues to drive a mission of bringing web3 tools to web2 development and businesses. Through metagraphs, we have introduced extensible frameworks that enable more customization through data integrations with incentives and complete subnetwork orchestration. In this paper, we have described a network fee structure that will benefit the network as a whole through enhanced security, scalability, and sustainability. Furthermore, this fee structure expands our vision of web2 composability through its compatibility with existing cloud computing models. This strategy, enhanced by the versatility of metagraph architecture, showcases that the Hypergraph will persist as a supportive platform for projects of varying sizes to flourish. Moreover, the methodologies discussed in this paper regarding fee implementation, resource distribution, and incentivization are set to foster a self-reliant network that advantages all involved parties in the long run.

At the heart of our strategy is a pledge to maintain Constellation Network as an open and dynamic ecosystem for every stakeholder - metagraphs, validator node operators, developers, and the community. The introduction of fees aims to promote efficient use of the network, enhance security against attacks, and foster a vibrant utility marketplace, establishing a foundation where innovation thrives alongside robust security and scalability. These fees serve not just as a mechanism for resource management but as a testament to our commitment to a model that encourages active contribution, rewards engagement, and supports the overall health of the ecosystem.

Each feature and mechanism, articulated in this paper, unlocks the potential for future development and elasticity of the network. For example, dynamic staking can evolve to allow community driven participation to reduce costs on metagraphs, or the ability for nodes to delegate resources to other metagraphs that provide certain attractive economic models. Through both technological and economic lenses, applications will be empowered to create alternative treasury strategies to complement their consumer facing experience. They will not have to compromise their technical vision for broken web3 economic models, but instead will be able to marry web3 architecture and financial strategies to introduce programmatic transparency, accountability, and accretive financial models.

Introduction​

As Constellation Network evolves to meet the dynamic needs of a growing ecosystem, we are excited to introduce Metanomics—the next generation of our tokenomic model. The current framework has successfully driven data incentivization, supported node validators, and nurtured the early stages of metagraph development. However, with the network expanding and more metagraph projects coming online, a decisive shift is necessary. Metanomics is designed to be a sustainable and adaptable supply model that aligns with our vision for long-term decentralization, offering robust rewards and incentives for all stakeholders within the ecosystem.

In cryptocurrency, a capped supply model is often ideal for store-of-value tokens, as it can enhance scarcity and, by extension, value retention. However, DAG is fundamentally a utility token designed to foster the growth and functionality of the Constellation Network. A strictly capped supply can hinder the network's ability to adapt and scale effectively, restricting its capacity to reward validators, support protocol development, and incentivize all participants within the ecosystem.

Currently, Constellation Network supports the development of its public protocol through a combination of public and private funding sources. While this approach has allowed for significant growth, it also presents challenges in aligning resources with the broader needs of the network. As the ecosystem evolves, it's becoming increasingly important to establish a dedicated focus on core protocol development and network tooling to ensure the continued expansion and innovation of the public network. Metanomics offers a clear path forward by providing a sustainable funding model that reduces reliance on private subsidies and aligns incentives across all participants, ensuring Constellation Network can continue to deliver robust solutions for its users.

This litepaper introduces the next evolution of DAG tokenomics with a flexible supply model. This model ensures predictable incentives for node validators, participants, and protocol development while preserving the network’s economic integrity. It also establishes a transparent and sustainable mechanism for funding both ongoing and future initiatives.

The New Model​

Immediate Changes​

Rebuild Treasury​

As we navigate the evolving market, with its increasing competition and new opportunities for adoption, it is essential to refocus on open-source development, core team support, and ecosystem growth.

To support these efforts, we are making a strategic move to significantly enhance the Constellation Network treasury, comparable to leading protocols. This initiative is crucial for providing robust support for both ongoing and future projects, ensuring that our network remains competitive and continues to thrive.

As part of this strategy, we will unlock and repurpose 450 million DAG tokens. These tokens were originally locked by the founders as a commitment to the long-term success of the network and to demonstrate their confidence in the long term success of the Constellation ecosystem. Now, with the network entering a new phase of growth, these tokens will be strategically allocated to accelerate development and expansion.

The repurposed tokens will be allocated as follows:

• Scaling Operations: 50M DAG

• Community Incentives (grants, general incentives): 50M DAG

• Marketing & Network adoption (development support, documentation, content creation): 50M DAG

• Employee Incentives: 50M DAG (18-month vesting)

• Public goods (Tessellation, Stargazer, Dag Explorer, Lattice, Euclid SDK, dag4js), Development, Engineering, R\&D: 250M DAG

To ensure transparency and maintain the trust of all network participants, we will provide bi-annual updates on the impact and allocation of these funds across the various categories. Furthermore, to protect the DAG market from unnecessary volatility, any token sales for funding will be limited to 5% of the average daily trade volume.

Reallocating these tokens ensures that Constellation Network is ready to compete and thrive in the rapidly changing Web3 landscape. This investment in community incentives, marketing, network adoption, employee incentives, and product development will strengthen our foundation and drive substantial growth in the years to come.

Winding down the data pool​

As we transition to the Metanomics model, the Data Pool will remain active until the official go-live date at the end of Q1 2025. However, in the lead-up to this transition, we are adjusting the overall distribution of tokens within the Data Pool to better align with the network’s future state.

New distribution​

The overall distribution will change as follows:

• Data pool bounties: decrease from 55% to 42%

• Stardust tax: decrease from 10% to 7%

• Mainnet validator incentives: increase from 17% to 24%

• Integrationnet validator incentives: increase from 15% to 20%

• Testnet validator incentives: increase from 3% to 7%

DTM Bounties​

In line with these changes, the DTM baseline bounty will be discontinued, as the primary focus now shifts to data collection with Dor's metagraph fully operational. To meet the expectations of Foundation DTM buyers, we will remove the caps on commercial and installation bounties. Of the 5,991,186.99 DAG allocated for this purpose, 2,710,298.88 DAG will be distributed monthly, with 35% designated for commercial bounties and 65% for installation bounties until the new tokenomics are implemented.

The remaining DAG will be reserved for distribution after the new tokenomics model is in place ensuring that DTM bounties remain available for 18 months after the Data Pool changes. This provides a smooth transition as we move into the Metanomics era.

Metanomics​

Introducing Metanomics​

As Constellation Network continues to grow and evolve, so too must its tokenomics. Metanomics represents the next significant step in the evolution of DAG tokenomics, designed to meet the network’s future needs while building on the strong foundation already in place.

Under the old model, rewards were distributed according to a fixed schedule of epochs, each lasting approximately two and a half years, depending on the actual rate of snapshot creation on the network. In each new epoch, the rewards were halved, with the final epoch concluding once the total token supply reached just under 3.69 billion DAG. At that point, no new rewards would be created, effectively capping the total supply and distributing rewards rapidly in the early stages and more gradually as the ecosystem matured.

However, as the network expands and more participants join the ecosystem, a more flexible and sustainable model is needed. Beginning in the first quarter of 2025, DAG will transition to a flexible supply token under the Metanomics model. This new structure introduces a dynamic inflation rate, starting at 6% and gradually decreasing until it stabilizes at 0.5%.

A key innovation in this model is integrating DAG's market price into the emission formula. As network participants incur fixed costs—such as hardware, opportunity costs, and the expenses related to core protocol development—the inflation rate will adjust accordingly. When the token price is higher, less inflation is required to cover these costs, thereby maintaining economic stability within the Constellation ecosystem. This approach ensures sustainable growth, preventing both excessive inflation and deflation, and enhances the utility of DAG as a mechanism for securing the long-term sustainability of the network.

By shifting to a flexible supply model, Metanomics ensures that Constellation Network can dynamically adapt to the needs of its growing ecosystem. Unlike the capped supply of the past, this approach allows for a balanced distribution of rewards that scales with network demand. The flexibility in supply enables the network to provide consistent incentives for validators and participants, maintain economic stability, and support ongoing development—all while ensuring that the network can evolve in step with its expanding user base and technological advancements.

Emission Formula​

Key aspects​

• Economic Stability: The flexible supply adjusts to market conditions, maintaining network health.

• Incentive Alignment: Ensures continuous incentives for protocol, stardust collective, validators, and delegators.

• Transparency: A clear and predictable inflation rate allows all participants to adjust and plan accordingly.

Network Emission Distribution​

The distribution of inflation emissions among network stakeholders is structured as follows:

Variable emissions​

• Protocol receives 30%

• Stardust Collective (Foundation) receives 5%

• Validators receive 20%

• Delegators receive 45%

Fixed emissions​

• Delegators receive a fixed 3% on delegated DAG

The protocol starts with an initial rate of 0%, increasing by 6% each quarter until it reaches a maximum of 30%. During this ramp-up period, the foundation receives the remaining funds.

This allocation ensures robust incentives for all groups to actively participate and operate within the network, providing a sustainable, predictable, and transparent incentive framework.

Introducing Delegators​

Delegators are key participants within the Constellation Network who hold DAG tokens and choose to delegate them to one or more validators on the network. In return for their delegation, they receive incentives, with a portion deducted as a validator fee.

Anyone that holds DAG in a wallet can participate in the delegation process. Token holders simply choose a validator on the network to delegate to - this could be regular validators, metagraph-operated validators, or any other validator node on the network. After delegation, rewards are distributed to the delegator based on the amount delegated, with a portion of rewards redirected to the validator based on their validator fee.

This delegation process allows anyone to participate actively in the network by directing token emissions to their chosen validators. Delegators thus play a crucial role in shaping the distribution of network incentives, making them active participants in the growth and governance of Constellation Network.

The Protocol/core treasury is prohibited from being used in Delegation.

Delegator incentives

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Delegators receive incentives from two sources:

• Fixed Emissions: A fixed 3% APR on all delegated DAG.

• Variable Emissions: 45% of all inflationary emissions allocated to the network.

A key factor in this model is the idea that in order to have a functional delegation system, delegator rewards should outpace network inflation whenever possible. The variable rewards structure creates a dynamic within the network where an equilibrium in incentive distribution is achieved when 60% of the total DAG supply is delegated. This 60% threshold is optimal as it maintains network liquidity while encouraging active participation.

When the total supply delegated is below 60%, DAG holders have a clear incentive to delegate, as their returns will exceed the inflation rate. The fixed 3% APR further ensures that delegator incentives are consistently above the inflation rate, making delegation a compelling option for all DAG holders.

This structure creates a precise opportunity cost for keeping DAG idle, as the tokens would be diluted over time, creating a powerful incentive for all network participants to engage in the existing opportunities within the network.

Unwinding a Delegated Position​

If a delegator decides to withdraw their DAG tokens from delegation, there is a 30-day unwinding period during which the tokens remain locked, and no rewards are earned. This unwinding period helps maintain network stability and prevents sudden large withdrawals that could disrupt the system. However, delegators can re-delegate their tokens to another validator without undergoing this unwinding period.

Validator Fees​

Validators can set a fee, ranging from 5% to 10%, on the incentives distributed to Delegators. This fee structure incentivizes validators to operate efficiently and attract delegations by offering competitive terms. Delegators have the freedom to choose validators based on performance, alignment with specific projects, or contributions to the network, creating a competitive environment where validators strive to maintain high standards. For instance, entities like the Stardust Collective (Foundation), the Protocol, or DOR may have dedicated validators where delegators can delegate their tokens, effectively directing support to these areas of the network.

Active incentive governance​

The introduction of delegators adds a new layer of active incentive governance within the Constellation Network. By selecting specific validators, delegators directly influence the distribution of 5% to 10% of the total delegate emissions. This participatory model creates a competitive environment wherein node validators are incentivized to compete and find means to attract delegations.

Delegators can choose validators based on their performance, alignment with specific projects, or contribution to the network. This choice encourages validators to maintain high standards and actively contribute to the network's health and growth.

All aspects of the incentive governance model are designed to be transparent. The mechanisms for delegation, collecting validator fees, and emission distribution will be automated and on-chain, allowing all participants to understand and predict outcomes.

Metagraph Projects​

Metagraph projects can strategically leverage this governance structure to secure funding and project growth. By attracting delegated DAG, metagraph projects can finance their development, marketing, and community engagement initiatives. Providing L0 tokens or exclusive project features as incentives to delegators aligns the interests of these projects with those of the network participants. It will be up to the project to decide the best way to attract delegated DAG by leveraging what their project offers.

Stardust Collective​

The Stardust Collective, tasked with promoting community growth and network awareness, benefits from this incentive governance model as a funding opportunity. Delegators who value the Collective's contributions can delegate their DAG to the Collective’s validators, thereby supporting its initiatives.

Node validators​

Regular node validators can leverage this dynamic to accrue extra DAG incentives. Known node validators in the community can leverage their following to attract delegations. They can do this by giving special perks to those who decide to delegate to their validator. Other node validators can simply delegate their DAG to their own validator. This will guarantee them net incentives, as they receive the full delegation amount plus the validator fee.

Protocol​

Although protocol/core treasury cannot participate in delegation, delegators can opt to delegate to the protocol nodes, this will help fund development and the overall work the protocol does for the network.

Snapshot Fees​

Snapshot fees play a critical role in the Constellation Network's economic model, particularly within the framework of Metanomics. These fees are paid by metagraphs based on their activity levels on the network and are designed to be a counterbalance to the inflationary aspects of the tokenomics model.

As metagraphs generate activity on the network, they incur snapshot fees that are consumed, and irrevocably removed from circulation. This removal of fees serves to offset the inflationary emissions generated through rewards, ensuring that the overall token supply remains balanced.

In this way, snapshot fees act as a buffer against potential oversupply, creating stability for DAG and contributing to the network's health. Their role is particularly important after the transition to the flexible supply model, where they help to maintain the delicate balance between inflation and deflation.

If the network requires additional support, a governance vote could authorize reallocating a portion of the snapshot fees to validator incentives. This flexibility ensures that the network remains adaptable and capable of sustaining growth while preserving its core economic principles.

Key dates​

• Unlock of the original 450M DAG founder’s tokens: August 9th, 2024

• Data pool changes: August 2024

• Go live of Metanomics: End of Q1 2025

Model Summary​

Key Features​

• Flexible Supply Model: The supply of DAG will adjust based on market conditions, with an initial inflation rate of 6% decreasing to a target rate of 0.5%.

• Emission Distribution: Inflation emissions are allocated among protocol development (30%), Stardust Collective (5%), validators (20%), and delegators (45% of emissions plus a fixed 3%).

• Delegators: New way for DAG holders to participate in the network as a mechanism of active incentive governance

Effect of market conditions on the inflation rate​

This chart shows how the inflation rate in the model reacts over time under four different market conditions (stable, decreasing, increasing, and up and down), with all other inputs being equal.

The Metanomics model is designed to ensure that, regardless of market conditions, the inflation rate gradually decreases over time until it reaches a target rate of 0.5%. This built-in adaptability allows for effective management of the DAG token supply, supports network growth, and maintains economic stability even in fluctuating market environments.

Relation between Network adoption and DAG supply​

This chart illustrates how the model responds to a consistent increase in network activity by mitigating the effects of inflation on the token supply.

The controlled increase in total supply, along with a decreasing inflation rate and growing metagraph adoption, demonstrates the model’s capacity to provide necessary incentives while avoiding unchecked supply growth. This balance ensures the network remains appealing to new participants and continues to expand sustainably.

Conclusion​

The introduction of the Metanomics model represents a crucial evolution in Constellation Network's approach to tokenomics, aligning our economic framework with the growing needs of our ecosystem. By embracing a dynamic supply model with a controlled and decreasing inflation rate, Metanomics ensures that the network can sustain growth while maintaining economic stability.

This new model enhances our ability to not only open the network to more participants but also to incentivize them to participate effectively, ensuring that the ecosystem remains appealing to both existing members and newcomers. Integrating delegators into the governance process further empowers our community, creating a more engaged and participatory network where token emissions and rewards are directly influenced by those who contribute to the network's health and success.

As metagraphs continue to drive increased activity on the network, the role of snapshot fees becomes increasingly vital. These fees, integrated into the dynamic supply model, help moderate inflation in line with network activity, ensuring overall balance within the ecosystem. Along with a strong network treasury and developer outreach strategy, the proliferation of metagraph projects will form a generative economic landscape that will support the network as a whole.

By managing supply and demand through a well-structured tokenomic framework, Metanomics positions Constellation Network to thrive in the face of evolving market conditions. This forward-looking approach lays the foundation for sustained success, ensuring that Constellation Network continues to lead in the decentralized technology space for years to come.

Stargazer Wallet​

Stargazer Wallet is a multichain wallet that supports Constellation and Ethereum chains. It's available as a Chrome extension and on mobile for iOS and Android.

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