VeChainThor Blockchain
Authority Masternode Handbook v0.3

How to use the handbook

This handbook contains the policies and procedures for the application and lifecycle management of VeChain Authority Masternodes.  All Authority Masternode applicants and existing holders are expected to understand and comply with the policies included. 


This trial version has been reviewed and agreed by the existing Authority Masternode Holders before put into operation. During the trial stage, VeChain Foundation will adjust the policies and procedures from time to time based on the operational status and feedback collected. The trial stage will end when the VeChain Foundation deems the program to be mature enough, in the final handbook a formal credit system is expected to be introduced to quantify the performance and contribution of AM holders for each review period. The credit system will then help establish the mechanism for the Steering Committee to determine which AM holders are qualified to maintain their status.


VersionPurposeChange DescriptionDate
0.1
Exposure
Initially compiled and open for consultation among existing Authority Masternode Holders
January 27, 2019
0.2
Trial version
Form interim policies and procedures for the trail stage which are subject to optimization based on the operation status
March 1, 2019
0.3
Trial version
Updated based on the whitepaper 2.0
January 1, 2020



VeChain Foundation reserves the right to interpret and to optimize the processes and metrics described in the policies and procedures from time to time. If you have any feedback and/or suggestions, please email authoritynode@vechain.com

This handbook contains the policies and procedures for the application and lifecycle management of VeChain Authority Masternodes.  All Authority Masternode applicants and existing holders are expected to understand and comply with the policies included. 


This trial version has been reviewed and agreed by the existing Authority Masternode Holders before put into operation. During the trial stage, VeChain Foundation will adjust the policies and procedures from time to time based on the operational status and feedback collected. The trial stage will end when the VeChain Foundation deems the program to be mature enough, in the final handbook a formal credit system is expected to be introduced to quantify the performance and contribution of AM holders for each review period. The credit system will then help establish the mechanism for the Steering Committee to determine which AM holders are qualified to maintain their status. 


VersionPurposeChange DescriptionDate
0.1
Exposure
Initially compiled and open for consultation among existing Authority Masternode Holders
January 27, 2019
0.2
Trial version
Form interim policies and procedures for the trail stage which are subject to optimization based on the operation status
March 1, 2019
0.3
Trial version
Updated based on the whitepaper 2.0
January 1, 2020



VeChain Foundation reserves the right to interpret and to optimize the processes and metrics described in the policies and procedures from time to time. If you have any feedback and/or suggestions, please email authoritynode@vechain.com.

Section 1
Overview

The VeChainThor blockchain uses a Proof-of-Authority (“PoA”) consensus in which each transaction is validated by Authority Masternodes (also referred as “AM”), however, the VeChainThor blockchain node program is open source which means it does not require any permission to synchronize the full ledger of VeChainThor blockchain and initiate transactions on it.  An AM is a network-connected server running the VeChainThor full node program which keeps a complete copy of the blockchain. Additionally, Authority Masternodes are the full nodes authorized via an on-chain whitelist to validate and produce blocks of the VeChainThor blockchain. The whitelist of Authority Masternodes is managed through the Authority built-in smart contract which requires multi-signature authorization of the VeChain Steering Committee members to make any modification. 


All AM holders must do the following: a) be vetted to ensure that they have a legitimate identity, b) hold 25M VETs as collateral, and c) run and manage a server with a certain guaranteed level of performance and availability. More importantly, in addition to those minimum qualifications, AM holders are responsible for actively contributing to the VeChain ecosystem in their own fields. 


As an incentive to AMs for maintaining the integrity of the blockchain, contributing to the VeChain ecosystem, and participating in the platform governance, the network rewards the AMs with VTHO tokens which is a native VIP180 token serving as the only way to purchase gas for the transaction fees of the VeChainThor blockchain. In each block, 30% of the VTHO consumed by transactions are paid out to the AM that produces the block. The other 70% of VTHO are burned. On the VeChainThor blockchain, Authority Masternodes do not compete to produce blocks, rather the block producer is selected by a random algorithm. This helps solve one of the key concerns of enterprises to run a consensus node on a public blockchain regarding computing power / energy consumption: the PoA consensus consumes far less energy than Proof of Work.  In addition, Authority Nodes are entitled to the highest weight per vote in the all stakeholders voting process, based on the VeChain Governance Model. Collectively, AMs hold a total of 40% of the total voting authority. 


The design of the PoA consensus and Authority Masternodes lies at the center of the VeChain Governance model. Unlike most public blockchains on the market, the VeChain AM holders are subject to strict KYC, and their identity and reputation are part of the stake, in addition to the financial collateral. The VeChain Foundation will conduct strict identity verification and hold AMs accountable for their activities and obligations to the ecosystem.

The VeChainThor blockchain uses a Proof-of-Authority (“PoA”) consensus in which each transaction is validated by Authority Masternodes (also referred as “AM”), however, the VeChainThor blockchain node program is open source which means it does not require any permission to synchronize the full ledger of VeChainThor blockchain and initiate transactions on it.  An AM is a network-connected server running the VeChainThor full node program which keeps a complete copy of the blockchain. Additionally, Authority Masternodes are the full nodes authorized via an on-chain whitelist to validate and produce blocks of the VeChainThor blockchain. The whitelist of Authority Masternodes is managed through the Authority built-in smart contract which requires multi-signature authorization of the VeChain Steering Committee members to make any modification. 


All AM holders must do the following: a) be vetted to ensure that they have a legitimate identity, b) hold 25M VETs as collateral, and c) run and manage a server with a certain guaranteed level of performance and availability. More importantly, in addition to those minimum qualifications, AM holders are responsible for actively contributing to the VeChain ecosystem in their own fields. 


As an incentive to AMs for maintaining the integrity of the blockchain, contributing to the VeChain ecosystem, and participating in the platform governance, the network rewards the AMs with VTHO tokens which is a native VIP180 token serving as the only way to purchase gas for the transaction fees of the VeChainThor blockchain. In each block, 30% of the VTHO consumed by transactions are paid out to the AM that produces the block. The other 70% of VTHO are burned. On the VeChainThor blockchain, Authority Masternodes do not compete to produce blocks, rather the block producer is selected by a random algorithm. This helps solve one of the key concerns of enterprises to run a consensus node on a public blockchain regarding computing power / energy consumption: the PoA consensus consumes far less energy than Proof of Work.  In addition, Authority Nodes are entitled to the highest weight per vote in the all stakeholders voting process, based on the VeChain Governance Model. Collectively, AMs hold a total of 40% of the total voting authority. 


The design of the PoA consensus and Authority Masternodes lies at the center of the VeChain Governance model. Unlike most public blockchains on the market, the VeChain AM holders are subject to strict KYC, and their identity and reputation are part of the stake, in addition to the financial collateral. The VeChain Foundation will conduct strict identity verification and hold AMs accountable for their activities and obligations to the ecosystem.

Section 2
Target candidates of the Authority Masternode Holder and selection criteria
2.1 Target candidates

The award of AMs centers on those entities which can encourage rapid expansion of the ecosystem and network transaction activity. For that reason, the designation of Authority Masternodes will be given to organizations or individuals in the following five categories:

  • Enterprise users
The adoption of enterprise users is critical in industrializing the VeChainThor blockchain technology. Enterprises can leverage the Authority Masternodes to easily and quickly deploy their blockchain applications and lower the cost of using the platform to provide services to their customers. Authority Masternodes also provide the enterprise user with flexibility in the service fee scheme for their customers who may still prefer to pay in fiat currency, which is extremely important in the early stage of blockchain adoption. In addition, they can influence the technological and business development of the platform to suit their business needs.

  • Blockchain development teams
A dynamic ecosystem needs high-quality developers. The Authority Masternodes can incentivize the developer to build their blockchain applications or sidechain solutions on the VeChain blockchain and express needs for the improvement of the platform. Developers may also use the Authority Masternode to develop and run cross chain services.

  • Business and technical development partners
By leveraging the features of the VeChainThor blockchain, tools, and turnkey packages of VeChain enterprise solutions, business and technical development partners can accelerate the enterprise mass adoption at a broader scale. Being the experts of the VeChainThor blockchain and solutions, these partners will help get more enterprises running applications on the VeChainThor blockchain.

  • Community contributors

Community contributors actively help the growth rate of the VeChain community and ecosystem in areas such as community outreach, community management, and professional expertise. They also represent the interests of the community in the governance of the platform. The use of earned VTHO can be used to facilitate community events and further grow the reach of the VeChain ecosystem.


  • Academic research partners

Academic research partners contribute to the technological research and development of the VeChain blockchain and leverage the Authority Masternodes to test out or run blockchain applications for their research purposes.

2.2 Selection criteria

VeChain Foundation reviews Authority Masternode applications based on a set of criteria which cover both basic requirements and ecosystem contribution requirements.


Basic requirements

  • Verified identity
Each Authority Masternode holder needs to go through the identity verification process via the VeVID service on the VeChain portal. Applicants should apply for a VeVID and provide required documents of the exact entity or individual that is going to hold the Authority Masternode. After the VeVID is approved, the applicant will be able to submit an application for the Authority Masternode. 

  • VET collateral
Each Authority Masternode applicant is required to stake at least 25M VETs in a VeChainThor address. When the applicant is selected, this address will be added to the Authority Masternode whitelist as the node holder’s collateral address. The collateral address of each Authority Masternode must hold at least 25M VETs at all times. 

  • Authority Masternode environment
Authority Masternode applicants are responsible for preparing the node environment which could be a server or VPS (virtual private server). If you choose to run the node server in the cloud, we recommend reliable cloud services such as AWS, Google Cloud, Microsoft Azure, AliCloud, Tencent Cloud and uCloud. Applicants should carefully read the recommended VeChain Authority Masternode hardware and software specification (CPU, RAM, Hardware disk, bandwidth, OS) and network environment (server access method, firewall, network segment) and set up the node environment accordingly.The recommended configuration is subject to change based on VeChain Foundation’s assessment of the overall blockchain status. 

  • Technical capability

As Authority Masternodes are the foundation of the VeChainThor blockchain, maintaining the security and availability of the Authority Masternode requires technical capabilities. Applicants need to be equipped with the technical capability to test and deploy the VeChainThor node program, maintain the availability of the node, timely upgrade according to the latest version on the official VeChainThor GitHub, and keep the node server secure. In addition, we recommend the Authority Masternode holder regular scan the node server to identify and mitigate vulnerabilities.


  • Academic research partners

Academic research partners contribute to the technological research and development of the VeChain blockchain and leverage the Authority Masternodes to test out or run blockchain applications for their research purposes.

2.1 Target candidates

The award of AMs centers on those entities which can encourage rapid expansion of the ecosystem and network transaction activity. For that reason, the designation of Authority Masternodes will be given to organizations or individuals in the following five categories:

  • Enterprise users
The adoption of enterprise users is critical in industrializing the VeChainThor blockchain technology. Enterprises can leverage the Authority Masternodes to easily and quickly deploy their blockchain applications and lower the cost of using the platform to provide services to their customers. Authority Masternodes also provide the enterprise user with flexibility in the service fee scheme for their customers who may still prefer to pay in fiat currency, which is extremely important in the early stage of blockchain adoption. In addition, they can influence the technological and business development of the platform to suit their business needs.

  • Blockchain development teams
A dynamic ecosystem needs high-quality developers. The Authority Masternodes can incentivize the developer to build their blockchain applications or sidechain solutions on the VeChain blockchain and express needs for the improvement of the platform. Developers may also use the Authority Masternode to develop and run cross chain services.

  • Business and technical development partners
By leveraging the features of the VeChainThor blockchain, tools, and turnkey packages of VeChain enterprise solutions, business and technical development partners can accelerate the enterprise mass adoption at a broader scale. Being the experts of the VeChainThor blockchain and solutions, these partners will help get more enterprises running applications on the VeChainThor blockchain.

  • Community contributors

Community contributors actively help the growth rate of the VeChain community and ecosystem in areas such as community outreach, community management, and professional expertise. They also represent the interests of the community in the governance of the platform. The use of earned VTHO can be used to facilitate community events and further grow the reach of the VeChain ecosystem.


  • Academic research partners

Academic research partners contribute to the technological research and development of the VeChain blockchain and leverage the Authority Masternodes to test out or run blockchain applications for their research purposes.

2.2 Selection criteria

VeChain Foundation reviews Authority Masternode applications based on a set of criteria which cover both basic requirements and ecosystem contribution requirements.


Basic requirements

  • Verified identity
Each Authority Masternode holder needs to go through the identity verification process via the VeVID service on the VeChain portal. Applicants should apply for a VeVID and provide required documents of the exact entity or individual that is going to hold the Authority Masternode. After the VeVID is approved, the applicant will be able to submit an application for the Authority Masternode. 

  • VET collateral
Each Authority Masternode applicant is required to stake at least 25M VETs in a VeChainThor address. When the applicant is selected, this address will be added to the Authority Masternode whitelist as the node holder’s collateral address. The collateral address of each Authority Masternode must hold at least 25M VETs at all times. 

  • Authority Masternode environment
Authority Masternode applicants are responsible for preparing the node environment which could be a server or VPS (virtual private server). If you choose to run the node server in the cloud, we recommend reliable cloud services such as AWS, Google Cloud, Microsoft Azure, AliCloud, Tencent Cloud and uCloud. Applicants should carefully read the recommended VeChain Authority Masternode hardware and software specification (CPU, RAM, Hardware disk, bandwidth, OS) and network environment (server access method, firewall, network segment) and set up the node environment accordingly. The recommended configuration is subject to change based on VeChain Foundation’s assessment of the overall blockchain status. 

  • Technical capability

As Authority Masternodes are the foundation of the VeChainThor blockchain, maintaining the security and availability of the Authority Masternode requires technical capabilities. Applicants need to be equipped with the technical capability to test and deploy the VeChainThor node program, maintain the availability of the node, timely upgrade according to the latest version on the official VeChainThor GitHub, and keep the node server secure. In addition, we recommend the Authority Masternode holder regular scan the node server to identify and mitigate vulnerabilities.


  • Academic research partners

Academic research partners contribute to the technological research and development of the VeChain blockchain and leverage the Authority Masternodes to test out or run blockchain applications for their research purposes.

Section 3
Authority Masternode lifecycle policy and procedures

3.1 Application and on-boarding


Authority Masternode applicants need to have their identities verified before submitting the application. VeChain Foundation and its Steering Committee review the applications based on the aforementioned selection criteria, and approved applicants are eligible to become Authority Masternode holders. The following flowchart and narratives describe the application and on-boarding process in greater detail.   


1. Applicants (individuals or enterprises) complete the identity verification through the VeVID service on the VeChain portal. A VeVID designated by the applicants will be approved and activated on the VeChainThor blockchain after the required information and documents are verified by the DNV GL team. VeVID represents the identity of the applicant and can be used in other services on the VeChainThor platform such as voting. 


2. After the VeVID is approved and activated, applicants will be able to fill in the Authority Masternode application form on the VeChain portal with the required information. Applicants should carefully read and understand the requirements of being an Authority Masternode holder and only provide factual information.


3. VeChain Foundation will perform a preliminary review of the application based on the criteria stated in the above section within two weeks upon receiving the required information and documents. Approved applicants are subject to further review by the Steering Committee. Otherwise the application will be rejected. 


4. Before each Steering Committee quarterly meeting, a shortlist of applicants will be summarized and submitted for Steering Committee’s further review. Steering Committee review normally takes place quarterly unless the VeChain Foundation team deems it is necessary to call for ad hoc review.


5. The Steering Committee will revisit the profiles of the candidates, make strategic assessment and determine the applicants that are qualified to be AM holders. The applicants deemed not qualified by the Steering Committee will be rejected.


6.  Applicants approved by the Steering Committee are added to the AM holder waiting list maintained by the VeChain Foundation team. In case there are less than 101 Authority Masternode functioning on the VeChainThor blockchain, the approved applicants can proceed directly to the on-boarding process.


7. Every time an Authority Maternode slot is available, candidates on the waiting list are eligible for becoming Authority Masternode holders. VeChain Foundation will pick candidates from the waiting list with an independently verifiable random algorithm.


8. After being selected by the algorithm, the candidate will be contacted by the VeChain Foundation team for pre-deployment verification. The pre-deployment check will validate the accuracy of the masterkey address and collateral address provided as well as the ownership of the collateral address.


9. When passing the pre-deployment check, the candidate is responsible for deploying the Authority Masternode based on the guide and recommended configuration. The Authority Masternode will be live after the VeChain Foundation and its Steering Committee proceeds with the Authority Masternode whitelist modification process.



3.2 Authority Masternode Monitoring System and Termination

As an AM holder, you must maintain the security and availability of the Authority Masternode as well as contribute to the VeChain ecosystem. In order to measure the performance of AM holders, VeChain Foundation will continuously monitor metrics relating to Authority Masternode Performance (Group A) and VeChain Ecosystem Contribution (Group B).  


Group A: Authority Masternode Performance Metrics

The VeChain Foundation team continuously monitors the performance metrics of Authority Masternodes and notifies the AM holders when any violation is identified. 


Authority Masternode Performance Requirements include the following: 


1. The amount of VETs staked on the collateral address can not fall below 25 million VET at any time.


2. The Authority Masternode’s cumulative offline or unavailable time (i.e. the time captured by the monitoring system that the AM is unavailable to produce blocks) within a 7 day period should not exceed 24 hours, unless the VeChain Foundation team has been notified and explicitly approved in advance the node maintenance request.


3. For backwards compatible upgrades, the Authority Masternode must upgrade the node program within two weeks after the new version is released on the official GitHub.


4. For soft fork or hard fork upgrades, in addition to the official GitHub release, the VeChain Foundation will remind all AM holders at least one week in advance of the block height that the upgrade will be triggered, except for urgent upgrades, in which case VeChain Foundation will notify AM holders to upgrade the node program immediately. Therefore, all AM holders must upgrade the node program before the defined block height triggering the upgrade in order to avoid compromising the integrity of the VeChainThor blockchain.


5. AM holders should conduct periodic vulnerability assessments and put in place security monitoring controls over the node environment to avoid security risks to the VeChainThor blockchain.


6. AM holders must not engage in any activities that may cause damage to the VeChain Ecosystem, such as causing hard forks.


Monitoring and violation: 


When AM holders violate the above performance requirements, the VeChain Foundation team will notify the AM holder and require immediate remediation except those cases where AM holder is enforced to be disqualified by system design or through the urgent removal process. Please see details below. 


•  By the design of the VeChainThor blockchain, if VETs on the collateral address go below 25 million at any given time, the Authority Masternode can be kicked out of the whitelist via the built-in smart contract.


•  An Authority Masternode might be unavailable to produce blocks due to various reasons such as the node server being offline, the use of incorrect masterkey address, failure to implement the node upgrades, etc (i.e. bullet 2,3&4 in the above performance requirements). Therefore, the VeChain Foundation will monitor the accumulative offline time over each 7 day period. The AM holder will be notified when the cumulative offline or unavailable time within a 7 day period exceeds 24 hours.


•  If AM holders are noticed with any such wrongdoings as stated in bullet 5 or 6 in the above performance requirement, the VeChain Foundation will verify the wrongdoing and require immediate remediation from the AM holder. In addition, if such wrongdoings are found to have significant negative impact on the VeChain ecosystem, the VeChain Foundation reserves the right to remove the Authority Masternode immediately. Please see the Urgent Removal section.


Note: Based on the trial stage result, a formal credit system will be introduced to quantify the AM performance for each review period and AM holders may be disqualified if they fail to maintain required credits. Violating the performance requirement will result in the reduction of Group A credits of the AM holder.




Group B: Authority Masternode Ecosystem Contribution

AM holders are expected to contribute to the VeChain ecosystem by conducting various activities in the areas covered by the domains specified in the Appendix - Authority Masternode ecosystem contribution credit categories and requirements


AM holders are required to submit a narrative of contribution for the review period, along with any evidence available, at least one week before the end of each review period.  Materials must be submitted via email at authoritynode@vechain.com. The VeChain Foundation will send out a reminder via email at least two weeks before the end of each review period. 


Note: After the trial stage, AM holders will earn Group B credits for their reported activities. And failure to submit your contribution statement and evidence by the deadline will result in forfeiture of the Group B credits for this monitoring period. 


Periodical review

The review of the Authority Masternodes and their credits usually takes place in each quarterly Steering Committee meeting. The VeChain Foundation team summarizes the performance and contribution of each AM holder in the last quarter and submits this information to the Steering Committee for their review and approval. 


Normally the VeChain Steering Committee meeting takes place quarterly. In the event that the schedule is changed due to extenuating circumstances, the Authority Masternode holders shall be notified in a timely fashion with a revised review schedule. 


Note: After the trial stage, the Steering Committee will review the AM holders’ credits for the review period and determine whether the AM holder is qualified to maintain the status.


Failure to Meet Requirements

In any case that an Authority Masternode Holder is disqualified by the Steering Committee, the AM holder can not re-apply to be an Authority Masternode candidate within 6 months after being disqualified.


3.1 Application and on-boarding


Authority Masternode applicants need to have their identities verified before submitting the application. VeChain Foundation and its Steering Committee review the applications based on the aforementioned selection criteria, and approved applicants are eligible to become Authority Masternode holders. The following flowchart and narratives describe the application and on-boarding process in greater detail.   


1. Applicants (individuals or enterprises) complete the identity verification through the VeVID service on the VeChain portal. A VeVID designated by the applicants will be approved and activated on the VeChainThor blockchain after the required information and documents are verified by the DNV GL team. VeVID represents the identity of the applicant and can be used in other services on the VeChainThor platform such as voting. 


2. After the VeVID is approved and activated, applicants will be able to fill in the Authority Masternode application form on the VeChain portal with the required information. Applicants should carefully read and understand the requirements of being an Authority Masternode holder and only provide factual information.


3. VeChain Foundation will perform a preliminary review of the application based on the criteria stated in the above section within two weeks upon receiving the required information and documents. Approved applicants are subject to further review by the Steering Committee. Otherwise the application will be rejected. 


4. Before each Steering Committee quarterly meeting, a shortlist of applicants will be summarized and submitted for Steering Committee’s further review. Steering Committee review normally takes place quarterly unless the VeChain Foundation team deems it is necessary to call for ad hoc review.


5. The Steering Committee will revisit the profiles of the candidates, make strategic assessment and determine the applicants that are qualified to be AM holders. The applicants deemed not qualified by the Steering Committee will be rejected.


6.  Applicants approved by the Steering Committee are added to the AM holder waiting list maintained by the VeChain Foundation team. In case there are less than 101 Authority Masternode functioning on the VeChainThor blockchain, the approved applicants can proceed directly to the on-boarding process.


7. Every time an Authority Maternode slot is available, candidates on the waiting list are eligible for becoming Authority Masternode holders. VeChain Foundation will pick candidates from the waiting list with an independently verifiable random algorithm.


8. After being selected by the algorithm, the candidate will be contacted by the VeChain Foundation team for pre-deployment verification. The pre-deployment check will validate the accuracy of the masterkey address and collateral address provided as well as the ownership of the collateral address.


9. When passing the pre-deployment check, the candidate is responsible for deploying the Authority Masternode based on the guide and recommended configuration. The Authority Masternode will be live after the VeChain Foundation and its Steering Committee proceeds with the Authority Masternode whitelist modification process.



3.2 Authority Masternode Monitoring System and Termination

As an AM holder, you must maintain the security and availability of the Authority Masternode as well as contribute to the VeChain ecosystem. In order to measure the performance of AM holders, VeChain Foundation will continuously monitor metrics relating to Authority Masternode Performance (Group A) and VeChain Ecosystem Contribution (Group B).  


Group A: Authority Masternode Performance Metrics

The VeChain Foundation team continuously monitors the performance metrics of Authority Masternodes and notifies the AM holders when any violation is identified. 


Authority Masternode Performance Requirements include the following: 


1. The amount of VETs staked on the collateral address can not fall below 25 million VET at any time.


2. The Authority Masternode’s cumulative offline or unavailable time (i.e. the time captured by the monitoring system that the AM is unavailable to produce blocks) within a 7 day period should not exceed 24 hours, unless the VeChain Foundation team has been notified and explicitly approved in advance the node maintenance request.


3. For backwards compatible upgrades, the Authority Masternode must upgrade the node program within two weeks after the new version is released on the official GitHub.


4. For soft fork or hard fork upgrades, in addition to the official GitHub release, the VeChain Foundation will remind all AM holders at least one week in advance of the block height that the upgrade will be triggered, except for urgent upgrades, in which case VeChain Foundation will notify AM holders to upgrade the node program immediately. Therefore, all AM holders must upgrade the node program before the defined block height triggering the upgrade in order to avoid compromising the integrity of the VeChainThor blockchain.


5. AM holders should conduct periodic vulnerability assessments and put in place security monitoring controls over the node environment to avoid security risks to the VeChainThor blockchain.


6. AM holders must not engage in any activities that may cause damage to the VeChain Ecosystem, such as causing hard forks.


Monitoring and violation: 


When AM holders violate the above performance requirements, the VeChain Foundation team will notify the AM holder and require immediate remediation except those cases where AM holder is enforced to be disqualified by system design or through the urgent removal process. Please see details below. 


•  By the design of the VeChainThor blockchain, if VETs on the collateral address go below 25 million at any given time, the Authority Masternode can be kicked out of the whitelist via the built-in smart contract.


•  An Authority Masternode might be unavailable to produce blocks due to various reasons such as the node server being offline, the use of incorrect masterkey address, failure to implement the node upgrades, etc (i.e. bullet 2,3&4 in the above performance requirements). Therefore, the VeChain Foundation will monitor the accumulative offline time over each 7 day period. The AM holder will be notified when the cumulative offline or unavailable time within a 7 day period exceeds 24 hours.


•  If AM holders are noticed with any such wrongdoings as stated in bullet 5 or 6 in the above performance requirement, the VeChain Foundation will verify the wrongdoing and require immediate remediation from the AM holder. In addition, if such wrongdoings are found to have significant negative impact on the VeChain ecosystem, the VeChain Foundation reserves the right to remove the Authority Masternode immediately. Please see the Urgent Removal section.


Note: Based on the trial stage result, a formal credit system will be introduced to quantify the AM performance for each review period and AM holders may be disqualified if they fail to maintain required credits. Violating the performance requirement will result in the reduction of Group A credits of the AM holder.




Group B: Authority Masternode Ecosystem Contribution

AM holders are expected to contribute to the VeChain ecosystem by conducting various activities in the areas covered by the domains specified in the Appendix - Authority Masternode ecosystem contribution credit categories and requirements


AM holders are required to submit a narrative of contribution for the review period, along with any evidence available, at least one week before the end of each review period.  Materials must be submitted via email at authoritynode@vechain.com. The VeChain Foundation will send out a reminder via email at least two weeks before the end of each review period. 


Note: After the trial stage, AM holders will earn Group B credits for their reported activities. And failure to submit your contribution statement and evidence by the deadline will result in forfeiture of the Group B credits for this monitoring period. 


Periodical review

The review of the Authority Masternodes and their credits usually takes place in each quarterly Steering Committee meeting. The VeChain Foundation team summarizes the performance and contribution of each AM holder in the last quarter and submits this information to the Steering Committee for their review and approval. 


Normally the VeChain Steering Committee meeting takes place quarterly. In the event that the schedule is changed due to extenuating circumstances, the Authority Masternode holders shall be notified in a timely fashion with a revised review schedule. 


Note: After the trial stage, the Steering Committee will review the AM holders’ credits for the review period and determine whether the AM holder is qualified to maintain the status.


Failure to Meet Requirements

In any case that an Authority Masternode Holder is disqualified by the Steering Committee, the AM holder can not re-apply to be an Authority Masternode candidate within 6 months after being disqualified.


Urgent Removal

The VeChain Foundation aims to maintain the security, integrity and availability of the VeChainThor blockchain and expects AM holders to lead the contribution to the VeChain ecosystem. In addition to the quarterly review, the VeChain Foundation may choose to remove or replace Authority Masternode(s) on demand. Such circumstances include but are not limited to:


•  Authority Masternode refuses to follow the voting result by the community based on the VeChain governance model.


•  Authority Masternode fails to upgrade the node program in a timely manner after receiving warning from the VeChain Foundation, which causes negative impact to the security, integrity or availability of the VeChainThor blockchain.


•  Authority Masternode holder is noticed to conduct malicious attack on the VeChainThor blockchain or other nodes.


•  Authority Masternode causes significant security risks due to vulnerabilities in its node environment and can not be resolved in a reasonable timeframe.


•  Authority Masternode holder is found to engage in activities that will cause significant damage to the VeChain ecosystem such as fraud or scam.


Urgent Removal

The VeChain Foundation aims to maintain the security, integrity and availability of the VeChainThor blockchain and expects AM holders to lead the contribution to the VeChain ecosystem. In addition to the quarterly review, the VeChain Foundation may choose to remove or replace Authority Masternode(s) on demand. Such circumstances include but are not limited to:


•  Authority Masternode refuses to follow the voting result by the community based on the VeChain governance model.


•  Authority Masternode fails to upgrade the node program in a timely manner after receiving warning from the VeChain Foundation, which causes negative impact to the security, integrity or availability of the VeChainThor blockchain.


•  Authority Masternode holder is noticed to conduct malicious attack on the VeChainThor blockchain or other nodes.


•  Authority Masternode causes significant security risks due to vulnerabilities in its node environment and can not be resolved in a reasonable timeframe.


•  Authority Masternode holder is found to engage in activities that will cause significant damage to the VeChain ecosystem such as fraud or scam.


3.3 The process of Authority Masternode whitelist modification


The PoA consensus of VeChainThor blockchain consists of 101 Authority Masternodes which are managed by a whitelist via a built-in smart contract. The whitelist contains the masterkey address and collateral address of each Authority Masternode. 


Any modification to the whitelist must go through the on-chain governance process which requires multi-signature from the Steering Committee members. Scenarios that require modification to the whitelist may include the following:


•  Addition of Authority Masternode(s)

•  Removal of existing Authority Masternode(s)

•  Modification to the information of existing Authority Masternode(s)


The process of Authority Masternode whitelist modification is as follows:



Modifications to the whitelist occur in four steps.


1. Whenever there is a need to modify the whitelist, the VeChain Foundation team will submit a request to the Steering Committee through the VeChain Portal detailing the changes


2. One of the Steering Committee members approves this request and initiates for a proposal for this change on the VeChainThor blockchain through the “executor” built-in smart contract with his/her VeKey secure identity device which protects the Steering Committee member’s private key


3. The rest of the Steering Committee members receive the proposal, review the changes and cast the votes with their VeKey security identity device


4. Based on the current on-chain governance parameters, 5 out of the 7 Steering Committee members must sign with their VeKey security identity devices before any change is executed on the blockchain



3.4 Authority Masternode Identity Disclosure

In the VeChain development plan, it describes the PoA as follows: 


“To be an Authority Masternode (AM) on the VeChainThor blockchain, the individual or entity voluntarily discloses who they are (identity and reputation by extension) in exchange for the right to validate and produce blocks. It is their identities and reputations placed at stake that give all the AMs additional incentives to behave and keep the network secure. In VeChainThor, each AM has to go through a strict know your customer (KYC) procedure and satisfy the minimum requirements set by the Foundation.”


It has always been the VeChain Foundation’s goal to provide the community with transparency. The Proof of Authority consensus relies on the public reputation of the node holders, on the other side, we all witnessed the fallout of Libra association where enterprises chose to withdraw as masternodes due to regulatory ambiguity. Though the VeChainThor blockchain was launched in June 2018, our AM holders especially enterprise holders shared the same perspective and some of them would prefer to keep their identities and activities on the blockchain from the public.  However, the VeChain Foundation and its Steering Committee (who is elected by the stakeholders with voting authority, see section 3.2 of the VeChain whitepaper for more information) apply strict identity verification and assessment during the onboarding process to ensure that legality of AM holders’ identities and AM holders are able to make contributions to the VeChain ecosystem. For the stability of the VeChain ecosystem at its early stage, we understand that while AM holders are pioneers and innovators in their own fields to join a public blockchain network for a distributed business ecosystem, many of them want to spend more time to explore and gain more clarity from both technical and regulatory perspectives. 


Therefore, during the trial stage of the VeChain Authority Masternode program, the Foundation has decided that it would be at the AM holder’s discretion to disclose the status as an Authority Masternode holder to the public. New Authority Masternode applicants that are willing to disclose the status will be favored in the on boarding assessment. As the AM program matures, the VeChain Foundation aims to work closely with the AM holders to provide more transparency.

3.3 The process of Authority Masternode whitelist modification


The PoA consensus of VeChainThor blockchain consists of 101 Authority Masternodes which are managed by a whitelist via a built-in smart contract. The whitelist contains the masterkey address and collateral address of each Authority Masternode. 


Any modification to the whitelist must go through the on-chain governance process which requires multi-signature from the Steering Committee members. Scenarios that require modification to the whitelist may include the following:


•  Addition of Authority Masternode(s)

•  Removal of existing Authority Masternode(s)

•  Modification to the information of existing Authority Masternode(s)


The process of Authority Masternode whitelist modification is as follows:



Modifications to the whitelist occur in four steps.


1. Whenever there is a need to modify the whitelist, the VeChain Foundation team will submit a request to the Steering Committee through the VeChain Portal detailing the changes


2. One of the Steering Committee members approves this request and initiates for a proposal for this change on the VeChainThor blockchain through the “executor” built-in smart contract with his/her VeKey secure identity device which protects the Steering Committee member’s private key


3. The rest of the Steering Committee members receive the proposal, review the changes and cast the votes with their VeKey security identity device


4. Based on the current on-chain governance parameters, 5 out of the 7 Steering Committee members must sign with their VeKey security identity devices before any change is executed on the blockchain



3.4 Authority Masternode Identity Disclosure

In the VeChain development plan, it describes the PoA as follows: 


“To be an Authority Masternode (AM) on the VeChainThor blockchain, the individual or entity voluntarily discloses who they are (identity and reputation by extension) in exchange for the right to validate and produce blocks. It is their identities and reputations placed at stake that give all the AMs additional incentives to behave and keep the network secure. In VeChainThor, each AM has to go through a strict know your customer (KYC) procedure and satisfy the minimum requirements set by the Foundation.”


It has always been the VeChain Foundation’s goal to provide the community with transparency. The Proof of Authority consensus relies on the public reputation of the node holders, on the other side, we all witnessed the fallout of Libra association where enterprises chose to withdraw as masternodes due to regulatory ambiguity. Though the VeChainThor blockchain was launched in June 2018, our AM holders especially enterprise holders shared the same perspective and some of them would prefer to keep their identities and activities on the blockchain from the public.  However, the VeChain Foundation and its Steering Committee (who is elected by the stakeholders with voting authority, see section 3.2 of the VeChain whitepaper for more information) apply strict identity verification and assessment during the onboarding process to ensure that legality of AM holders’ identities and AM holders are able to make contributions to the VeChain ecosystem. For the stability of the VeChain ecosystem at its early stage, we understand that while AM holders are pioneers and innovators in their own fields to join a public blockchain network for a distributed business ecosystem, many of them want to spend more time to explore and gain more clarity from both technical and regulatory perspectives. 


Therefore, during the trial stage of the VeChain Authority Masternode program, the Foundation has decided that it would be at the AM holder’s discretion to disclose the status as an Authority Masternode holder to the public. New Authority Masternode applicants that are willing to disclose the status will be favored in the on boarding assessment. As the AM program matures, the VeChain Foundation aims to work closely with the AM holders to provide more transparency.

Appendix - Authority Masternode ecosystem contribution categories and requirements

AM holders make contributions in various areas and report to the VeChain Foundation before the end of each review period. The below table details the example activities of AM holders that are deemed as substantial contribution to the VeChain ecosystem. The VeChain Foundation might add more activities during the trial stage. 


Note: After the trial stage, a minimum number of credits will be assigned to each contribution activity. VeChain Foundation, based on assessment, may decide that some activities are worth more credits due to the depth or amount of ongoing commitment involved.



Contribution

Enterprise users

1

use VeChain enterprise solutions as an enterprise or individual business owners

2

develop and launch a blockchain application PoC

3

develop and launch a blockchain application for business activities in production

4

Enterprise users who run significant applications on the VeChainThor blockchain with over 100,000 transactions per month

Business and technical development partners

5

onboard an enterprise or individual business owner on the enterprise solutions by VeChain or its partners

6

launch an enterprise blockchain application PoC

7

launch an enterprise blockchain application for business activities in production

8

VeChain’s announced strategic partners

Blockchain development teams

9

launch a blockchain application or migrate a blockchain application from other blockchain platforms

10

run live blockchain application on the VeChainThor mainnet with over 1,000 monthly active users

11

develop a tool that benefits the VeChain ecosystem

12

successfully contribute to the VeChain project source codes or technical documentation

13

submit a verified bug / vulnerability relating to VeChainThor blockchain and other ecosystem applications in the responsible manner

14

develop and maintain infrastructure services for the VeChain ecosystem

Community contributor

15

host a VeChain meetup or or represent VeChain in blockchain / crypto / industry events upon the approval of the VeChain Foundation

16

contribute to VeChain Foundation community initiatives

17

 create contents (e.g. website, research / analysis report, articles, etc) relating to VeChainThor blockchain or other ecosystem applications

18

provide professional advice to the VeChain Foundation in the areas of legal, regulatory compliance, cybersecurity, privacy and finance

Academic research partners

19

publish an academic research paper on VeChainThor blockchain or VeChain ecosystem

20

contribute or provide professional advice / research results to improve the VeChainThor blockchain technology, governance model or economic model


AM holders make contributions in various areas and report to the VeChain Foundation before the end of each review period. The below table details the example activities of AM holders that are deemed as substantial contribution to the VeChain ecosystem. The VeChain Foundation might add more activities during the trial stage. 


Note: After the trial stage, a minimum number of credits will be assigned to each contribution activity. VeChain Foundation, based on assessment, may decide that some activities are worth more credits due to the depth or amount of ongoing commitment involved. 



Contribution

Enterprise users

1

use VeChain enterprise solutions as an enterprise or individual business owners

2

develop and launch a blockchain application PoC

3

develop and launch a blockchain application for business activities in production

4

Enterprise users who run significant applications on the VeChainThor blockchain with over 100,000 transactions per month

Business and technical development partners

5

onboard an enterprise or individual business owner on the enterprise solutions by VeChain or its partners

6

launch an enterprise blockchain application PoC

7

launch an enterprise blockchain application for business activities in production

8

VeChain’s announced strategic partners

Blockchain development teams

9

launch a blockchain application or migrate a blockchain application from other blockchain platforms

10

run live blockchain application on the VeChainThor mainnet with over 1,000 monthly active users

11

develop a tool that benefits the VeChain ecosystem

12

successfully contribute to the VeChain project source codes or technical documentation

13

submit a verified bug / vulnerability relating to VeChainThor blockchain and other ecosystem applications in the responsible manner

14

develop and maintain infrastructure services for the VeChain ecosystem

Community contributor

15

host a VeChain meetup or or represent VeChain in blockchain / crypto / industry events upon the approval of the VeChain Foundation

16

contribute to VeChain Foundation community initiatives

17

 create contents (e.g. website, research / analysis report, articles, etc) relating to VeChainThor blockchain or other ecosystem applications

18

provide professional advice to the VeChain Foundation in the areas of legal, regulatory compliance, cybersecurity, privacy and finance

Academic research partners

19

publish an academic research paper on VeChainThor blockchain or VeChain ecosystem

20

contribute or provide professional advice / research results to improve the VeChainThor blockchain technology, governance model or economic model