1.3 - Now, how does it actually work ?

The SAMURAI protocol is designed around an innovative and powerful reward mechanism : the SAMURAI-nodes.

SAMURAI-nodes are the tools that allow you to generate HNR rewards.

The protocol utilises a dynamic rewards pool to determine the rewards that node produce rather than relying on a static/fixed rate (the dynamic rate is adjusted based on the protocol's performance by considering metrics such as traded volume, HNR tokens in rewards pool, HNR token price volatility, etc.)

Samurai Nodes can no longer be created and purchased on Samurai's dApp directly.

To acquire a node, please visit tofuNFT where you can buy/trade/sell Samurai Node NFTs

This is the ONLY way to acquire a Samurai NFT Node.

-

After forking RING's codebase and before introducing the concept of a node cap, the protocol's sustainability heavily relied on the creation of new nodes. Individuals could acquire Samurai nodes with the use of the protocol's native tokens depending on the node's current price, which was showcased on the dApp. In exchange for the tokens, individuals would then be provided with Samurai nodes.

Automatically, a portion of these tokens would be sold into Fantom's native token (FTM) to incentivise the team and a portion would be kept in the Samurai protocol's native token form, largely used for the purpose of replenishing the rewards pool which determine's the protocol's ability to issue and distribute rewards.

Node Creation Token Split Mechanism

• 10% of tokens to Pool 1, as 50% protocol native token (e.g. HNR) and 50% FTM

• 70% of tokens to Pool 2, as 70% protocol native token (e.g. HNR) and 30% FTM

• 20% of tokens to Pool 3 as 100% FTM

The above showcases the flow of HNR tokens when a node was created and highlights the great reliance of the overall system on continuous creations of new nodes to continuously replenish the rewards pool. The more nodes that would be created, the "fuller" the rewards pool would be and thus the greater is its ability to pay out and distribute rewards. This however poses an issue and systemic risk in cases where no new nodes are created, as the protocol could face a scenario where it is unable to pay out and distribute rewards. For these reasons, Samurai has attempted to substantially deviate from RING's fundamentals and introduced a number of new mechanisms and features such as NFT nodes, RPC endpoints across 3 blockchains, lottery system, dynamic reward pools, which pays out in accordance with the performance of the protocol, to effectively attempt to minimize and circumvent the occurrence of a "bank run" by avoiding to solely rely on node creations as the main incentive for new protocol entrants and provide additional utility and incentives besides sole node creations.

The protocol further strives to attain sustainability by leveraging mechanisms such as treasury, royalty collections on NFT nodes, floor sweeping and token buybacks. These mechanisms are a smaller, supplementary subset underpinning the protocol with focus on further bolstering its sustainability and utility by aiming to deploy and execute strategic decisions pertaining to crypto-capital allocation that strive to generate yield. The treasury utilises its funds and potentially generated returns to then further support the protocol in ways including but not limited to conducting token buybacks or sweeping the Samurai Node NFT floors. While we appreciate and acknowledge the short term nature and viability of these mechanisms, these enable the protocol to partially maintain its price stability, replenish the protocol’s rewards pools and partly reduce its token emissions (reward distributions) by removing Node NFTs from the circulation. The attained HNR tokens and NFT nodes are then sent to the rewards pool to further attempt mitigating the occurrence of a rewards pool death spiral whereby its lack of tokens would make it unable for nodes to redeem their tokens. The treasury, its size and operations are manually handled, filled, funded and determined at the discretion of the core team. However, there are a number of underlying mechanisms that are fully or semi-automated such as:

TofuNFT royalties

• When Samurai Node NFTs are sold or bought on the NFT secondary marketplace (tofuNFT) a 3% royalty fee is collected and automatically directed to the treasury’s wallet address

Lottery pool

• All tokens that the protocol derives from the losses of lottery games are collected and directed to the replenishment of the rewards pool