Hi @shayaaa, thanks for this observation! We have looked at the rates and also had feedback from some smaller (potential new) Node Providers. For smaller Node Providers, the remuneration might be on the low side even with a multiplier as their Opex expenses (ISP and data center costs) are relatively high for them with only a few nodes. Whereas this is not the case for Node Providers with a large number of nodes. This is something that might need to be taken into account (and voted of course by the community) for the future.
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Due to the community decentralization benefits of having more node providers instead of always larger node providers, I think it makes sense to offer a discount to smaller node providers to offset the centralization incentive from economies of scale - not a complete offset, of course, but at least somewhat.
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@SvenF I appreciate the reply and it made me think of something… I’ve heard that on Solana you need about $2MM to run a profitable validator yet they are able to have “smaller wallet” people join validators because of their design - - other PoS chains are able to do similar things with pooling resources. I know this isn’t exactly possible on ICP but would there be a possibility for something like “Parent NP’s" that establish the nodes to the network and then “decentralize” themselves by selling interests in their node? If there is enough community interest, could something like a “NodeDAO” that pools money together and operates nodes as a community be another possibility?
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What purpose would that really serve to “decentralize” anything? Everyone has heard of the “$5 wrench attack” to steal someone’s crypto by physical threat or force. For NPs, I would call a similar attack on decentralization the “5 cent paper attack”. If a sniveling little bureaucrat from one of a dozen three-letter U.S. agencies threatened to slap economic sanctions, no-fly-list sanctions, terror watch list sanctions, indefinite detention without trial, etc. on a node provider (use your imagination for more examples based on prior U.S. precedents), would all those “decentralized” nodes of his get shut down from that one piece of paper too? My guess is yes, they would.
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There are two things to consider.
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Who controls the nodes and signs the lease agreement with the data center. This is what is important for decentralization.
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Who benefits from the NP rewards.
It doesn’t matter if 10,1000, or 10,000 people own the NP rewards if you have one person that controls it.
So yeah, you can decentralize ownership but ultimately somebody needs to control the machines in the data center which is all that matters from a security standpoint.
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@dfisher Would there be any possibility for the SNS launch a “DAO” that controls a node(s)? Could the control of the node somehow be under the control of the DAO itself so all stakeholders can make decisions? (sorry I’m not very technical so forgive me if these ideas are dumb/not possible)
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No that’s not possible. The SNS is great for things that exclusively live online like a website.
If it interacts with the real world then the SNS is not great. In this case we have physical servers a person controls, someone needs to sign a lease with a data center, enter the data center, access the servers etc etc. An indiviudal is going to control this. It cannot be handed over to the SNS for control.
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Dear all, after posting the remuneration proposal for new node providers with Gen2 Hardware in December, we have received some valuable suggestions for further improvement of the remuneration model. The feedback was both from the community in this forum thread as well as from existing and potential future node providers. Main suggestions for the remuneration proposal were:
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How can smaller entities/node providers be incentivized to join as a node provider?
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How can we differentiate between incentivizing node providers in different regions, for different numbers of nodes?
Based on these suggestions, we have spent the last weeks working out an updated remuneration model for Gen2, which for clarity we will call V2 remuneration and is described here. The V2 remuneration model on a high level covers the following:
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Higher rewards for the first nodes of a new NP in order to attract more NPs in an effort to improve ownership decentralization.
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More refined rewards for nodes in new geographies, like South America, Africa, Asia and Australia, to stimulate further geographical decentralization.
With this updated remuneration model, it is much more interesting for potential new Node Providers to join with a small number of nodes. But it remains interesting for Node Providers who want to set up a larger number of nodes in a new country or region, to join as well. The node reward model is parametrized by:
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Geography multiplier: This multiplier will be lower, namely 2, for regions with many nodes (e.g. Europe and North America), and higher, namely 3, for regions where there are currently limited nodes present (such as Africa and South America)
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Reduction coefficient (r): The node reward of the n-th node of a Node Provider is multiplied by r ^ (n-1). The reduction coefficient r is dependent on the geography of the Node Provider. As a result, the first nodes of a Node Provider gets attractive rewards but it is increasingly less attractive to add additional nodes.
The detailed formulas and reward amounts can be found on the internet computer wiki.
Note that the V2 remuneration proposal only applies for a limited period of time in which the team is working on a more elaborate and automated remuneration solution in the NNS, the V3 remuneration. This future remuneration will be based on a reduction coefficient formula that applies a combination of NP, Country, Data Center and city. In addition, the future remuneration model will include penalties in case nodes should be unavailable.
Please continue to share any additional thoughts and suggestions on this remuneration model in this Forum thread.
I will update in this thread as well once the corresponding NNS proposal is live for voting.
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I understand the value of distribution among Countries for the sake of having a diversity of political/governmental systems.
Might a more permanent and automated solution, however, instead incentivise geographical distribution based simply upon remoteness from other NPs/data centers?
This would
- Avoid having the IC judge political disputes regarding land ownership (Ukraine, Liberland, Taiwan, etc)
- Avoid the need to update remuneration based upon changing Country borders (wars, land sales, new claims)
- Automate and encourage geographical distribution amongst states/provinces/territories
- Incentivise node construction on unclaimed lands (islands, Antarctica, the moon)
- Ensure security against nuclear, EMP, and other large or massive scale destruction events
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Hi @Jonathan, that’s actually an interesting idea that could be implemented next to country or geography., i.e. a solution that takes both into account.
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Nodes on the moon anyone? I’m in! 
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Below is a formula from ChatGPT to calculate a value (V) for the spatial remoteness of a given node (N). The idea is based on Newton’s inverse square law, except… well, inverted. Essentially, nodes take the place of mass.
It assumes that the physical locations of all nodes can be queried as a set of Cartesian coordinates. Manipulating k and p can potentially produce an infinitely scalable factor for geographical/spatial value, adding heavy incentives for e.g. a lunar or Martian node 
(How to treat of latency in exotic locations is another matter.) The fact that some potential nodes on ships, satellites, or celestial bodies would be in motion would need to be addressesed, perhaps by taking an average of d over time.
NB this formula uses Euclidean distances.
To define a value V that increases as the distance of an object N from all other objects of its type increases in Cartesian coordinates, we can use the following formula:
V = 1 / (k + ∑i=1 to n d(N, Ni)^p)
where,
V is the value that increases as the distance of object N from all other objects of its type increases.
k is a constant that ensures V is non-zero and can be adjusted to change the rate at which V increases with distance.
n is the total number of objects of the same type as N.
d(N, Ni) is the Euclidean distance between object N and object i, where i is any other object of the same type as N.
p is an exponent that determines how quickly the value of V increases as the distance between the objects increases.
The formula computes the sum of the distances between object N and all other objects of the same type, with the sum raised to the power of the exponent p. The value of V is then obtained by taking the reciprocal of this sum, adding k to it to ensure that V is non-zero, and then taking the reciprocal again. As the distance between object N and any other object of the same type increases, the value of V increases. The exponent p determines how quickly the value of V increases with distance. A larger value of p means that V increases more quickly as the distance between objects increases. Conversely, a smaller value of p means that V increases more slowly with distance.
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Another option would be to begin at N and take an expanding radius outward. For each Ni within a given radius r, node rewards are reduced accordingly. This would allow for some rewards to be maintained when a node is only somewhat lonely, rather than fully isolated.
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Can you please tell me which form I should use to apply for Node provider? I remember that ICA used to have an application form, but I am not sure if it exists now. Also, are there any eligibility requirements to apply?
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Hi @hokosugi, great to hear you are interested in becoming a Node Provider!
In order to become a Node Provider, you need to prepare the Node Provider self-declaration (see Node Provider Self-declaration - Internet Computer Wiki) and then submit a NNS proposal to become a Node Provider as described on Node Provide onboarding wiki page (Node Provider Onboarding - Internet Computer Wiki). I suggest to first prepare the Self-declaration form, and then send it in a direct message to me so it can be uploaded on the internet computer wiki. I will then also explain the steps to submit the NNS proposal.
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Hello,
Is anyone interested in partnering to setup a node in Lagos, Nigeria.
I would have do it alone, but the cost of the servers is high.
Any interested parties will be appreciated. Every other resources will be provided.
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Dear all,
Following up on the post of last week regarding the V2 remuneration model (see this link), please be informed that the motion proposal for this remuneration model is live for voting. Please vote to adopt the proposal if you support incentivising Node Providers to set up nodes in new countries or regions.
The motion proposal can be found here: Proposal: 110174 - IC Dashboard.
As always, please continue to share any additional thoughts and suggestions on this remuneration model in this Forum thread!
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Hello Sven Fischer
I want to build a node in HongKong, do we have to use 10Gbps professional bandwidth? What advice can you give me! Thanks! ! Where else can I reach you other than the forum?
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Hi @lyjmry, thanks for the question! The bandwidth depends on how many nodes you want to set up. The average bandwidth requirement is 300mpbs. I am happy to set up a quick call for any questions you, will reach out to you with a direct message,
Best, Sven
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