bitsCrunch Network
A Decentralized AI Enabled Data Network
One API, Infinite Insights - Access Smart Data on NFTs, Tokens, Wallets,
and More
Gopi Kannappan, with contributions from the bitsCrunch Team
July 2024 (v2.01)
Legal Disclaimer: This whitepaper and all the information contained within are provided solely for informational purposes. This document is
not a solicitation or offer for buying or selling tokens or any other financial instruments, and should not be treated as such. Potential token
holders should carefully consider the potential risks and consult their legal, financial, tax, and other professional advisors before participating
in any token sale or investing in the bitsCrunch network.
The bitsCrunch project, its founders, team members, and any affiliated parties:●
No Guarantees: Do not guarantee any specific outcomes, token value, or future performance related to the bitsCrunch network or its
associated token.
●
No Liability: Assume no liability or responsibility for any loss or damage that might arise from the reliance on this whitepaper orthe use of or reliance on any materials contained within.
●
Regulatory Uncertainty: Note that the regulatory status of cryptographic tokens and blockchain technology is uncertain and maychange in various jurisdictions. This can consequently affect the rights of token holders, the value of tokens, and the functioning of
the bitsCrunch network.
●
Incomplete Information: While efforts have been made to ensure accuracy, the content of this whitepaper might not be exhaustiveand does not imply elements of a contractual relationship.
●
Subject to Change: The details and structures described in this whitepaper are subject to change without notice, based on ongoingdevelopments, regulatory changes, or other reasons.
●Third-Party References: Any references to third-party data, companies, or technologies do not constitute an endorsement or
recommendation.
This document does not promise any specific benefits, monetary gains, or outcomes. All potential participants are urged to do their due
diligence, understand the specific details and risks associated with the bitsCrunch network and its token, and consult with professionals as
needed.

Abstract
In this paper, we present bitsCrunch, a decentralized enriched data network designed to revolutionize
blockchain data analytics. We detail the processes involved in data acquisition, processing, and delivery
within a decentralized and permissionless network, deployed on an existing EVM-based layer 2
solution. Initially, the network will feature AI/ML models, metrics, and insights developed bybitsCrunch. As the network matures, community developers will be empowered to contribute additionalmodels, metrics, and other enhancements, fostering a collaborative and sustainable ecosystem.
This whitepaper provides a comprehensive overview of the network’s plans, functional architecture, andthe steps towards achieving full decentralization. We explain the importance of decentralization forenhancing security, transparency, and innovation within the blockchain ecosystem. Additionally, thedocument covers network security measures and the critical role of community contributions in ensuring
the network’s longevity and adaptability.
By leveraging advanced AI and machine learning technologies, bitsCrunch aims to set a new standard inblockchain data analysis, supporting a wide range of applications from DeFi to gaming and investment
management. Our commitment to creating a robust, versatile, and community-driven platform
underscores the transformative potential of decentralized data networks in the evolving blockchain
landscape.

1Introduction
Key Challenges
The bitsCrunch Solution
Market Overview
Blockchain Growth Drivers

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Key Segments Leading the Way

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Challenges in the Blockchain and NFT Markets
Challenges Faced by Existing Data Providers
Decentralized Network
Layers of decentralization
Data Query Layer
Network DApp
Request Router
Routing algorithm
Query Processor Node
Data Processing Layer
Data Sync Service
Queuing and Logging
Runtime
Data Acquisition Layer
BlockhubData Manager
Data Storage Layer
Benefits of Decentralization
Network Development Strategy
Security
Use Cases
Blockchain Analytics Platform
Fraud detection and alerting
Compliance and AML
Centralized / Decentralized DeFi
NFT Lending Protocol
Gaming Industry
And more
Token Economics
Token Utility
PurposeBootstrapping the Network
Network Consensus
Network Roles
Node Operator Roles
Query Processor Node
Data Enricher Node
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Delegators
Indicators
Community Contributor
Network User
User Fund Management
Query Payment
Network Settlement
Network Reward Model
Fee share
Query Processor node
Data Enricher node
Rewards share
Query Processor node
Data Enricher node
Disputes
GovernanceCommunity-Driven Innovation
Governance Design Principles
Technical Governance Process
Governing Council
Slashing
Operator Expectations

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Introduction
The blockchain ecosystem has experienced exponential growth, encompassing a diverse arrayof assets such as cryptocurrencies, non-fungible tokens (NFTs), and decentralized finance(DeFi) tokens. As this ecosystem expands, the need for accurate, comprehensive, and real-timedata becomes critical for various stakeholders, including developers, investors, regulatory
bodies, and everyday users. The bitsCrunch network addresses this need by offering adecentralized, AI-enabled data platform designed to provide enriched analytics and forensics
for a broad spectrum of blockchain assets.

Key Challenges
In the rapidly evolving blockchain landscape, several challenges hinder the effective utilizationand trustworthiness of data:● Data Fragmentation: With multiple blockchains and countless assets, data is often
scattered and inconsistent, making it difficult to derive meaningful insights.
● Security Threats: The proliferation of scams, frauds, and malicious activities
necessitates robust forensic tools to protect users and maintain market integrity.

3● Regulatory Compliance: Increasing regulatory scrutiny requires comprehensive data
and reporting mechanisms to ensure compliance and foster trust.
● Transparency and Trust: Centralized data providers can suffer from bias and lack oftransparency, undermining user confidence.

The bitsCrunch Solution
The bitsCrunch network leverages advanced AI algorithms and community contributions togather, process, and enrich data from both on-chain and off-chain sources. By decentralizing
data processing and encouraging community-driven innovation, bitsCrunch ensures theaccuracy, reliability, and relevance of the data provided.
Key Features:
1. Comprehensive Analytics:○ Delivering in-depth analytics for NFTs, cryptocurrencies, and DeFi tokens
across multiple blockchains.
○ Providing real-time market trends, trading volumes, and asset performance
metrics.
2. Fraud Detection and Forensics:○ Implementing sophisticated AI models to detect and alert users about fraudulent
activities such as wash trading, counterfeit NFTs, and suspicious transactions.
○ Enhancing security by continuously updating forensic tools through community
contributions.
3. Accurate Valuation and Market Insights:○ Utilizing machine learning algorithms to offer precise asset valuations, helping
users make informed investment decisions.
○ Analyzing social media sentiment and predicting market trends to provide aholistic view of the blockchain ecosystem.
4. Compliance and AML:
○ Generating comprehensive Anti-Money Laundering (AML) and compliancereports to assist financial institutions and regulatory bodies.
○ Ensuring transparent and compliant transactions within the blockchain space.
5. Community-Driven Development:○ Encouraging developers to contribute new algorithms and insights, fostering acollaborative and innovative environment.
○ Ensuring the platform remains adaptive and up-to-date with the latest
developments in the blockchain industry.
The diagram below illustrates the high-level data flow for extracting, processing, anddelivering valuable insights from blockchain data related to various assets. By leveraging aseries of steps, the raw data is transformed into curated and enriched information, providing
users with a range of insights such as metrics about blockchain collections, estimated NFT
prices, contract alerts, or trade alerts.
4Figure 1: High-level data flow

Here are some of the classification of data that will be available with the network mainnet.
Analytics and Metadata: Gain the most comprehensive analytics and metadata insights acrossmultiple blockchains, encompassing NFTs, cryptocurrencies, and DeFi projects.
DeFi Metrics: Access detailed metrics and in-depth information about DeFi protocols toenhance your decision-making.
NFT Price Estimation: Obtain highly accurate AI-driven NFT price estimations for informed
buying and selling decisions.
Portfolio Insights: Achieve an accurate and real-time view of your investment portfolio,
ensuring you stay on top of your assets.
Gaming Insights: Dive into comprehensive data and analytics for GameFi projects, providing
valuable insights into the gaming sector of blockchain.
Contract Insights: Receive detailed insights into deployed smart contracts, including token
reputation scores and other critical metrics.
Wash Trade Analytics: Explore in-depth analytics on wash trading activities for NFT
collections and tokens across various blockchains, enhancing market transparency.
Monitoring and Alerts: Set up customized monitoring and alert systems to stay informed ofcritical events and changes in your blockchain investments.

5Market Overview
The blockchain industry has experienced exponential growth over the past decade,transforming from a niche technology into a major force in the global financial landscape. This
growth has been fueled by the advent of cryptocurrencies, decentralized finance (DeFi),
non-fungible tokens (NFTs), and a myriad of other blockchain-based applications.

Blockchain Growth Drivers● Decentralization: At the core of blockchain technology is decentralization, which
eliminates the need for intermediaries and promotes trustless and transparent
transactions.
● Adoption by Institutions: Increasing acceptance and adoption by financial institutions,
corporations, and governments worldwide have bolstered blockchain’s credibility andutility.
● Technological Innovations: Continuous advancements in blockchain technology, suchas scalability solutions (e.g., Layer 2 protocols) and interoperability improvements,
have enhanced the functionality and efficiency of blockchain networks.

Key Segments Leading the Way
1. DeFi (Decentralized Finance):○ Growth: DeFi platforms have grown exponentially, with the total value locked(TVL) in DeFi projects surpassing $200 billion by early 2024. This significant
increase highlights the immense potential and trust in decentralized financial
applications.
○ Popular Projects: Platforms like Uniswap, Aave, and Compound have become
significant players, enabling users to lend, borrow, and trade crypto assets
without intermediaries.
2. NFTs (Non-Fungible Tokens):○ Boom: The NFT market continued to expand, with total sales reaching over
$24.9 billion in 2023, reflecting a growing interest in digital art, collectibles, andvirtual assets.
○ Notable Sales: Beeple’s digital artwork sold for $69 million at Christie’s auction
in 2021 remains a landmark, but 2023 also saw other significant sales, including
high-value transactions in virtual real estate and gaming assets.
3. Institutional Adoption:○ Major Players: Companies like Tesla, MicroStrategy, and Square madesignificant Bitcoin purchases, sparking interest from other institutional
investors. Since 2023, more traditional financial institutions like BlackRock and
Fidelity began offering cryptocurrency investment options to their clients.
○ ETFs: The introduction of Bitcoin and Ethereum ETFs in various markets has
made it easier for traditional investors to gain exposure to cryptocurrencies. The
approval of a Bitcoin spot ETF in 2024 marked a significant milestone, further
legitimizing crypto assets in traditional finance.
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Challenges in the Blockchain and NFT Markets
Despite the rapid growth, the blockchain and NFT markets face several challenges:● Fraud and Scams: The decentralized nature of blockchain makes it susceptible tofraudulent activities, including phishing attacks, rug pulls, and counterfeit NFTs. In
2023 alone, crypto-related fraud and scams resulted in losses exceeding $3.9 billion,
according to the FBI.
○ 1 in 10 NFTs minted on the largest NFT marketplace are fraudulent, either ascopy mints of popular NFTs or as derivatives. This alarming trend has resulted
in a total loss of over $4 million for retail investors in that marketplace alone.
○ Potentially more than $46 Billion or 50% of NFT trade volume in wash trading
and about 1 out of 20 secondary market NFT transactions are wash trades.
○ Close to 10% of the NFT volume is potentially associated with money
laundering○ In 2023 alone, rug pulls accounted for significant losses, with scams totalingaround $760 million. Rug pulls were the most common type of crypto attack,affecting millions of investors globally​(Market Realist)​​(Cointelegraph)​​(Solidus Labs)​.
○ Between September 2020 and January 2022, over 212,000 scam tokens werecreated, with 83,000 scams in 2021 and 125,000 in 2022. Approximately 8% of
Ethereum-based ERC-20 tokens were designed to pull the rug​(Solidus Labs)​.
○ To date, it is estimated that over $27 billion has been lost to cryptocurrency and
NFT rug pulls and scams globally. This includes various types of fraud such as
Ponzi schemes, honeypots, and impersonations​(Comparitech)​.
○ In 2023 alone, over $1.9 billion was lost due to various cyber-attacks on
cryptocurrency platforms and exchanges. Notable incidents include the $600
million Poly Network hack and the $325 million Wormhole bridge exploit​(ar5iv)​.
● Market Volatility: Significant price fluctuations pose risks to investors and projects
alike. The crypto market saw major swings in 2023, with Bitcoin’s price ranging from
$30,000 to $69,000.
● Regulatory Uncertainty: Varying regulations across jurisdictions create compliancechallenges and hinder global adoption. The U.S., Europe, and Asia have taken different
regulatory approaches, adding complexity for global projects.
● Data Fragmentation: Inconsistent and fragmented data across different platforms
complicates accurate analysis and decision-making. This fragmentation can lead toinefficiencies and missed opportunities in market analysis.

Challenges Faced by Existing Data Providers
Current blockchain data providers, including those focusing on NFTs, face several challenges
and limitations:
1. DeFi Protocol-Specific Data Providers: These providers primarily focus on deliveringindexed data for DeFi protocols, offering little to no support for NFT-related data.

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Consequently, users interested in comprehensive blockchain analytics may find these
services inadequate for their needs.
Centralized Solutions: Such data providers suffer from a lack of transparency andlimited community collaboration. Centralized control over data aggregation anddissemination can lead to biased information or potential censorship, undermining thetrust and reliability that users seek in the rapidly growing markets for NFTs, DeFi, andother blockchain assets.
On-Chain Data Normalization Providers: These services mainly concentrate on
normalizing on-chain data for various blockchain assets but often neglect specificdetails related to NFTs or individual crypto transactions. This limitation can result in an
incomplete understanding of the broader blockchain landscape, as crucial details about
individual assets or their associated metadata might be missing.
Blockchain Asset Forensics Oversight: Many existing data providers pay little to no
attention to forensics across all blockchain assets, including NFTs, cryptocurrencies,
and smart contracts. Forensic analysis is essential for identifying fraudulent activities
such as counterfeit NFTs, wash trading, or suspicious wallet transactions. The absenceof robust forensic analysis can compromise the security and integrity of the entire
blockchain market.
Lack of Advanced Metrics: Current data providers may lack sophisticated metrics andanalytics that can provide users with deeper insights into market dynamics, trends, andvaluations for a wide range of blockchain assets. The absence of advanced metrics
makes it difficult for users to make well-informed decisions and fully understand thepotential of their investments in NFTs, cryptocurrencies, and DeFi projects.
Limited Community Contribution Opportunities: Many existing data providers do notoffer opportunities for community members to contribute data, insights, or otherrelevant information. This lack of community involvement can hinder the growth of adiverse and dynamic blockchain ecosystem, which relies on collective intelligence andcollaboration.

The landscape for blockchain data providers, encompassing NFTs, cryptocurrencies, DeFi
projects, and other blockchain assets, is currently fragmented and faces several challenges.
These include a lack of focus on specific data needs, centralized solutions with limited
transparency, inadequate forensic analysis, the absence of advanced metrics, and restricted
opportunities for community contribution. Addressing these issues is critical for fostering a
reliable, secure, and collaborative ecosystem that benefits all participants.

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Decentralized Network
Decentralization via blockchain technology is a revolutionary concept that has transformed theway we think about data storage, transfer, and management. Essentially, blockchain is a
distributed ledger system that enables multiple parties to share and store data in a secure andtamper-proof manner without the need for intermediaries. The importance of blockchain lies in
its ability to provide a transparent and trustless system that is resistant to fraud, corruption, andhacking. By decentralizing data management, blockchain can eliminate the need for centralized
control and reduce the risk of data breaches and cyberattacks.
The complexity involved in building a blockchain network is significant, requiring a deep
understanding of cryptography, distributed systems, and programming languages. Developers
must design the system to ensure that the data is replicated across multiple nodes, and theconsensus protocol is followed to maintain the integrity of the network. Additionally, thesystem must be scalable, secure, and fault-tolerant, with proper governance structures to ensurethat the network operates efficiently and effectively.
This part of the complexity has already been solved by the existing layer 1 and layer 2
solutions, so we are not going to try to reinvent the wheel by creating a new blockchain.
Instead, we will leverage one of the existing proven EVM based layer 2 chains. Ourdecentralized network will be more focused on data management and data manipulation using
AI/ML models, heuristics, and other tools. The result will be highly enriched data that is easy
to understand and ready to use.
The journey to create a decentralized bitsCrunch network involves several stages, including
planning, design, development, testing, and deployment. The development process involves
building and testing the network, creating smart contracts, and deploying them on the network.
In this section, you will find detailed information about the components involved in our
decentralized network, including a high-level decentralization roadmap in the section titled"Development Strategy".

Layers of decentralization
This layered architecture focuses on the decentralization and on the data flow and data
management, not on the application architecture. Each layer represents the lifecycle of the datafrom how it's getting acquired to the final layer exposing the data for consumption. In thefollowing sections we will go into the details about each section.

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Figure 2: Functional layer of the decentralization network

Data Query Layer
The data query layer is a key component of the network that enables users to access theinformation they need from the network. This layer provides a way for consumers to securely
and efficiently query the network for data that has been enriched by other participants in the
network.
This Layer is designed to allow participants to transact and interact without the need for acentral authority or intermediary. This means that users should have the freedom to access the
network and use its features without any restrictions or requirements. A permissionless system
ensures that anyone can join and use the network without needing to seek approval fromanyone. It is also made frictionless and easy to use and interact with. This includes a seamless
onboarding process, easy navigation, and simple transaction processing. Users should be able
to use the network without encountering unnecessary barriers or complications.
High scalability and throughput are essential for ensuring that the network can handle a large
volume of queries without slowing down or becoming overwhelmed. A high-throughput
system ensures that data can be processed quickly and efficiently, allowing users to get the
information they need in a timely manner. State-of-the-art security measures are in placeensuring that the network is safe and secure for users.

Figure 3: Query processing flow

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The distributed network architecture enables each node to have access to the full enriched
dataset, allowing them to operate autonomously and handle all queries independently. Thisapproach not only ensures high availability and fault tolerance but also promotes scalability
and parallelism by distributing the workload across multiple nodes. Furthermore, the use ofadvanced algorithms and data structures enhances the efficiency and reliability of the network's
query processing and data synchronization. As a result, the distributed network can handle alarge volume of queries and adapt to changing demands without compromising performance ordata integrity.

Network DApp
Users will have the ability to connect their crypto wallet, such as Metamask, to the Dapp
network. Once connected, users can register to create secure credentials that will grant themaccess to the API. After registration, users will receive a secure downloadable access key thatwill be protected through encryption using the user's wallet.
To manage user accounts and hold user-deposited funds, a billing smart contract will be
implemented. Periodically, a portion of the user's funds will be deducted based on query usage
from the billing contract to the network treasury. Users will have the ability to view logs oftheir usage and raise a dispute in the event of a conflict.
This DApp serves as a platform for operators and delegators to interact with the network.
Operators have the ability to create an operator account by connecting their crypto wallet anddepositing a minimum amount of network utility tokens. This ensures their participation in the
network, and as part of the onboarding process, they will receive an access key that is similar to
the network users' access key. This key is crucial in securely configuring the node to the
network.
Moreover, this DApp provides a comprehensive suite of operator analytics, enabling operators
to monitor their network performance and evaluate their contributions. These analytics areavailable at both an aggregate and individual operator level, offering the ability to drill down
into specific metrics and identify areas for improvement. By leveraging these insights,
operators can optimize their performance and increase their earning potential within the
network.
Delegators have the option to browse through a comprehensive list of operators, and they havethe ability to evaluate their earning and service records before making a selection. This enables
them to choose the operator that is best suited to their needs. After selecting an operator,delegators can stake the network utility token and become eligible to receive a portion of theearnings generated by the operator.
To attract delegators, operators share their fee earnings and network rewards. This staking
process is essential for securing the network. While delegators have the flexibility to withdraw
their stake at any time, they may receive only partial or no rewards if they do so before the11network settlement event. This event occurs once every epoch, which is typically 30 days or on
a fixed day of the month.
This DApp will serve as the primary interface for users and operators to interact with the
network's smart contracts. All of the key interactions that the DApp facilitates will be encoded
directly into the network's contracts. This approach ensures that the interface is not tethered to
any central entity through a hosted UI. By relying on the network's contracts to execute key
interactions, the DApp can function autonomously and without any centralized control. This
allows for greater transparency and decentralization within the network. Users and operators
can trust that their interactions are being executed directly on the network, rather than being
funneled through a third-party intermediary.

Request RouterThis component is highly scalable, lightweight and boasts an impressive ability to handle morethan 100,000 requests per second. Every query to the network is processed by the request
router. As security is of paramount importance, this component takes on the responsibility ofverifying the requester's credentials before allowing the request to pass through to the node.
Only if the credentials are found to be valid will the request be allowed to proceed.
After verifying the credentials, the router consults the routing queue, which helps identify thenext node in the sequence to which the request should be forwarded. Further information on
this process can be found in the "Routing algorithm" section. As each request is received andprocessed, the system meticulously records the relevant details, including the requestor's
identity, the node number, and the receipt of the request, all of which are stored in the logs.

Routing algorithm
All nodes that have registered with the network are recognized by the request router. The routeris responsible for conducting periodic ping tests to each node in order to ascertain their status
and maintain a comprehensive record of it. Along with the uptime record, the router also
maintains the performance statistics of each node. The router is also responsible for managing
multiple queues, it uses these queues to select the node to route the incoming queries. This
enables all nodes in the network to have an equal opportunity to participate in the query
processing.
Queue Name

Description

GeneralAll live nodes in the network will be placed in this queue.

Best Performer

Nodes with the best performance. Performance parameters like
Throughput, Availability etc

Most Accurate

Nodes with the least errors

Staking cap

Nodes that reach the staking cap will be listed in this queue.
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Table 1: Request routing queues

Nodes that are included in all queues will have the advantage of receiving more queries to theserver than other nodes only in one or few queues. Below is a simulation of how the router
works under a 4 queue example

Figure 4: Example of a queuing with single router

Query Processor NodeThis is one of the three types of nodes that a network operator can perform and has the specificrole of serving user queries. The node operates by receiving user queries based on the queuesystem, the request router forwards the query to it. Furthermore, a record of each user query is
maintained in a decentralized storage system, which is periodically aggregated, and the hash of
the file is recorded in the blockchain. This file serves as an essential part of the process,particularly during disputes or validation procedures.

Data Processing Layer
The middle layer of a network plays a critical role in the process of data enrichment andpreparation for user consumption. This layer takes the block data produced by the layer below
and applies various complex algorithms and processes to it. The purpose of these steps is toenrich the data, meaning to extract more useful information from it and transform it into a moremeaningful representation for the user.
In particular, this middle layer is responsible for executing all of the AI/ML model and metriccalculation logic. This includes running various machine learning algorithms, performing
statistical analyses, and applying other computational techniques to extract insights from thedata. The goal of these calculations is to create a more accurate and robust representation of thedata, which can then be used by the user to make more informed decisions. Overall, the middle
layer is a central component of the network, and its ability to process and enrich data is criticalto the success of the network as a whole.
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This layer is responsible for integrating and managing AI/ML models and related algorithms
plays a crucial role in the system, necessitating stringent security measures. To ensure thehighest level of protection, we employ advanced encryption techniques, such as elliptic curve
cryptography, to secure access keys and restrict system entry. Additionally, participants are
required to lock the network's utility tokens as a safeguard.
In the event of any misconduct or malicious activity, a set of predefined slashing rules will be
enforced, providing a robust mechanism for penalizing bad actors and maintaining overallsystem integrity. This combination of encryption, token locking, and slashing rules establishes
a strong security foundation, protecting the layer dedicated to AI/ML models and algorithms
from potential threats.

Figure 5: Data processor components

Data Sync Service
This critical component plays a crucial role in ensuring that the data processing layer and data
query layer are seamlessly connected. It not only synchronizes data between the two layers but
also ensures that the latest information is available to all the query processors registered with
the network. This synchronization mechanism is essential to maintain the accuracy andreliability of the data.
Moreover, this component's ability to keep the query processors up-to-date with the latest data
helps to enhance the performance and efficiency of the entire system. This ensures that the
network is operating at peak performance and can handle large volumes of data efficiently.

Queuing and Logging
Queuing refers to the process of managing and controlling the flow of work items or tasks in a
network. Queuing is essential in many applications and systems where multiple tasks need to
be executed, and the order of execution is important. Queuing systems typically use afirst-in-first-out (FIFO) approach, where the first task that arrives is the first one to be
executed, which is what is used in the network. The component contains a peer-to-peer andresponsible for queuing the Data Enricher nodes in the network is also responsible for
periodically conducting a ping test to check the health of each node. Multiple queues areformed using parameters such as uptime, performance, capacity allocation, and staking ratio.

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These parameters are based on the data stored in the decentralized storage and are calculated ona daily basis to update the queuing process.
Logging refers to the process of recording events or data into a log file or database for later
analysis or troubleshooting. Logging is critical for monitoring and diagnosing the behavior of
the network. Logging allows the network participants to understand what is happening inside
the system, track down errors, identify performance issues and use this for reward computationor to apply penalties to the operator. Effective logging requires careful consideration of what
data to log, how to log it efficiently, and how to analyze the logs to gain insights into the
network’s behavior. Additionally, this component is used to log the work done by each node to
decentralized storage. The raw file and aggregated data file’s hash are periodically updated tothe blockchain. This allows the participants to review the logs when conflicts arise.

RuntimeThe runtime component of the network is the central hub where all the machine learningalgorithms and computational techniques are executed. This component plays a critical role inthe success of the AI system, as it directly affects the performance, accuracy, and scalability ofthe system. Machine learning algorithms, which are the backbone of any AI system, requiresignificant computational resources to execute efficiently. These algorithms typically involve
large amounts of data and complex mathematical calculations that can be computationallyintensive. Therefore, the runtime component must be capable of scaling up and down as needed
to meet the computational demands of the algorithms.
In addition to machine learning algorithms, the runtime component also performs statisticalanalyses and applies heuristics to the data. Statistical analyses help to identify patterns andtrends in the data, while heuristics are rules or guidelines that are used to guide thedecision-making process. These techniques are essential for extracting meaningful insightsfrom the data and making accurate decisions and predictions.
The runtime component may also incorporate other computational techniques such as natural
language processing (NLP), computer vision, and reinforcement learning. NLP enables the AI
system to understand and interpret human language, while computer vision allows the system
to interpret visual data such as images and videos. Reinforcement learning is a type of machinelearning that enables the system to learn by interacting with its environment and receiving
rewards or punishments based on its actions.

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Figure 6: AI Agents in the bitsCrunch network

The above image represents a part of the runtime that operates the network's AI agents, which
are trained specifically to provide one or two inferences. This design keeps the agents small,easy to maintain, and efficient to operate. Some examples of these AI agents include:
1. IP Infringement Check: Scans newly minted NFTs for potential intellectual property
infringements, ensuring compliance and protecting creators' rights.
2. Transaction Monitoring Agent: Monitors the blockchain and pushes out alerts
whenever it detects a transaction exceeding $10,000, helping to track large movementsof funds.
3. Whale Alert Monitoring Agent: Tracks large holders (whales) and alerts users whensignificant transactions occur, which can indicate market-moving activities.
4. Honeypot Evaluation Agent: Evaluates token contracts to identify potential
honeypots, protecting users from malicious traps.
5. Suspicious Activity Detector: Identifies patterns that may indicate fraudulent or
suspicious behavior, such as rapid successive transactions or unusual transaction sizes.
6. Market Sentiment Analyzer: Analyzes social media and news feeds to gauge market
sentiment around specific assets or the broader market, providing insights for trading
strategies.
7. Smart Contract Vulnerability Scanner: Scans smart contracts for known
vulnerabilities and potential exploits, helping developers to secure their contracts before
deployment.
These are just a few examples of the versatile AI agents operating within the network, each
designed to perform specialized tasks to enhance security, compliance, and market intelligence.

Data Acquisition Layer
This is a logical layer in the network that plays a crucial role in maintaining the integrity of the
network. This layer is responsible for retrieving block data from various blockchain and storing
it in the node's distributed database. To ensure efficiency and accuracy, the queuing component16

is used to make assertive decisions on which source to pick data from. This allows the node to
retrieve and store block data quickly and accurately.
To support different blockchain types, many chain adopters will be available in the network.
These adopters will enable the node to connect and adapt to various blockchain types, making
it possible to retrieve and store data from different blockchain networks. Each block that is
retrieved and stored in the database will earn rewards for the node operators. These rewards
will be in the form of a network utility token and a share of the revenue earned by the network.

Figure 7: Data acquisition flow

Queuing component is used to queue the nodes and the sources, as mentioned above thisfactors in many things from availability, performance, capacity allocation, and staking ratio.

BlockhubThis component is for facilitating the retrieval of data from different blockchain nodes via their
RPC (Remote Procedure Call) endpoint or other means. One of the key aspects of thiscomponent is the chain-specific adaptor that is designed specifically to work with a particular
blockchain network. Each blockchain network has its own unique way of managing and storingtransactions, and these adaptors are essential for ensuring that transactions are properly
retrieved and recorded.
In addition to the chain-specific adapter, this component also includes a mechanism forregistering blockchain source endpoints. Once the endpoints are registered, they are sharedacross all nodes on the network. This helps to ensure that all nodes have access to the same
information, which is crucial for maintaining consistency across the network.
This component uses a queue to ensure that the correct provider is used for the next block
retrieval. The queue keeps track of which provider should be used next, based on a variety offactors such as network latency and other performance metrics. The record of the provider used
is logged in a decentralized storage and the hash value of the log file and the aggregated data
files are recorded periodically in the blockchain. This is done to ensure that participants can17review the logs if conflicts arise on payouts. By recording this information in the blockchain, it
becomes a permanent part of the network's history, and cannot be altered or deleted.
Consensus-Based Data Validation
This approach relies on comparing data from multiple sources to determine the trustworthinessof each source based on the majority agreement. Here’s a breakdown of the process:1. Initial Comparison:○ Retrieve data from two primary sources.
○ Compare the data from both sources.
2. Consensus Check:○ If the data matches, both sources are considered trustworthy.
○ If there is a discrepancy, a third source is introduced as an arbiter.
3. Arbiter Source:○ Retrieve data from a third independent source.
○ Compare the third source's data with the data from the initial two sources.
○ Determine trustworthiness based on the majority consensus (i.e., which two outof the three sources agree).
4. Trust Assignment:○ The sources that agree with the third source are considered trustworthy.
○ Document the trusted sources for future reference and data validation.
Why Consensus-Based Data Validation?
● Accuracy: This method helps ensure data accuracy by relying on multiple sources anddetermining trust based on majority agreement.
● Reliability: By continuously validating sources, the process can adapt to changes insource reliability over time.
● Scalability: This method can be scaled to include more sources as needed, improving
robustness and reliability.
Example Scenario
Consider validating Block data from three data providers:
1. Source A and Source B provide different prices.
2. Source C is introduced as an arbiter.
3. If Source C matches Source A, both Source A and Source C are considered
trustworthy.
4. If Source C matches Source B, then Source B and Source C are considered
trustworthy.
This majority consensus helps ensure that the data used is accurate and reliable, based on theagreement of multiple sources.

18

Data Manager
This component is responsible for several critical data processing functions in the network.
Let's look at each of these functions in more detail:1. Parsing Block Data: This component parses the block data retrieved by the blockhub
and extracts transactions, logs, traces, and other information. This involves analyzing
the raw block data to identify and extract relevant information, which can then be usedfor various purposes such as machine learning, business intelligence, ordecision-making.
2. Retrieving Off-Chain Data: In addition to extracting data from blocks, this component
can also retrieve off-chain data from IPFS or other storage when needed. This meansthat the system can access and use data that is not stored on the blockchain, allowing for
more comprehensive data gathering.
3. Onboarding Community Data: Network operators and communities can onboard datalike social media handles or other information that are off-chain but on the web. This
community data can then be integrated into the network and used for analysis, adding
additional insights and perspectives.
This becomes the base data for AI/ML models, heuristics, and metrics calculation. This meansthat the accuracy and quality of the data are critical for ensuring the effectiveness of theseactions. Community developers can contribute to additional data cleansing or datatransformation logic via this component. This means that the network can continually improveand evolve based on the contributions of its community members. Overall, the data
preprocessing and preparation functions performed by this component are essential for
enabling accurate data analysis, effective decision-making, and the development ofsophisticated AI/ML models in a network.

Data Storage Layer
This pivotal component intersects and overlaps with the three previously mentioned layers,
seamlessly integrating their functions. It is the layer for storing all data coming from the dataacquisition and data processing layers. The data acquisition and data processing layers interact
with the data storage layer to perform CRUD operations. As its name implies, the data query
layer focuses predominantly on executing read operations. In order to guarantee
decentralization, a distributed database system will be utilized within this essential cross-layercomponent.

19Benefits of Decentralization

Figure 8: Benefits of decentralizing the bitsCrunch network

Network Development Strategy
Development of the network will be a multiphase multi year endeavor. This section only
provides a high level overview on the network development, for more detailed feature levelroadmap refer to the bitsCrunch Litepaper and or to the bitsCrunch network website.

Figure 9: Functional overview with development phase mapping20

Figure 10: High-level timeline and network roadmap

The development of the network is currently divided into three phases. The first phase, which
was completed as of Q2-2024 involves the creation of the Data Query layer and Query
Processor node. During this initial phase, the query processor node will utilize a commonshared database. In Phase 1.5, which is a subsequent step to Phase 1, each node in the network
will be equipped with its own database, resulting in a decentralized network with no central
point of failure. This is an important feature of the network as it increases the security andresilience of the overall system.
The second and third phases of development will focus on the creation of the Data Enricher andData Harvester layers respectively. More details about these phases will be made available as
the project progresses. Overall, the development of the network is expected to take three years.
Once completed, the network will provide a secure and decentralized platform for querying andprocessing data, enabling a wide range of applications and use cases.

Security
The bitsCrunch Network's smart contract security is designed to ensure safe, secure, andtrustworthy interactions between all parties involved. Here's a brief overview:● Contract Auditing: All smart contracts used in the Network undergo thorough auditing
by independent third-party security firms. These audits aim to find and fix any potential
vulnerabilities or bugs in the contract code.
● Secure Development Practices: The development of the smart contracts follows secure
coding practices. This includes thorough testing of functionality, edge cases, andpotential attack vectors, before deployment on the mainnet.
● Staking and Slashing Mechanisms: To protect the network from malicious activities, thebitsCrunch Network implements a staking and slashing mechanism. Node operators
must stake a certain amount of network utility tokens, which are subject to slashing21

(reduction) if the operator misbehaves or fails to fulfill their obligations. This creates afinancial disincentive for dishonest behavior.
● Access Control: Smart contracts implement various levels of access control, which
restrict who can execute certain functions within the contract. This helps to prevent
unauthorized actions on the network.
● Data Privacy: While the blockchain inherently makes certain transaction data public,
the bitsCrunch Network ensures that sensitive data remains private through the use of
secure data handling techniques.
● Asset Security: Users employ their personal, non-custodial wallets to deposit assets,such as stablecoins or BCUT tokens, into the network contract. These assets are held ina non-custodial manner, granting exclusive access and management privileges to theirrespective users.

Use Cases
Accessing accurate and up-to-date data is essential for the success of any project, especially inthe world of blockchain and NFTs. The bitsCrunch network offers a reliable and consistentsource of data that can be used by a variety of projects in different industries.

Blockchain Analytics Platform
One of the most significant challenges faced by analytics platforms is staying abreast of therapidly evolving blockchain landscape and the increasing complexity of transactions due tocontinuous innovation. As the blockchain industry is still in its nascent stages, this challenge is
expected to grow more pronounced over time. To effectively address these hurdles, analytics
projects can capitalize on the data available through the bitsCrunch networks.
The bitsCrunch network is continuously enriched through community contributions, ensuringthat it remains up-to-date and reflective of the latest developments in the blockchain space. Byleveraging this ever-evolving data source, analytics projects can focus their efforts ondelivering valuable insights to their customers while staying current with the fast-pacedchanges in the industry.

Fraud detection and alerting
Fraud detection and alerting are crucial tools in the blockchain ecosystem. It involves
identifying fraudulent activities related to various blockchain assets, such as fake NFTs, scams,
and phishing attacks, and notifying relevant parties about potential risks. Fraud can also
involve misleading or incomplete information in the metadata associated with the assets.
The bitsCrunch network provides inbuilt fraud detection and alerting. Projects can consume
this data and set up alerts and notifications to react accordingly. Preventive measures can also
be implemented, such as educating users about fraud, implementing strict verification
processes, and increasing transparency in marketplaces.

22Compliance and AML
Projects, users, financial institutions, and regulatory bodies can all benefit from the wealth ofdata available on the bitsCrunch network to ensure a secure and compliant ecosystem. Thisdata can be utilized to generate comprehensive Anti-Money Laundering (AML) andcompliance reports that help maintain transparency and adherence to regulatory requirements.
Banks and other financial institutions can analyze this data to verify the legitimacy oftransactions and wallet activities, ensuring they have not been involved in any financial fraud
or illicit activities. Additionally, government agencies can leverage this data to oversee market
compliance, ensuring that participants adhere to established rules and regulations. This level ofoversight is crucial for maintaining a fair and transparent market, fostering trust and confidence
among participants.

Centralized / Decentralized DeFi
The bitsCrunch network offers numerous use cases in the world of DeFi, which is afast-growing ecosystem of decentralized financial applications built on blockchain technology.
One of the primary benefits of the bitsCrunch network is that it provides accurate and reliabledata for various blockchain assets, including NFTs and cryptocurrencies, to DeFi projects. Thisdata helps users make better investment decisions.
By leveraging the data provided by the bitsCrunch network, DeFi projects can access nearreal-time information about market trends, trading volumes, and other relevant metrics. This
information can be used to create advanced trading strategies, predict market movements, andidentify potential investment opportunities.
Moreover, having access to accurate data can also help DeFi projects avoid engaging withmalicious contracts and take necessary precautions to protect their users' funds. In addition to
DeFi projects, the bitsCrunch network can also benefit centralized and decentralized
marketplaces. By providing users with all the necessary information, such as the ownershiphistory, authenticity, and market value of assets, buyers and sellers can make informed
decisions when trading these unique digital assets.

NFT Lending Protocol
NFT Lending Protocols face challenges in staying updated with the ever-changing NFT
landscape and accurately evaluating NFTs for loan collateralization. With the rapid growth of
the NFT market and the diverse range of assets, it becomes increasingly difficult for the
protocols to maintain an up-to-date and comprehensive understanding of NFT values, trends,
and potential risks.
To overcome these challenges protocols can leverage the data from the bitsCrunch network. By
tapping into this rich data source, the protocol will be able to access real-time, accurate, andcomprehensive information about NFTs, their underlying asset value, and market trends

23

Gaming Industry
In the gaming industry, with the growth of blockchain-based gaming and NFTs, gamedevelopers can leverage data from the bitsCrunch network to analyze market trends, accurately
price their assets, and improve user experience. Developers can gain user-specific stats andunderstand how users engage with other gaming projects.

And more
Developers, artists and creators can also benefit from the data provided by the bitsCrunch
network. By accessing accurate pricing information and market trends, they can make informed
decisions on the value of their creations and optimize their marketing strategies.
Investors in the blockchain market can use data from the bitsCrunch network to perform due
diligence and make informed investment decisions. By accessing accurate transaction data andmetrics, they can identify potential risks and opportunities, and maximize their returns on
investment.
The capabilities of the bitsCrunch network extend beyond NFTs and cryptocurrencies. The data
can be used for various other applications, such as tracking cryptocurrency prices, monitoringsocial media sentiment, and predicting market trends. Its adaptability and the continuous
addition of new algorithms ensure that the platform remains robust and versatile, meeting the
evolving needs of the blockchain ecosystem.

Token Economics
Token economies for the bitsCrunch utility token refers to the design and management of the
BCUT token. In this case, the token's value is derived from its utility rather than its speculative
or investment value. The goal is to create a sustainable and effective ecosystem thatincentivizes the use and adoption of the token for its intended purpose. This includes
determining the distribution and circulation of the token, setting the supply and demand
dynamics, and designing governance mechanisms that align the incentives of users and otherstakeholders with the success of the network. Key considerations for token economics are theutility token functionality, user adoption, network effects, and token governance. Successful
token economics helps to drive adoption and usage of the network, creating a positive feedback
loop that further enhances the value of the token.
Total token supply will be 1 billion, the detailed breakdown of the allocation to different token
sale rounds and to other areas can be found in the picture below. Token will become
inflationary (delayed inflationary) from year 5 to keep incentivizing the network participants.
The decision on the delayed inflation of the token will also go through a governance process assoon as we have a functioning DAO.

24

Figure 11: Token distribution chart

Here is a table explaining the distribution of the tokens as shown above
Total Supply

1,000,000,000

Comments

Seed Round Token Sale

100,000,000

Initial seed sale that took place in mid 2021

Private Token Sale

100,000,000

This sale was completed by the beginning of
2022

Strategic Token Sale

30,000,000

Extended strategic sale due to demand

Public Token Sale

70,000,000

Completed on CoinList in December 2023

Team Allocation

150,000,000

Tokens reserved for the team members of the
project

Advisor Allocation

20,000,000

Tokens reserved for the advisors of the project

Airdrop 1

15,000,000

Tokens reserved to reward the phase 1 of thetestnetSecurity Buffer

50,000,000

Tokens reserved to reward bug discoveries or
to cover the loss in case of a security incident

Growth70,000,000

This allocation would go towards marketing,partnerships, community building and user
acquisition

Additional Development
Fund

60,000,000

These tokens are set aside to finance future
platform development, hire additional teammembers, and make technical enhancements

Listing and MM

50,000,000

Tokens reserved for CEX listing, DEX listing,and for Market Making

25

Ecosystem

130,000,000

Tokens allocated towards fostering andgrowing the bitsCrunch network ecosystemthrough grants, rewards and marketing
initiatives

Additional Airdrop Pool

5,000,000

Tokens reserved for future testnet phases

Network Bootstrapping
Reward Pool

150,000,000

Token allocated to reward operators,delegators, contributors and indicators during
the network bootstrapping

Table 2: Token supply classification

Token vesting is strategically designed to ensure that there is a controlled release of tokens overa specified period of time, which prevents a sudden influx of tokens into the market. Thisapproach is beneficial in balancing the demand and supply of tokens, as it ensures that there isa steady flow of tokens over a prolonged period, rather than a large release in a short timeframe. By doing so, token vesting promotes stability in the market and encourages a gradualincrease in demand for the tokens as adoption grows.

Figure 12: Token vesting and release schedule

Percentages mentioned above are all specific to the allocation within that category and not thepercentage of the overall supply.
Below is a graph showing token circulation over the course of time. All tokens will be
unlocked on the 48th month from TGE.

26

Figure 13: Token circulation

Figure 14: Token emission by category

Even though all 1 billion tokens unlock by month 48 it is highly unlikely that all tokens end up
in the market.

27

Figure 15: Token emission milestones

Note
There is a discrepancy between the tokens scheduled to be in circulation and the actual
circulation numbers reported on CoinGecko and CoinMarketCap. This discrepancy arises fromthe way these platforms track circulating supply. For example, tokens from the community sale
were vested over 12 months, but all of these tokens have been allocated to CoinList for
distribution. This all together is considered as circulating supply. Another challenge is that thetoken is multi-chain, which makes it difficult for these tools to track the circulating supply with
precision.
Disclaimer
The tokenomics described herein reflect current intentions and are subject to change at thediscretion of the project team. Token holdings involve a high degree of risk, including thepotential loss of all amounts invested. Past performance, if any, is not indicative of future
results, and there is no guarantee that any future version of the token will achieve comparable
results or that the token will yield any return on investment.

Token Utility
PurposeThe bitsCrunch token (BCUT) is a digital token native to the network, providing access toenriched NFT data within the bitsCrunch ecosystem. Its primary function is to facilitate smooth
operations within the network, and it is intended solely for use as a utility token. The securefunctioning of the bitsCrunch ecosystem relies on a combination of cryptographic techniquesand economic incentives to drive adoption and ensure network security. Following are some of
the key functions and purpose of the token● Incentive Alignment: The digital asset acts as a motivational tool, fosteringcollaboration and commitment among Operators, Delegators, Indicators, andContributors.
● Governance: The digital asset enable decentralized governance, where token holders
can vote on proposals and changes to the network's protocol

28

● Network Security: Through mechanisms like staking, our digital asset can add layersof security, making malicious activities costly and thereby protecting the network's
integrity.
● Independence: Having a digital asset ensures the network's autonomy and reduces
reliance on external entities or tokens. It aligns the token's value and functionality
closely with our network's objectives and performance.
● Economic Design: The digital asset allows us to tailor the economic model to theunique needs and values of our network, controlling aspects like issuance, distribution,
inflation, or deflation.
● Discounting: Data consumers can stake the token to get a discount on the query
pricing.

Bootstrapping the Network
All of the initial network rewards are provided from the staking allocation of the tokenomics,
which can be referred to in the token economics section for more information. This allocationis also utilized to reward node operators, LP mining, among other things. The staking
allocation will be utilized to cover network rewards for the bootstrapping duration, after which
rewards will be primarily based on the revenue generated by the network and the rates will be
determined by the network smart contract.
The following chart illustrates the planned token emission for bootstrapping the network over a
period of up to 4 years. This emission schedule has been designed to ensure a steady andsustainable release of tokens into circulation, with the ultimate goal of supporting the growthand development of the network over the long term. After this initial bootstrapping period the
network will go into a delayed inflationary model to help continually reward the network
participants.

Figure 16: Staking allocation emission assuming the bootstrapping of network is for 4 years

29Network Consensus
The bitsCrunch network leverages a Delegated Proof-of-Stake (dPoS) consensus mechanism.
Within this system, delegators stake their digital assets with chosen operators, who are thentasked with various responsibilities within the network. The operators are rewarded based on
the work they perform, aligning their interests with the overall integrity and functionality of the
network.
Additionally different consensus protocols will be used for different parts of the network toachieve a high reliability within the network and on the data query layer.

Network Roles

Figure 17: Different roles envisioned for the operation and self-sustainability of the network

The diagram above presents an overview of the various roles envisioned within the network.
Each role is detailed and elaborated upon in the subsequent sections, providing acomprehensive understanding of their functions and responsibilities within the network
ecosystem.

Role

Token Utility

Node Operator

Stake the token to participate in the network and earn fee andrewards.

Delegator

Delegate stake the tokens to secure the network and influencesufficiently decentralized

Indicator

Stake token to become an indicator of the network to help shape
the content direction.

Community Contributor

Contribute to the network with code and content to earn tokens as
rewards.

30

User/Customer/Consumer

Stake token to get discount on the query fee
Table 3: Network Roles and Token utility

Node Operator Roles
In order to ensure smooth operations of a blockchain network, there are typically one or moreroles that enable its functioning. These roles are well-defined and allow operators to choose theone that best suits their appetite and experience. Similarly, the bitsCrunch network will alsooffer multiple roles for operators to choose from. Operators may choose to run a full node withall roles or a partial node that satisfies only one role. It is important to note that bitsCrunch is
not a blockchain but rather a decentralized data network that leverages decentralized
blockchain technology to maintain proof of use and contribution.
Network operators play a critical role in the success of bitsCrunch's decentralization effort.
Each role in the network will share the fee earned by the network and will also be rewarded
with network tokens. In the following sections, we will provide more details on the various
roles that operators can choose from in the bitsCrunch network.

Query Processor NodeThis node in the network is responsible for making enriched data available to consumers
through a Restful API. Consumers interact solely with this node, which ensures secure accessto data through a cryptographic and secure model. The node comprises components of thedecentralization layer, including data query and data storage. This role within the network
carries weightage, as described below, which means that node operators with this role will
receive fees and rewards based on this weightage. The distribution is calculated using the
Cobb-Douglas Production function, refer to “Network Reward Model” for more details.
Role

Weightage

Query Processor Node

30% to 50%
Table 4: Query processor node weightage

The Query Processor node is designed to be less complex than the Data Enricher node, whichmakes it an attractive role for more node operators to participate in. However, despite its
relative simplicity, the Query Processor node will still need to be robust and resilient in order tohandle high demand and ensure consistent performance.
As a critical component of the network, the Query Processor node plays a critical role inprocessing queries and facilitating the transfer of data across the network. This requires a highlevel of reliability and performance, especially as the network grows and more demands areplaced on the system.

31

Therefore, the Query Processor node must be designed with scalability and resiliency in mind,
using proven techniques such as load balancing, redundancy, and fault tolerance to ensure thatit can handle even the most demanding workloads. By doing so, the network can maintain ahigh level of performance and reliability, while also attracting more node operators toparticipate in this important role.

Figure 18: Functional components of query processor node

Data Enricher NodeThis node is responsible for providing the necessary runtime for all the algorithms including AI/ ML models and also to collect the block data from the blockchain RPC endpoints. It will bepossible to distribute these tasks into smaller chunks and execute among all the participants of
the network. This node comprises components of the decentralization layer, including dataprocessor, data acquisition and parts of data storage. This role within the network carries
weightage, as described below, which means that node operators with this role will receive feesand rewards based on this weightage. The distribution is calculated using the Cobb-Douglas
Production function, refer to “Network Reward Model” for more details.

Figure 19: Functional components of data enricher node

Role

Weightage

Data Enricher Node

40% to 70%
Table 5: Data Enricher node weightage

This node will interact with RPC endpoints to get data from different blockchain supported by
the network. Between these two nodes 100% of the query fee and the network rewards areshared based on the weightage defined within the roles.
32Delegators
Not everyone can be a node operator due to the technical expertise and capital requirements
needed to operate and maintain a node. However, token owners who still want to participate insecuring the network can become node delegators.
Node operators incentivize delegators to delegate their tokens to their node by offering a shareof the fee revenue and rewards earnings earned by the node. The rewards for delegators are
influenced by the node's performance and effort, and tend to have low to no influence as more
tokens are staked in the node.
To maximize their returns, delegators carefully consider a variety of factors when selecting anode operator. They typically look for operators with a strong work load, favorable sharing
rates, and an optimal staking ratio, which allows them to earn the most rewards from theirstaked tokens. By carefully choosing a node operator, delegators can help secure the networkand earn rewards while avoiding the complexity and cost of operating their own node.

Indicators
Essential for the sustained expansion of the decentralized model, the data enrichment process
must continuously evolve and adapt. Signaling mechanisms play a vital role in informing
network participants about which blockchains to index, what data needs grooming, and which
metrics to construct, among other tasks.
Network users can leverage their role as indicators to influence the selection of blockchains or
metrics they wish to consume, ensuring the network remains responsive to their needs.
Indicators are rewarded with a share of the query fees, creating an incentive for active
participation in the network's growth and development.
To ensure indicators prioritize tasks appropriately and make well-considered decisions, staking
rewards are unlocked only after the signaled task has been executed. This mechanism
encourages careful signaling and fosters a sense of responsibility among indicators,
contributing to the overall health and efficiency of the decentralized network.
By promoting active engagement and providing tangible incentives for indicators, the network
fosters a collaborative environment that drives the continuous growth and improvement of its
data enrichment activities. This dynamic ecosystem empowers users to contribute theirexpertise and influence the network's direction, ultimately enhancing its utility and value for allparticipants.

Community Contributor
Developers and projects have the opportunity to make meaningful contributions to the networkby introducing innovative AI/ML models and supplementary metrics that can further enhance33the network’s capabilities. Additionally, they can provide cutting-edge fraud detection
algorithms and logic, which can be used by the users of the project.
Even non-developer contributors can play an important role in the network's success bycontributing off-chain data such as social media handles and other relevant information. To
encourage and reward such contributions, the network offers incentives in the form of its native
utility token. These tokens can be earned by developers and non-developers alike, fostering acollaborative and dynamic ecosystem where all members are motivated to contribute theirskills and knowledge. By actively engaging a diverse range of participants, the network cancontinuously evolve and adapt to the ever-changing landscape in blockchain.

Figure 20: Community contribution

1) Community developers contribute AI/ML models for analytics and forensics or otheralgorithms to the network.
2) All community members can contribute with Off-chain metadata like eg: social media
handle for collections.
3) These contributions are logged securely in a decentralized storage and the same is also
recorded in a decentralized blockchain.
4) User application access data via the query processor node.
5) Network billing contract will draw down from the user deposit based on the query
usage.
6) A portion of the fee and contributor rewards are distributed to the community
contributors based on the contribution.
Community developers will get additional funding from the ecosystem fund if they continue tomake reliable contributions.

34

Network User
Network users are consumers of data from the network, which can be obtained through apermissionless model. All users can connect a crypto wallet to create an account and obtain thenecessary credentials to query the network. To obtain credentials, users must lock up stablecoin
tokens in the billing smart contract. This contract deducts tokens based on usage and swaps
them to BCUT, which is sent to the query fee pool. Stablecoins are used as the payment token
to maintain a stable price for services, allowing users to plan and budget account top-ups.
When users log in for the first time to the network interface, they will receive a default billing
account. This default billing account includes a predefined test API key with a capped quote tohelp users test and integrate network services into their applications. Users can manage
multiple application integrations or potentially resell services to other users outside the networkby having multiple billing accounts.

Figure 21: Network user and interactions

1) Users create a billing account and deposit stablecoin into the billing smart contract.
They can optionally add BCUT to receive a discount on the query fee.
2) Users obtain credentials and apply them to the application integration settings.
3) The application uses the credentials to query the network.
4) The network responds to the query and records the activity to IPFS-backed storage.
5) Data from the IPFS storage is periodically aggregated, and the resulting file's hash isrecorded in the blockchain along with the raw data file's hash. This helps prevent any
manipulation of the data.
6) The network's billing contract looks up the blockchain for the latest aggregated filedetails.
357) The billing contract then uses this information to retrieve the data from IPFS and, basedon the aggregated data, deducts from the money deposited by the user based on usage.
This step may be manual during the initial phase of the project.

User Fund Management
To avail of our network services, users will be obliged to deposit or stake a stablecoin, such as
USDC. This not only fuels the utilization of our services but also forms the basis of our secured
payment system.
Throughout the billing cycle, these staked funds will be frozen and non-withdrawable. This
provision is to ensure the availability of funds for the consumed services. It's important to notethat a halt in services must be initiated by the user before the withdrawal of any outstanding
tokens can occur, and this can only happen post the settlement of the final bill.
We maintain a rigid protocol for the security of these funds. There is no manual mechanism or
backdoor that allows the withdrawal of funds from the contract. These funds can only be used
for service payment, which is automatically handled by the contract, or withdrawn by thecustomer following the termination of services. This system is designed to ensure the security
and integrity of transactions, providing customers with peace of mind.

Query Payment
As noted previously, user deposits serve as the payment medium for the services used,governed by an automated process executed by the smart contract at pre-determined intervals(1H, 6H, 10H - these durations will be configurable).
In an effort to maintain complete transparency and traceability, all records of service
consumption are securely archived in IPFS storage, a decentralized system renowned for its
data integrity and durability. Subsequently, the hash of these logs is updated and inscribed on
the public blockchain (Polygon), creating an indelible record that is both accessible andauditable.
Such a design not only ensures full visibility of transactions for our customers but also equips
them with the necessary data to raise and validate any potential disputes. The mechanism aims
to instill trust and confidence, fostering a strong customer-service provider relationship basedon transparency and fairness.

Network Settlement
The network settlement contract ensures that all operators and delegators in the network are
duly compensated for their work. This is made up of one or more smart contracts that leverage
the work log files stored in the decentralized storage. The network settlement process isentirely conducted using the utility token BCUT, ensuring seamless and secure transactions.

36

Figure 22: Network settlement flow

1) Delegators will stake BCUT token on operator(s) to secure the network and to earn ashare of the query fee and rewards.
2) Network billing contract will draw down from the user deposit based on the query
usage, a portion of it is kept in an expenses pool for paying blockchain gas fee and IPFS
storage costs.
3) A portion of the drawdown is periodically swapped to BCUT and kept in the fee pool.
The remaining portion is kept as stablecoin.
4) Network settlement contract will use node effort calculated using the aggregated data inthe decentralized storage and the staking ratio. Most of the calculation will be
externalized to not complicate the contract code and also keep the cost low.
5) Node operators will be able to claim BCUT from the settlement contract as per the
reward and fee allocation calculated in step 3. Delegators will also be able to claim thetokens as per the fee and reward share setup by the operators.

Network Reward Model
Query fees are collected by the billing smart contract and converted to BCUT before being
deposited into the query fee pool. Operators receive their share of the tokens from this pool ona monthly basis, with the distribution determined by the Cobb-Douglas Production function.
Rewards are calculated and shared daily.
Let’s apply this function for fee sharing and rewards sharing among the network operators anddelegators. Node staking is used in the request routing and for reward calculation.

37

Fee share
All fees generated from processing queries are converted to BCUT (the native token of the
network) and collected in a common pool. On the settlement day, which occurs on a fixed dayeach month, a Cobb-Douglas algorithm is used to determine the distribution of BCUT rewards
among node operators and delegators based on their contributions to the network. Bothoperators and delegators are eligible to claim their respective share of the reward from the pool.
Staking ratio is not used in fee share calculation but instead is used as a factor for query
queuing.

Figure 23: Query fee rebate

The above image depicts the distribution of the network-generated fees among operators,
contributors, and indicators. Specifically, contributors are entitled to a 10% share of the
network’s revenue as a royalty for their curated content. This distribution is scheduled tocommence from H2–2024 and will be contingent upon ongoing engagement and proportional
to the volume and quality of work contributed. Furthermore, these royalties will be subdivided
between content and code contributions, ensuring a fair and balanced reward system.
Query Processor node
nodeFeeShareqp(i) = totalFeeEarnings * nodeEffortqp(i) * nodeWeightage
Where● nodeFeeShareqp(i) is the fee share that is allocated to a particular query processor node
● totalFeeEarnings is the total fee earned by the network over the settlement cycle (afixed day of the month)● nodeEffortqp(i) is the contribution of a node towards query processing. nodeEffortqp = (#of successful queries processed by a node / total successful queries processed by all
nodes)● nodeWeightage is derived from the roles played by the node, refer to Network Operator
Roles section for more details
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Data Enricher node
nodeFeeSharede(i) = totalFeeEarnings * nodeEffortde(i) * nodeWeightage
Where● nodeFeeSharede(i) is the fee share that is allocated to a particular data enricher node
● nodeEffortde(i) is the effort contributed by the node. nodeEffort = (# of bCU by the node
/ total bCU by all nodes) + (# of blocks retrieved using the node / total blocks retrievedby all nodes). bCU is a bitsCrunch compute unit calculated as a combination of theinfrastructure and other components contributed by the node. Since not all blockchain
have the same block size and hence this will also be factored in towards the node effort.

Rewards share
As previously stated in this chapter, a portion of the BCUT tokens is allocated forbootstrapping the network and rewarding its operators. At the close of each fixed epoch sets,
reward shares are computed and made available for distribution to both operators anddelegators. Both delegators and operators are eligible to claim their respective share of the
rewards.

Figure 24: Network rewards share

The diagram provided offers a detailed visualization of the various reward pools designated for
different roles within the network. Specifically, the allocation for content contribution is set at 5
million BCUT annually, equating to 416K BCUT monthly. This strategic allocation serves two
key objectives: firstly, it actively encourages sustained engagement within the network;secondly, it aligns the interests of contributors with the long-term objectives and success of the
network.

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Query Processor node
nodeRewardShareqp(i) = totalRewards * nodeEffortqp(i) * nodeWeightage
Where● nodeRewardShareqp(i) is the rewards share that will be allocated to a particular node
● totalRewards is the total rewards allocated for the epoch.
● nodeEffortqp(i) is the contribution of a particular node towards query processing.
nodeEffortqp(i) = (# of successful queries processed by a node / total successful queries
processed by all nodes)● nodeWeightageqp is derived from the roles played by the node, refer to Network
Operator Roles section for more details
Data Enricher node
nodeRewardSharede(i) = totalRewards * nodeEffortde(i)* nodeWeightage
Where● nodeRewardSharede(i) is the rewards share that is allocated to a particular data enricher
node● nodeEffortde(i) is the effort contributed by the node. nodeEffort = (# of bCU by the node
/ total bCU by all nodes) + (# of blocks retrieved using the node / total blocks retrievedby all nodes). bCU is a bitsCrunch compute unit calculated as a combination of theinfrastructure and other components contributed by the node. Since not all blockchain
have the same block size and hence this will also be factored in towards the node effort.

Disputes
In order to maintain fairness and transparency within the network, all node operators have theright to raise disputes if they believe there are discrepancies or issues with fee and rewards
payouts. Disputes are handled through an open and transparent process that involves network
operators and community support, with the goal of resolving disputes within a fixed duration.
This process includes a detailed review of the dispute, with input from all relevant parties, anda thorough investigation to identify the cause of the issue. Once the issue is identified, aresolution is proposed and voted on by the network community.
By allowing node operators to raise disputes and providing a transparent and collaborative
process for resolving them, the network promotes a sense of trust and fairness that is essential
for long-term success.

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Governance
Effective governance is crucial for the sustainability and growth of any decentralized network.
The bitsCrunch network employs a decentralized governance model that promotes
transparency, inclusivity, and community participation. This section outlines the governancemechanisms, decision-making processes, and roles within the bitsCrunch ecosystem.
The bitsCrunch DAO will be responsible for managing various aspects of the network,
including network upgrades, query fee structures, and incentive mechanisms. By leveraging thecollective expertise and insights of stakeholders, the DAO will ensure that the network isgoverned in a fair and transparent manner that aligns with the values of the community. Token
holders will be able to delegate their voting power.
Using the DAO will allow stakeholders to have a direct say in the rules and regulations thatgovern the network, ensuring that decisions are made through a consensus-driven process. This
will promote greater accountability and community-driven innovation, fostering a greater senseof ownership and participation among stakeholders.

Community-Driven Innovation
Community Participation: The bitsCrunch network values the contributions of its community
members. By involving the community in decision-making processes, bitsCrunch ensures thatthe network evolves in a way that reflects the needs and interests of its users. Community
members can propose changes, suggest new features, and participate in discussions about the
network's future.
Proposal System: Any community member can submit a proposal for changes or improvements
to the network. These proposals are then subject to community review and voting. Proposals
can range from technical upgrades and new feature implementations to policy changes andstrategic initiatives.
Voting Mechanisms: Voting on proposals is a key aspect of the governance process. Token
holders can vote on proposals using their BCUT tokens. The voting power of each participant
is proportional to the number of tokens they hold, ensuring that those with a greater stake in the
network have a commensurate influence on its direction. We will also evaluate other voting
mechanisms to ensure that the overall community is represented in key decision making.

Governance Design Principles
Here is how core design principles apply to governance:
1. Usability: Governance processes should be clear and understandable. Mechanisms for
active participation and for voting (where available) should be simple andstraightforward. Governance should be effective and efficient so it arrives at decisions
quickly and implements them efficiently. The community of stakeholders should havesufficient voice that they support the legitimacy of decisions and do not exit or fork theplatform.
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2. Scalability: Governance should scale as the scope and complexity of the platform itself
grows, as the diversity of its stakeholders increases and as the breadth of participation
expands.
3. Simplicity: The most robust processes tend to be the simplest so good governanceshould avoid overengineering processes and acknowledge that often human-to-humancommunication is the simplest approach.
4. Sustainable Decentralization: Governance should allow participation from the fullbreadth of stakeholders in the platform but be resilient against capture by any one ofthese over time.
It is important that governance design balances between efficiency and resiliency. Decisions
must be made and implemented efficiently if a technical platform is to continue to evolve
sufficiently to provide the best value for its stakeholders but that platform must ensure that it
can not be captured over time by a particular group of stakeholders.

Technical Governance Process
In DAO (Decentralized Autonomous Organization) governance, proposals typically go throughseveral stages or statuses.
● Draft: The proposal is in its initial phase, where it is being created, drafted, and refined.
This stage allows for early discussions and feedback but does not yet involve any
formal decision-making.
● Submission: The proposal is officially submitted to the DAO for consideration. Thismight require meeting certain criteria or gaining preliminary support from members.
● Review: The proposal is under review by the community or specific working groups.
This stage might include discussions, debates, clarifications, and requests for more
information.
● Voting: The proposal is put to a vote. Depending on the DAO's rules, this might include
different types of voting such as simple majority, supermajority, or consensus. Voting
could involve various stakeholders, such as token holders or a governing council.
● Approved: The proposal has passed the voting process and has been officially acceptedby the DAO. Next steps, such as implementation or allocation of resources, will follow.
● Rejected: The proposal has been voted down and will not proceed. Depending on the
DAO's rules, it might be possible to revise and resubmit a rejected proposal.
● On Hold: The proposal has been temporarily paused, possibly due to issues that need tobe resolved, a lack of consensus, or other strategic reasons.
● Implemented: The proposal has been successfully implemented, and the changes or
actions it proposed are now in effect.
● Archived: The proposal, whether approved, rejected, or withdrawn, is archived forrecord-keeping and future reference.
● Withdrawn: The proposer or supporters of the proposal decide to withdraw it before it
reaches a vote. This can occur for various reasons, such as a lack of support or theidentification of unforeseen issues.
● Escalation: In case of disputes or conflicts, the proposal may enter an escalation phase,where mediation, arbitration, or other conflict resolution processes are invoked.

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● Expired: If a proposal doesn’t meet certain conditions within a predefined timeframe(e.g., not enough votes), it may expire and be removed from consideration.

Governing Council
The bitsCrunch network governing council is composed of a diverse group of individuals,organizations, or entities, united with the common purpose of overseeing and guiding thedecentralized network. This council's responsibilities encompass the careful management,
development, and sustained maintenance of the protocol, ensuring that all decisions align withthe community's best interests and contribute to the future growth of the network.
During the initial phases of development and until sufficient decentralization is achieved, thebitsCrunch Foundation may appoint members to this governing council. These appointed
members will work closely with the core development team, providing essential oversight,
strategic direction, and support.
The rationale behind this approach is twofold. First, it allows the project to maintain a strong,unified direction during its critical early stages. Second, it sets the stage for a gradual transition
toward a more decentralized model of governance, reflective of the broader community'svalues and desires. This transitional model ensures that the core team remains focused ondelivering the committed roadmap and vision, while also paving the way for increased
community engagement and decentralized decision-making in the future.

Slashing
Slashing is a mechanism in which a node operator's stake is penalized for violating certain rules
or engaging in malicious behavior that harms the network. Examples of actions that may resultin a slashing penalty include serving inaccurate data, double logging work, censorship, or otherforms of malicious behavior.
The purpose of slashing is to discourage node operators from engaging in harmful behavior andto ensure that they have a vested interest in maintaining the security and integrity of theblockchain. While slashing penalizes the node operator, it does not affect delegators. However,delegators can expect reduced earnings as the node is downgraded from the queues.
It is important to note that community contributors of the network may also be subject toslashing penalties for providing inaccurate or harmful content. This ensures that everyone who
participates in the network is held accountable for their actions and that the network is operated
in a fair and transparent manner.
Overall, slashing is an essential mechanism for ensuring the security and integrity of theblockchain. It incentivizes node operators to behave in a trustworthy and honest manner andpromotes a decentralized and resilient network that is less vulnerable to malicious attacks.

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Operator Expectations
●
●
●
●
●
●

Always run the latest version of the node
Meet the minimum hardware and software specification requirements
Meet staking requirements
High availability and reliable infrastructure
Participate in regular feedback sessions with the team and community
Participate in network governance44