The "Decentralisation Premium"

By allocating work based on stake, and by paying a common price to all Seeker Nodes whose offer price is within a narrow range, the Sylo Network ensures that a range of profitable price points exist. This means that Nodes at a variety of scales can participate in the network and ensures that the network participants remain diverse. Under this system, the common price of relay will be marginally higher than the price offered by the most cost effective Node in the network. This can be thought of as a “decentralisation premium” - it is the cost of ensuring that relay is performed by a variety of Seeker Nodes, and of preventing a dominant Node from being able to perform traffic analysis to map communication between peers. The size of this decentralisation premium can be configured by changing the parameters of the price setting process. By lowering the percentile level that sets the service price, a lower service price will be produced, one that is closer to the lowest offer among all Seeker Nodes. This reduces the “decentralisation premium”, and means that a smaller variety of costs of providing the service are profitable. The premium is only caused by economies of scale - nodes at every scale have incentive to invest and reduce their operating costs in an economically rational way.