What is an Initial Node Offering (INO)
Before we explain what an initial node offering (INO) is, we would like, first of all, to reiterate that a real working decentralized system has no centralized ownership as it belongs to the people running it. Companies that create real decentralized system hand over them to the public, so that they have no more control over it. Once the system is public, and its code is open source, then the project is really decentralized: the public members who support the funding of the project directly contribute to the development process done by the open source community. Under this rationale people who have, through the INO, purchased an NFT that allows them to run a node of the system’s peer to peer network, are contributing to the system development, but are also contributing to the system itself by running the network, creating collective value and strengthening the system, while monetizing from the users activities in the peer-to-peer (P2P) system. In a sense, the INO process helps stabilize the whole system and bringing a central idea to a decentralized result. Thanks to the INO mechanism, node operators are compensated for the processing power and costs which they have allocated to run their nodes in a P2P system, code is in the hands of the open source community, and the full project is public.
What is the key difference between the ICO and the INO, and why the INO is a more ethical alternative to the ICO?
In an ICO, developers create out of thin air millions of coins or tokens, inflate their value with promises, sell them in bulk at a cheap price to “whales” cashing in quite well, and letting the whales dump their coin at a profit at the expenses of small faithful supporters that are not even involved in the development process and running of the network. On the other hand an INO doesn’t focus on tokens or coins, and focus more on technology. Without a real project, an INO has no means to exist, and those that have purchased the nodes as NFTs, are directly involved in running the network, while contributing actively to the development through their participation.
Why INO uses NFTs?
The reason to use NFTs for the INO, is because each NFT represents a precise node in the P2P network, making iti unique, and, as the name says, non fungible.
Each NFT has 3 data that the owner can edit:
- The owner account (this is the address where the revenue collected by the node is sent to),
- The unique ID of the node (this is needed to be sure no duplicate nodes run in the system), and
- Up to 100 characters to leave a message recorded in the blockchain genesis block forever!
The NFT smart contract is programmed with 2 dates in it. The first date blocks the NFT from being transferred (or sold), and the second date blocks the NFTs from being edited. This allows those that have purchased in bulk at the private sale and presale, and also at the beginning of the private sale, to resell some of their nodes making a revenue, as once the public sales starts, the price of an NFT increases daily.
The NFTs after the INO is completed, are frozen in the host blockchain. They cannot be transferred, and they cannot be edited anymore. As the Genesis block of the blockchain has the list of the nodes in it, the frozen NFTs become a mirror of the genesis block of the system that will launch. This guarantees those that later want to run a node and join the blockchain that the node they are running has not been compromised, as the genesis block included in the core software must include the same nodes as those registered in the NFTs.