Incentive Testnet: A Key Driver for Successful Protocols

In recent years, Proof of Stake (PoS) blockchains have become increasingly popular. This trend is reflected in Ethereum's transition from Proof of Work to PoS, the flourishing of the Cosmos ecosystem, and the emergence of new PoS public chains like Aptos and Sui.

The PoS mechanism relies on a network of validators, which presents two major challenges for the project: first, the value of internal testing is limited because the network relies on external stakeholders to execute consensus; second, nodes can be costly and require specialized skills and effort to maintain.

These factors contributed to the rise of incentive Testnets. Cosmos was the first to launch such a Testnet through the Game of Stakes project, providing a decentralized and low-risk testing mechanism for blockchains.

The Essence of the Incentive Testnet

The Incentive Testnet is a gamified project that encourages external validators, developers, and users to participate in testing the blockchain network to earn rewards. It is primarily used to test the PoS infrastructure, helping the protocol to establish a robust network of node operators, ensuring stability and decentralization at launch, while simulating real-world environments to identify potential issues.

Participants typically receive native tokens or stablecoins of the protocol as rewards. Recently, the scope of incentivized Testnet applications has expanded to various aspects such as smart contract deployment, governance voting, trading, cross-chain infrastructure, and security measures.

Key Considerations for Building an Incentive Testnet

Clarify the goal

The project team needs to define testing priorities, considering scale, eligibility criteria, and success metrics. In addition to common node infrastructure testing, some projects also use the Testnet to educate early users and test specific features. For example, a certain trading protocol successfully recruited over 11,000 traders, which not only validated its ability to create market efficiency and ensure liquidity but also identified and fixed significant vulnerabilities.

set reasonable thresholds

The access criteria ensure that participants meet minimum standards. Requirements for validators may include hardware configuration, experience, and technical capabilities, as well as geographical diversity. The number of participants can range from 100 to over 2800, depending on project needs. Some exchanges or lending protocol Testnets may have lower thresholds to attract more users to participate.

KYC is almost a standard requirement for all incentive Testnets, which helps ensure compliant distribution of rewards and prevent potential attacks.

Design Incentive Mechanism

The design of the project and the distribution of rewards are at the core of incentivizing the Testnet. The goal is to ensure comprehensive testing of all functions and to help participants prepare for the mainnet launch. The Testnet is usually conducted in phases, gradually testing different parts of the network. For example, the Testnet of a certain emerging public chain is divided into three phases: validator setup and code deployment, economic mechanisms and DeFi primitives, and validator performance.

Rewards are typically distributed in the form of native tokens of the project, with some projects also using stablecoins. Recently, several projects allocated about 1% of their token supply for the Testnet. The reward methods are mainly divided into two categories: milestone/task-based and performance-based.

In addition, the project should also consider whether the Testnet should emphasize adversarial or cooperative nature. Adversarial projects can test the resilience of the network in the face of real attacks.

from Testnet to mainnet

Successful Testnet projects lay a solid foundation for the mainnet launch. Validators gain operational experience, developers become familiar with tools and documentation, and community contributors write learning content and provide support. Project teams should continue to interact with Testnet participants to maintain community vitality.

Some projects take additional measures to strengthen the community. For example, a certain public chain provides an opportunity for Testnet validators to obtain token authorization. Other projects launch multiple rounds of Testnet to continually stimulate community engagement.

By meticulously designing and executing incentive Testnet, blockchain projects can thoroughly validate their technology and economic models before officially launching, while fostering a strong and active community ecosystem. This not only helps to identify and resolve potential issues but also lays a solid foundation for the long-term success of the project.