What is a Service?

Together with Operators, Services form the backbone of the SatLayer ecosystem. Services represent blockchain applications or protocols that require “operations,” validation, and security. They are the entities that define the operational requirements, reward structures, and slashing conditions for the ecosystem’s validators and infrastructure providers.

Services, Networks, and Bitcoin Validated Services (BVS) refer to the same concept in SatLayer.

In the SatLayer ecosystem, a Service can be any decentralized application that needs reliable, trustworthy computation and validation. Services establish the rules and parameters for their operations, while relying on Operators to execute these operations securely and efficiently.

Typically, Services play a crucial role in the ecosystem by:

• Defining what needs to be validated and how it should be validated
• Establishing consequences for improper validation or malicious behavior
• Setting operational requirements and standards
• Creating economic incentives for proper operation

They require infrastructure support because building and maintaining a robust, secure validation network is complex, resource-intensive, and often outside the core expertise of the service developers. Therefore, Operators become essential partners who provide the specialized infrastructure, security expertise, and operational capabilities that Services need to function effectively.

Services have significant responsibilities toward the Operators they engage with:

• Provide economic incentives: Services cannot expect Operators to run their service without incentive—proper economic incentives must be established to make it worthwhile for Operators to dedicate their resources and expertise.
• Offer clear documentation: Services cannot expect Operators to understand all the nuances of their specific application or protocol without proper guidance.
• Establish straightforward integration processes: Making it easy for Operators to integrate with the service reduces friction and improves operational efficiency.
• Maintain ongoing support: Responsive support channels help Operators resolve issues quickly and effectively.
• Provide clear technical specifications: Detailed specifications help Operators understand exactly what is required to run the service properly.
• Create fair economic models: Aligning the interests of both parties through well-designed economic models helps ensure a sustainable relationship.

By fulfilling these responsibilities, Services help create a sustainable ecosystem where both they and their Operators can thrive.

Registration Lifecycle

The relationship between Services and Operators is bidirectional and requires mutual agreement. This design ensures that both parties explicitly consent to work together, enhancing security and reliability in the ecosystem.

• Services and Operators independently register themselves in the BVS Registry
• Services register Operators they want to run their validation logic
• Operators register Services they are willing to validate
• When both parties have registered each other, the relationship becomes “Active”
• If either party decides to end the relationship, they can unregister, changing the status to “Inactive”
• Operators may deregister if they deem the service is not worth their time—for example, if there is too much slashing or insufficient rewards

Behind the scenes, the registration process often involves direct communication between the Operator team and the Service team. They typically connect and mutually agree on the registration process, discussing technical requirements, reward structures, and operational expectations. While this communication is not necessarily a formal process nor required by the protocol, it is expected and beneficial for both parties.

This collaborative approach is important because Services must make it worthwhile for Operators to run their service. Without attractive incentives and reasonable requirements, Services may struggle to attract high-quality Operators. Similarly, Operators benefit from understanding the Service’s expectations and technical requirements before committing their resources. This mutual understanding helps establish a strong foundation for a successful working relationship.

Economic Incentives

Economic incentives are the driving force behind the Service-Operator relationship in the SatLayer ecosystem. These incentives create a symbiotic relationship where both parties benefit from their cooperation:

Benefits for Services:

• Gain the security and infrastructure needed to operate effectively
• Access to economic validation to prevent malicious behavior (i.e., long-range attacks)
• Reduced need to build and maintain their own validation infrastructure
• Protection against malicious behavior through economic security mechanisms

Benefits for Operators:

• Receive rewards for providing reliable and secure validation services
• Opportunity to diversify their operational portfolio across multiple Services
• Clear performance metrics and expectations

The economic model is designed to align the interests of Services with the Operators that support them. By providing appropriate rewards for successful operations and implementing penalties for failures or malicious behavior, Services can create strong incentives for high-quality service provision.

Providing Incentives

Services implement reward structures to incentivize Operators for their work. These reward mechanisms are designed to ensure fair compensation while promoting high-quality service.

Key aspects of the rewards system:

• Flexible distribution: The SatLayer ecosystem implements a flexible and efficient rewards distribution system that allows Services to incentivize Operators based on their performance and contribution.
• Customizable criteria: Services calculate rewards for each Earner (Operators and Stakers) based on their own criteria and discretion.
• Efficient distribution: Rewards are distributed through the ecosystem’s rewards contract, ensuring transparency and reliability.
• Alignment of interests: Properly designed reward structures help align the interests of Services and Operators, creating a sustainable ecosystem where both parties benefit from successful validation.
• Competitive advantage: Services that provide competitive and fair rewards are more likely to attract high-quality Operators, enhancing the security and reliability of their operations.

Programmable Slashing

To ensure honest behavior and maintain the integrity of the ecosystem, Services can implement slashing mechanisms that penalize Operators for malicious behavior or performance failures. This programmable slashing capability is a powerful tool for Services to enforce their requirements and protect themselves from potential harm.

Key aspects of the slashing mechanism:

• Customizable parameters: The slashing parameters, including the maximum percentage that can be slashed and the resolution window duration, are defined by the Service
• Explicit acceptance: Parameters must be explicitly accepted by the Operator, ensuring they are fully aware of the potential penalties before establishing a relationship
• System guardrails: The system includes guardrails to prevent malicious or disproportionate slashing, helping maintain trust in the ecosystem

These mechanisms help maintain trust in the ecosystem while still providing Services with the tools they need to enforce proper behavior from their Operators. See Programmable Slashing for more indepth information on the slashing mechanism.