The SFT Protocol is a decentralized platform designed to bridge physical infrastructure with Web3 technologies, creating a comprehensive Decentralized Physical Infrastructure Network (DePIN). It aims to integrate various hardware and data services into a single decentralized autonomous organization (DAO), addressing the growing demand for computational resources in emerging technologies.

Overview

The SFT Protocol is built on the concept of a "Chain of Chains," serving as a marketplace for transactions using coins from various blockchain networks. Its primary goal is to create a sustainable and flexible framework for integrating diverse hardware and data services. The protocol utilizes an innovative auction system to ensure continuous and organic growth, while also providing consistent revenues to stakeholders and the DAO.

Key features of the SFT Protocol include:

1. Liquid staking derivatives for long-term locked assets
2. Wrapped coins from integrated chains
3. Full node RPC services
4. Decentralized storage, bandwidth, and computing
5. AI computing services
6. GPU rendering (public and private)
7. Encrypted and validatable data collection from IoT and other sources

Core Components

DAO Smart Contract

The DAO serves as the governing body of the protocol, with the following responsibilities:

• Owning the treasury and receiving proceeds
• Voting on new projects, partners, integrations, and proceed distribution
• Staking and governance mechanisms for DAO token holders

Liquid Staking Derivatives and Wrapped Coins

The protocol supports:

• LSD tokens for integrated staking networks (e.g., SFT for Filecoin)
• Wrapped tokens from other blockchains (e.g., Bitcoin)

Liquidity Bond Auctions

A portion of hardware proceeds is auctioned off in exchange for liquidity provider (LP) tokens. This mechanism ensures:

• Healthy organic growth of the protocol
• Facilitation of LSD, wrapped, and DAO token functionality

Decentralized Hardware Ownership

The protocol incorporates three models for hardware ownership:

1. Direct Model: Uses service provider contracts for colocated equipment in existing datacenters
2. Distributed Model: Integrates partner services and networks
3. Decentralized Model: DAO-owned nodes on its own Layer 1 blockchain

Public Service Deployment

The protocol facilitates paid digital services using the integrated hardware, enabling transactions and verification of service fulfillment.

Revenue Streams and Distribution

Revenue generated from various sources (e.g., Bitcoin mining, AI services) is distributed as follows:

• 30% to staked SPD (DAO token) holders
• 20% to treasury (16% for marketing, 4% for equipment)
• 37.5% auctioned off for SPD+USDC Liquidity
• 12.5% auctioned off for SFT+USDC Liquidity

These percentages can be modified through DAO voting.

LP Auctions & Bonding

The protocol implements an innovative LP bonding mechanism, combining Protocol Owned Liquidity with external revenue generation. Key aspects include:

• Bidding on discounted proceeds (LSD tokens, wrapped coins, or USDC)
• Two reward pools: one for DAO Token + USDC LP, another for USDC + associated LSD Token or Wrapped Coin LP
• Auction process to determine the winning bids and distribute rewards
• Bonded LP tokens purchased go to the DAO Treasury

Future Developments

The SFT Protocol has a comprehensive roadmap divided into four tracks:

1. Infrastructure Development
2. DAO Development
3. Service Development
4. L1 Development

Future plans include transitioning to an application chain, which will enable direct integration of hardware and services for use and data exchange. This Layer 1 chain will validate encrypted data from hardware using ZK-Proofs, allowing for secure and scalable data and computation exchange.

In conclusion, the SFT Protocol aims to create a robust, decentralized infrastructure network that can adapt to the rapidly changing demands of the DePIN marketplace. By leveraging innovative mechanisms like LP auctions and flexible hardware integration, the protocol seeks to become the largest and most liquid hardware marketplace in the Web3 space.