Interpreting the Saga Project: High-frequency, Light-asset Project Solutions

Since its launch on Binance Launchpool, SAGA has attracted over 13 billion US dollars in funding, making it the project with the highest participation in Binance Launchpool history. What is the allure of SAGA that can attract such a large amount of funding？

Introduction

SAGA is a Layer 1 protocol that allows developers to automatically launch specialized chains, called “Chainlets,” which are compatible with different virtual machines, can run in parallel, and are interoperable, providing applications with unlimited scalability. Saga enables developers to start Chainlets with just a click of a button through shared security, cutting-edge validator orchestration, and standardized automated CI/CD deployment pipelines across any type of blockchain virtual machine.

Developers using SAGA can effortlessly launch dedicated blockchains or mini-blockchains similar to deploying smart contracts. SAGA's network is best suited as a scalable layer for web3 infrastructure. SAGA offers the following features:

• Launch chains without upfront costs

• Provide predictable block space pricing for developers

• Automatically deploy single-tenant applications to their own chain

• Offer developers' applications a dedicated shared security chain, ensuring high throughput without relying on other applications using Saga, and making upgrades and congestion mitigation easy.

SAGA uses shared security to automatically instantiate fully decentralized proof-of-stake chains. Each Saga Chainlet is protected by shared security from the Saga mainnet validators.

In less than 2 years, the SAGA ecosystem has grown to 350 projects based on its protocol, with 80% being games. SAGA has also established partnerships with Polygon, Avalanche, MarbleX, Com2uS, and Celestia to automatically scale their infrastructure using Chainlets.

Tokenmonics

According to information released by Binance, the token allocation ratio is as follows:

The initial circulating supply consists of only 4.5% from Launchpool and 1.5% from airdrops, while the shares from the ecosystem and foundation can be largely ignored.

Business Model

The essence of SAGA's business model is to distribute block space to downstream demand parties, and a key issue involved is how to price it. SAGA adopts a unique set of pricing models:

(1) Assuming there are initially a = 12 validators, SAGA wishes to select 8 of them for delegated validation;

(2) First, SAGA selects a certain number of validators to enter the bidding phase based on their staking rate, for example, p = 10. Validators ranked 11th and 12th will be eliminated;

(3) Next, the 10 validators proceed to submit their bids. They are sorted from lowest to highest bid. Among them, 8 validators are selected for delegated validation, and the price is determined by the highest bid among these 8 validators. Validators ranked 2nd and 7th with bids of $6 and $8 respectively are eliminated, leaving the remaining 8 validators to qualify, and they agree to price at $5.

In simple terms, this bidding mechanism allows validators to offer block space at the most affordable price possible. In practice, the pricing will be close to [cost + a small profit].

Additionally, SAGA's fee structure differs from other public chains. Users do not need to directly pay network fees, and applications can independently determine their own charging methods (such as subscription-based, one-time purchase, advertising-based, or even completely free), providing more flexibility.

The infrastructure provided by SAGA and its business model can meet the demands of high-frequency trading and light-asset projects, such as Gamefi and Deso-type projects.