What is The Service Nervous System: Beginner's Guide

Recently, the Head of the DFINITY Foundation, Dominic Williams, discussed his plans for implementing the Service Nervous System in a series of social media posts. In the future, the SNS will greatly assist dApp entrepreneurs in managing open internet services. So, what is the Service Nervous System?

Introduction to Service Nervous System

The concept of the Service Nervous System has already been discussed in a Dfinity Medium article written by the founder, Dominic Williams, entitled "Announcing the Internet Computer “Mainnet” and a 20-Year Roadmap". However, the term SNS was not alluded to in the article.

The term 'Service Nervous System' only really came into being when one of the dApp platforms on the Internet Computer network called OpenChat published its Medium article entitled "OpenChat: A Truly Decentralized Alternative to WhatsApp."

The article explains that when OpenChat has transitioned into an open internet service, early adopters and contributors will be rewarded with OpenChat tokens. These tokens will be used to participate in the governance of the service that adopts the Service Nervous System model derived from the Internet Computer Network Nervous System.

How is SNS different compared to NNS

Basically, the way the Service Nervous System (SNS) works is very similar to the concept of how the Network Nervous System (NNS) works on the current Internet Computer network. Functions like voting, proposal submission, and token locking on neurons will also be similar to what will be on SNS.

The difference between the SNS and NNS lies only in the tokens used in the governance system. In the NNS, users must use ICP tokens to participate, whereas, in the SNS model, each dApp can issue their governance tokens to run within their dApp governance system.

SNS allows issuance of governance token

Perhaps the best analogy to use to explain this is where Dfinity Community is a company, i.e., "DC Company." Currently, the services provided by DC are still managed by DC's internal staff, like a closed company.

Later, when the Service Nervous System is available, the DC Company could register itself as a public company (this term is called the 'open internet service'). It means that the control of DC companies is no longer carried out by the company's internal team but can be carried out by the people who hold the DC's governance token.

After Issuing the tokens, they are distributed

Let's say DC's corporate governance token is named DC Token, or DCT. The DCT distribution scheme will then be regulated, such as the allocation for private or public sales, the share for early founders, and what percentage will be given away free for promotional purposes.

Tokenized services, Governance, and Voting rewards

The DCT can be used for utility functions such as payment transactions and transfers when the distribution process is complete. In addition, DCT holders can also have the opportunity to be part of DC's corporate governance, as described previously.

To participate, DCT holders must stake a certain amount of DCT, which is then locked for a certain period. The greater the amount of DCT at stake, the greater the influence in making decisions in the DC company.

These participating DCT holders will also be rewarded for their participation in locking their owned DCT tokens and taking part in DC's corporate governance system, such as determining whether a proposal is eligible for acceptance or not.

This model is not much different from the NNS model, where we can lock our ICP coins into neurons for staking with a time limit option of up to 8 years. We then have the power to participate in voting actively, and finally, get rewarded for our active participation in governance in the NNS by spawning new ICP.

Governance tokens of Open Internet Services

This aforementioned token system is commonly known as a 'governance token.' Of course, when a cryptocurrency has the status of a governance token, its function is more valuable than just a utility token.

Despite the advantages, of course, there are disadvantages. Since this process depends on the holder with the most token holdings to influence a decision, it also doesn't necessarily mean that they can deliver the best voting results in line with the expectations of all DCT holders, for example.

Conclusion

Lastly, the SNS concept is still in the planning stage after a proposal by Dominic Williams and will later be proposed to the NNS. Because there are not many details about the SNS concept, one question that might arise in our minds is:

“Once this SNS model is available, will ICP tokens still have leverage for admin fees, or will it be completely controlled by the governance token itself?”

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