Update whitepaper.md

Author: mattjhawken

whitepaper.md

@@ -1,15 +1,12 @@
 # Smartnodes: A Modular Decentralized Resource Sharing Network
 ###### Version 0.1 Oct 2025 (under active development) 
 
----
-
 ### Table of Contents
-0. [Abstract](#abstract)
+
 1. [Introduction](#1-introduction)
-2. [Architecture Overview](#2-architecture-overview)
-   - 2.1 [Peer-to-Peer Framework](#21-peer-to-peer-framework)
-   - 2.2 [Smart Contract System](#22-smart-contract-system)
-   - 2.3 [Tokenomics](#23-tokenomics)
+2. [Architecture](#2-architecture)
+3. [Smart Contract System](#3-smart-contract-system)
+4. [Tokenomics](#4-tokenomics)
 
 ---
 
@@ -42,13 +39,58 @@ Smartnodes provides the infrastructure and tools to build diverse resource-shari
 and hardware capabilities. This creates an ecosystem where token rewards flow only to networks that generate user demand, ensuring the 
 network and native token continue to derive value from real utility.
 
-## 2. Architecture Overview
+## 2. Architecture
 
 Smartnodes combines a smart contract system for rewards, reputation, and governance with a standardized node framework that simplifies 
 secure peer-to-peer (P2P) resource sharing. This design optimizes for both scalability and security, enabling high-throughput computational 
 workloads while maintaining security and economic incentives through blockchain infrastructure.
 
-### 2.1 Peer-to-Peer Framework
+```mermaid
+flowchart LR
+    %% Core Components
+    A["Smartnodes Smart Contract"]
+    B["Dedicated Python Libraries"]
+    A <----> B
+    
+    %% System Roles
+    C1["User"]
+    C2["Validator"]
+    C3["Worker"]
+    
+    %% Connect core to roles
+    B --> C1 & C2 & C3
+    
+    %% User actions
+    C1 --> D["Submit Job"]
+    D --> G["Send Job Payment"]
+    G --> J
+    
+    %% Validator actions
+    C2 --> E["Listen for Jobs"]
+    E --> H["Execute Job"]
+    E --> I["Mint Rewards"]
+    I --> J["Distribute Rewards"]
+    H --> J
+    
+    %% Worker actions
+    C3 --> F["Connect to Validator"]
+    F --> H
+    
+    %% Styling
+    classDef core fill:#ffddff,color:black,stroke:#333,stroke-width:2px
+    classDef roles fill:#ddddff,color:black,stroke:#333,stroke-width:1px
+    classDef userAction fill:#a8d5ff,color:black,stroke:#0066cc,stroke-width:2px
+    classDef validatorAction fill:#b8e6b8,color:black,stroke:#2d862d,stroke-width:2px
+    classDef workerAction fill:#ffd9a8,color:black,stroke:#cc7a00,stroke-width:2px
+    classDef shared fill:#e8e8e8,color:black,stroke:#666,stroke-width:2px
+    
+    class A,B core
+    class C1,C2,C3 roles
+    class D,G userAction
+    class E,I,J validatorAction
+    class F workerAction
+    class H shared
+```
 
 Smartnodes provides a Python-based node framework that handles all essential components for building resource-sharing networks. At the core 
 of this is the smartnode python library, which manages data transmission between network participants, implements smart contract-secured 
@@ -57,19 +99,19 @@ ensures data availability, storage, and replication across the network without r
 
 The network defines three distinct participant types, each serving specific functions within the ecosystem:
 
-#### Validators
+### Validators
 Validators operate across all peer-to-peer networks and serve as the critical coordination layer. They provide API access to network 
 resources, maintain network data integrity, and facilitate interactions between users and workers. Beyond these coordination functions, 
 validators conduct proof-of-work verification on completed tasks and aggregate off-chain data for on-chain updates, including job 
 completions and worker contributions. Since validators commit reward distributions and job completions on-chain, they maintain the 
 active off-chain networks, and additions to the validator node framework can dynamically add and remove networks as needed.
 
-#### Workers
+### Workers
 Workers are specialized nodes that execute computational tasks for users. They maintain continuous availability for job assignment and 
 ensure efficient completion of user requests through validator coordination. The worker framework is designed to be flexible, allowing 
 modifications to accommodate different job types and endpoint hardware configurations. 
 
-#### Users
+### Users
 Users interact with the network to access computational resources by submitting job requests through validators and establishing direct 
 connections with workers for task execution. This architecture enables users to access pooled computational resources across the network without managing infrastructure directly.
 
@@ -91,24 +133,40 @@ then vote on submitted proposals, and the first proposal to receive 66% of activ
 for workers and validators. This mechanism balances efficiency with decentralized consensus, ensuring that network state updates reflect accurate 
 off-chain activity.
 
-### 2.2 Smart Contract System
+## 3. Smart Contract System
 
 Smart contracts handle payments, reputation updates, and governance decisions, providing immutable records and dispute resolution mechanisms. These contracts are deployed on Base, an Ethereum Layer 2 scaling solution that provides the scalability necessary for high-frequency network operations while maintaining security through Ethereum's established infrastructure. The ecosystem consists of four main contracts that work together to coordinate network operations.
 
+### SmartnodesCoordinator
+
 The SmartnodesCoordinator serves as a multi-signature contract controlled by collateralized validators that coordinate the updating of job information, worker participation, and rewards. At testnet launch, participation requires 1,000,000 SNO tokens as collateral, though this requirement is subject to adjustment based on network conditions and governance decisions. The Coordinator implements a periodically rotating validator set for enhanced security, preventing long-term capture of coordination functions by any single group. Its proposal creation and voting mechanism enables efficient off-chain data aggregation while maintaining decentralized consensus through a 66% approval threshold for state updates. When validators create proposals containing aggregated off-chain data including job completions, worker performance metrics, and network health indicators, other validators vote on the integrity of these proposals. Successful proposals that achieve greater than 66% approval trigger updates to the Core contract and automated token reward distribution to participating validators and workers.
 
+### SmartnodesCore
+
 The SmartnodesCore contract serves as the central repository for network state and access control mechanisms. It stores node credentials and reputation scores, enabling the network to maintain quality standards through transparent performance tracking. The Core contract implements access control for peer-to-peer communications, ensuring that only verified and reputable nodes can participate in sensitive network operations. Additionally, it processes job requests for large-scale computational tasks, coordinating resource allocation across the distributed network.
 
+### SmartnodesERC20
+
 The SmartnodesERC20 contract implements the standard ERC-20 token interface to facilitate network payments and incentives. Reward claims are processed through a Merkle proof claiming mechanism during Coordinator state updates, enabling efficient distribution of rewards to large numbers of participants without excessive gas costs. The token serves multiple functions within the ecosystem, including payment processing for network services, validator collateral management to ensure accountability, block reward distribution to incentivize continued participation, and governance participation through the SmartnodesDAO.
 
+### SmartnodesDAO
+
 The SmartnodesDAO enables decentralized governance for network upgrades and parameter adjustments, ensuring that the network can adapt to changing conditions and community needs without centralized control. Governance capabilities include fine-tuning of economic and technical parameters such as state update intervals and staking requirements, as well as upgrade capabilities for Core or Coordinator contracts. While the token contract is immutable to ensure economic predictability, the current testnet implementation allows Core contract upgrades to facilitate iterative development. Voting power within the DAO is proportional to token holdings, aligning governance influence with economic stake in the network's success.
 
-### 2.3 Tokenomics
+## 4. Tokenomics
 
 Smartnodes implements a carefully designed tokenomics model to ensure fair distribution and sustainable participant incentives. Reward emissions begin upon testnet launch, with any claimed rewards eligible for claiming on mainnet following the network's production deployment. This approach allows early participants to earn rewards while helping test and secure the network before full mainnet launch.
 
 Rewards are emitted periodically and follow a yearly 40% reduction in the emission rate until reaching a tail emission. This emission schedule was chosen to balance early participant rewards with long-term sustainability, ensuring continued incentives for network participants to operate nodes even when processing free jobs. The declining emission rate prevents excessive inflation while maintaining sufficient rewards to attract and retain network participants as the platform matures.
 
 The initial token distribution allocates tokens to genesis nodes, with each genesis node receiving the minimum collateral requirement for validator operation. The three genesis nodes each receive 1,000,000 SNO tokens, totaling 3,000,000 SNO in the initial distribution. This genesis allocation bootstraps the network with sufficient validator capacity to handle initial coordination and consensus functions.
 
-State update rewards begin at 128 tokens per state update, with updates occurring at minimum 5-minute intervals. This reward structure compensates validators for their coordination work and the computational resources required to aggregate off-chain data and maintain network state. The emission rate reduces by 40% every approximately 12 months, gradually decreasing the inflation rate as the network matures and transaction fees potentially supplement validator income. After the series of reduction periods, the emission rate reaches a tail emission of 2 tokens per state update, representing approximately 1.39% annual inflation. This tail emission ensures perpetual incentives for network participation while maintaining a predictable long-term token supply trajectory. The emission model creates a balanced economic environment that rewards active network participation during the growth phase while transitioning to sustainable long-term incentives that preserve token value for all stakeholders.
+State update rewards begin at 45,000 tokens per state update, with updates occurring at 8-hour intervals. This reward structure 
+compensates validators for their coordination work and the computational resources required to aggregate off-chain data and maintain 
+network state. The emission rate reduces by 40% every approximately 12 months, gradually decreasing the inflation rate as the network 
+matures and transaction fees potentially supplement validator income. After the series of reduction periods, the emission rate reaches a 
+tail emission of 3,360 tokens per state update, leading to a perpetually decreasing inflation rate starting at ~2%. This tail emission 
+ensures perpetual incentives for network participation while maintaining a predictable long-term token supply trajectory. The emission 
+model creates a balanced economic environment that rewards active network participation during the growth phase while transitioning to 
+sustainable long-term incentives that preserve token value for all stakeholders.
+