> For the complete documentation index, see [llms.txt](https://paper.yamata.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://paper.yamata.io/security-and-incentives.md).

# Security and Incentives

**A) TRUST ARCHITECTURE**

Our optimistic security model assumes honest operation but verifies everything. Every trade, every order, every execution is subject to permissionless validation by the Guardian Network. Like a decentralized audit system, it ensures transparency without sacrificing performance.

The Guardian Network provides continuous oversight through multiple layers:

* Real-time monitoring of order execution 
* Verification of epoch commitments 
* Challenge capabilities for any discrepancy 
* Economic penalties for misbehavior

This creates a system that's "unable to be evil"—not through blind trust, but through mathematical guarantees and aligned incentives.

**B) ECONOMIC MODEL**

Our fee structure aligns interests across all participants:

* Maker/taker model rewards liquidity provision
* Volume-based tiers encourage active trading
* Clear fee distribution creates predictable economics

Transaction fees flow through a carefully designed distribution:

* 10% to Guardian Nodes for validation 
* 10% to Yamata for operations 
* 20% to Future Reward Pool 
* 60% to Treasury (locked for 14 days)

Guardian Nodes earn through multiple streams:

* Base rewards for active validation 
* Share of transaction fees 
* Substantial rewards for catching discrepancies 
* Opportunity to claim 
* Yamata's locked revenue on successful challenges

**C) REPUTATION SYSTEM**

Guardian Node effectiveness is tracked through a dynamic reputation system:

* All nodes start with 100 base points 
* Successful validations increase score 
* Failed challenges reduce points Inactivity causes score decay

Reputation directly impacts operations:

* Higher scores mean lower slashing risk (5-100% range) 
* Better reputation enables longer validation windows 
* Reward multipliers scale with reputation 
* Exclusion periods for low scores (3 hours to 7 days)

This comprehensive security model creates a self-reinforcing cycle: Guardian Nodes are incentivized to catch manipulation, while Yamata is incentivized to operate honestly to retain revenue. The result is a system where security emerges from economic rationality rather than trust.