Sponsors pay to secure the operation of a stream. They pay DATA tokens into a smart contract called a Sponsorship. Essentially, the Sponsor says “I want to spend X amount of DATA tokens over a period of time T to improve the security and stability of stream S”. The Sponsorship contract releases the funds over time to Operators who have joined the Sponsorship. It should be noted that a stream can have many Sponsors, and they could be anyone at all, including the Publisher(s), Subscribers, or a third party.
They’re designed to improve on the best effort guarantees that the Streamr protocol has without such incentives. The agreement dictates that DATA tokens will be distributed to Operators, over time, if they fulfill their promise to provide stable bandwidth to the sponsored stream. If they break that promise, they’ll lose tokens. Sponsorships are a close cousin to Web2 Service Level Agreements (SLAs). If all goes to plan, a service is offered and accepted with payment flowing from the demand side to the supply side of the market.
A Sponsorship is a smart contract funded by Sponsors that releases funds over time to Operators who have joined it.