Incentives
In a decentralized network, the more workers you have, the lower the rewards per worker, highlighting the balance between participation and profitability.
The block production is incentivized with minted rewards for each finalized block of the coordinated network. Earned coins are distributed to workers every epoch. The annualized minted amount depends on the total amount of stake coins. You can see on the screen the formula for how to calculate it. Our optimal value is considered to be 20%, which is the maximum annualized reward rate at the total stake of 9.6 billion. Hence, we can now calculate the maximum annualized reward rate at different values of S. The formula is displayed on the screen.
The figure on the screen depicts the maximum annualized reward rate that could be generated by stakeholders as block rewards at various total stake amounts. When there is a small number of workers, a huge annualized reward rate can be assumed. For instance, with 6.6 million stake coins, the maximum reward rate is expected to be 765%. This should contribute to the expansion of the network, which leads to greater decentralization. However, as the number of workers increases, the reward rate decreases sharply, reaching its optimal value of 20% with 9.6 billion stake. It is important to note that this rate is for preliminary tests and can differ in the mainnet.
A mead reward for a produced block can be obtained by considering the values of the annualized mead amount and slot times. Slots per year are calculated as the number of seconds in the year divided by the slot time. Therefore, the mead reward for a block is the annualized reward rate divided by the number of slots per year. On the screen, you can see the formulas. It is crucial to note that the total time sum of all slots of the coordinating network per year is equal to V. Furthermore, the amount of mead reward per block will be split among the committee leader and members that produce the block in the coordinating network.
In the tables, one can see the calculations of the rewards. The first table refers to the period of one epoch, and the second one refers to the period of one year. The optimal number of workers we consider here is 3 million, which corresponds to 9.6 billion total stake. Our optimal value remains the same as discussed before. The first four calculated rows with R, V, B, and W are derived from the formulas I showed earlier. The total coordinators' rewards are the reward per slot multiplied by the number of slots for the chosen period. The average reward is simply the total divided by the number of coordinators.
Now, let's move to the website. We can see the real situation for the testnet. The workers can miss their returns in reality; that is why the real number is less than the maximal one. The current number of workers is 2,132. Projected earnings per worker are calculated as shown in the previous table. Here, we can see the maximal, average, and minimal workers' earnings, for example, for each epoch. This chart reflects the number and statuses of workers. Additionally, this chart shows the workers' total balances and earnings; as the income becomes bigger, the balance also increases. Lastly, this chart shows changes in reward amounts for all workers.