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Validator & Delegator Rewards

peaq’s tokenomics are designed in a way to incentivize different network participants. Validators play an important role in the network as they not only maintain the state by running a full node, but also propose blocks - which are later validated by the Relay Chain validators.
  • Validators together with delegators receive 40% of the total rewards, consisting of new blocks being minted and transaction fees paid by the network users.
  • The active validator set consists of 42 validators, who are proposing new blocks in a round-robin manner. Any new block is being proposed by a single validator.
  • The active validator set renews every round (2400 blocks or approximately every 4 hours).
The mechanism of selecting validators in the active set is based on the total stake of the validator itself, plus the stake of all of its delegations. If the active set is full and the new candidate has the exact same stake as the last member of the set (by total stake); the system favors the validator that has been in the pool the longest. This way we can ensure that only the validators with the highest total stake are periodically selected to be eligible block authors. Delegators stake tokens on the validator of their choice, trying to select honest and well-performing validators. One validator can be supported by 100 delegators. If there is a 101st delegator who would like to delegate to the same validator, then 100 delegators are selected based on the highest stake, and the delegator with the lowest stake is removed from the delegator list.

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New Token Economy (v2)

The new token economy introduces significant changes, including the ability for collators to set their commission rates, which can range from 0% to 100%.

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Reward Calculation

The new token economy introduces a reward system based on total network stake rather than individual validator stakes. The following factors determine block rewards:
  1. Validator commission rate
  2. Number of blocks produced by the validator
  3. Total stake of all collators and their delegators
  4. Individual stake amount
The reward calculation for collators and their delegators is detailed below. 
PotBalance = (Block Reward Per Block * Blocks in Session) + TX Fees

TotalStake = SUM(# of authored blocks * (author's stake + SUM(author's delegator's stake)))

Delegator's Reward = PotBalance * (# of authored blocks * (1 - author's commission) * (Delegator's Stake / TotalStake))

Collator's Reward = PotBalance * (# of authored blocks * (Author's Stake / TotalStake)) + (PotBalance * (# of authored blocks * Author's Commission) * (total delegator's staking number in this validator / Total staking number))
In other words, the calculations are carried out as follows: 
Total session reward = Block reward * Collator_Delegator percentage * session length

Total staking number = SUM(validator's generated blocks * (validator's stake + SUM(validator's delegators' stakes)))

Delegator's reward = Total session reward * validator's generated blocks * (1 - validator's commission) * (delegator's stake / Total staking number)

Validator's reward = (Total session reward * validator's generated blocks * validator's stake / Total staking number) + (Total session reward * validator's generated blocks * validator's commission * total delegators' stake / Total staking number)

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Reward Snapshot

In our design, no matter the commission rate, the change of the staking number, and the delegator joining or leaving, all of them will affect the next session - not this session. For example:
  1. The validator changes the commission rate from 5% to 10% in session X. The reward calculation will follow 5% in session X, and the 10% will be affected in session X+1.
  2. The delegator stakes 100 tokens more on session Y. The increment of 100 tokens takes into account the session Y+1 only.
  3. The delegator joins session Z; his staking number is involved in the session Z+1.

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Reward Distribution

To enhance scalability, rewards are now distributed in batches per session rather than per block. Rewards are accumulated and calculated based on the session, then distributed in the following session. For instance, blocks created by collators A, B, and C during session X will have their rewards distributed in session X+1.