Validator Economy

Validator - Economy

In this wiki, we may use event and event block interchangeably. Do not confuse event block and block - those are different terms.

Economy scores

A validator's reward is weighted by 2 independent numbers: transactions reward weight and base reward weight.

• transactions reward weight: share of transaction fees that the validator will receive at the end of epoch.
• base reward weight: share of base reward (newly minted coins) that validator will receive at the end of epoch.

Reward weights are calculated at the end of each epoch using the formulas below:

• transactions reward weight = (originated fee + 0.45 * sent fee) * uptime
• base reward weight = stake * (uptime ^ 2)

where:

• stake is the sum of validator’s stake and delegations to validator
• uptime is the total number of nanoseconds the validator was online in the epoch (i.e. was creating events). It's also called validation score.
• originated fee is the total fees of transactions that the validator originated in the epoch ("originated" means "included into event"). It's also called origination score.
• sent fee is the total fee of transactions that the validator and his delegators have created (their impact is weighted by their stake amount/delegation amount) within the last 30 days. It's also called Proof Of Importance (PoI)

A list of properties which may be concluded from formulas:

• originated fee may be roughly estimated as stake share * uptime * network fee per nanosecond. If we substitute estimation into transactions reward weight formula, then we'll get (stake share * uptime * network fee per nanosecond + 0.45 * sent fee) * uptime. If we also assume that sent fee is 0, then we'll get a formula proportional to base reward weight.
• Uptime influences reward non-linearly. If a validator has 50% uptime in epoch, then he'll receive ~4 times less rewards in that epoch.
• stake influences base reward linearly, and influences transactions reward weight not linearly because of sent fee influence.
• sent fee influences transactions reward weight for 30 days, which also may be seen as a discount for sent transactions.

Rewards distribution

Rewards distribution is fully controlled by an SFC contract. It's worth to mention that the SFC contract can be upgraded by governance at any time without hardfork.

30% of transaction fees is held by SFC contract (those funds aren't used). Remaining 70% of transaction fees are distributed between validators proportional to their transactions reward weight.

Base rewards = epoch duration in second * base reward per second. At the launch, base reward per second is 16.483988584467592592 FTM per second. Hard limit which SFC contract cannot exceed is 32.967977168935185184 FTM per second.

Base rewards are distributed between validators proportional to their base reward weight.

Reward between validator and his delegators is distributed proportional to their stake, with exception that delegator pays 15% of his rewards to validator (as a validator commission).

Downtime

Downtime is calculated as a difference time of last block-time of last block where validator had at least 1 event.

Downtime has 2 numbers: number of missed blocks and time of missed blocks. If was missed only <= 4 blocks, then downtime should be interpreted as 0, because it may be possible that validator does emit events, but they are located higher in DAG than last Atropos.

Uptime in an epoch is calculated differently. It's reset to 0 every epoch, and during processing of i'th block, uptime is incremented by block[i].time-block[i - min(number of missed blocks, 4)].time.

According to the formulas above, missing of no more than 4 blocks in a raw doesn't affect uptime.

Block isn't confirmed by events of this frame, but by events from future frames (it's aBFT, not sync BFT). Every event participates in virtual elections from 2+ previous frames (typically 2 or 3, but it's not limited above). It's justifies why number 4 was chosen - typically virtual election doesn't take more than 4 frames.

If validator has downtime >= 72 hours (but not less than 1000 blocks), then he's permanently pruned from validators list. In this case, validator and delegators have to withdraw their stake via SFC contract using the withdrawal procedure.