Validator Rewards and Fees
Validators declare a set of funding streams that comprise the destination of all of their staking rewards. Each funding stream contains a rate and a destination address . The validator’s total commission rate is defined as , the sum of the rate of each funding stream. cannot exceed 1.
The spread between the base reward rate and the reward rate for their delegators is determined by the validator’s total commission , or equivalently .
Validator rewards are distributed in the first block of each epoch. In epoch
, a validator whose delegation pool has size
dPEN receives a
commission of size
PEN, issued to the
To see why this is the reward amount, suppose validator has a delegation
pool of size
dPEN. In epoch , the value of the pool is
PEN. In epoch , the base reward rate causes the value
of the pool to increase to
Splitting as , this becomes
The value in the first term, ,
corresponds to the portion, and accrues to the delegators. Since , this is exactly , the new
PEN-denominated value of the delegation pool.
The value in the second term, , corresponds to the portion, and accrues to the validator as commission. Validators can self-delegate the resulting
PEN or use it to fund their operating expenses.
Transaction fees are denominated in
PEN and are burned, so that the value of the fees accrues equally to all stake holders.
allow transaction fees in
dPENwith appropriate price adjustment, but only in transactions (e.g., undelegations, voting) that otherwise reveal the flavor of
dPEN, so that there is no additional distinguisher?