Node operator rewards and incentives

To ensure incentive eligibility, random periodic reviews will be conducted to check reward entitlements. Nodes must be available and detected on the network during any of the network candidate eligibility checks for continued unlocking of vested tokens. Nodes that are not online during this check may result in forfeiture of a portion of the node operator’s remaining unvested tokens. If the node has been offline for an extended period of time, the forfeiture may extend to the remaining unvested tokens, allowing incentives to be allocated to a different (new) Node Operator.

It is a requirement that each Node Operator, whether it runs a Governor or a Candidate, will need to stake 100,000 RBNT to be eligible to participate in Mainnet. An allowance for this requirement is included in the Early Node Operator Incentive provided to a maximum of the first 600 Node Operators selected to join the network. Node Operators will be incentivised (in accordance with the regulatory framework and laws that exist in the Node Operator’s jurisdiction) to stake additional RBNT for longer durations. In particular, if authorised to do so, we will use the following reward r for x coins staked for a duration t:

Where S is the total minted coins (10B), Sj is the total number of coins minted till year j, a ≤ 1/52 to guarantee that the amount of staked coins is lower than Sj, the minimum staking duration is 2 weeks, the maximum staking duration is 52 weeks and the min_stake_amount is 100,000 RBNT. Hj < 1 is a predetermined, increasing and concave function with the asymptote 1 such that:

Unlike competitive blockchains where only one node, which imposes its block to the system, gets all the transaction fees in its block, Redbelly is collaborative and shares the transaction fees among all Governors, Candidates, Identity Partners and the Redbelly DAO. This section will focus on the portion of transaction fees that are allocated to Governors and Candidates.

Due to their important role in the consensus protocol, the Governors earn a larger portion of the transaction fees than the Candidates. In particular, each Governor will get a portion of the transaction fee that is twice as much as the portion of the transaction fee that a Candidate will receive. 

Transaction fees will be paid in RBNT but will be stable in USD terms, providing certainty to users. The base fee b for a given simple transaction (e.g., equivalent to 21,000 gas) will consist of the total cost c of running the nodes and a competitive profit margin 𝛼 ≥ 0 that generates a profit margin to candidates such that:

The transaction fee b for a simple transaction of 21,000 gas will typically be fixed to USD 0.01. Under the conditions where the number of transactions per month of X=10,000,000 in a stable network configuration of n=600 nodes and m=100 governors (i.e., n-m=500 candidates) the monthly reward allocated to a candidate will exceed the assumed monthly approximate cost C of USD $120 for each candidate to run a node: 

The network may however enter a surge pricing to prevent spams where the base fee will purposely be increased for a limited period of time to discourage nodes from flooding the network with requests.

Note that Redbelly expects more complex transactions than the simple transaction requiring 21,000 gas above. Based on Ethereum, with an average transaction requiring approximately 103,000 gas at the time of writing, the transaction fee revenue would be approximately USD $0.049 - higher than USD $0.01. This fee would be split across all Governors, Candidates, Identity Partners and the Redbelly DAO. In the example above, the candidate’s rewards would now be higher.

Note that the examples above are examples only, and are not a guarantee of transaction fee reward of any specific amount.

For more information on how transaction fees are distributed across the network's stakeholders, see Transaction fees distribution.

Redbelly will reserve the right to slash partially, or fully, the stake of misbehaving participants if detected as such.

This is to ensure the integrity and security of the network. The severity of a penalty will be determined by the severity of the action and may result in being removed from the network.

For more information on node governance, see Network governance.