This article was first published on Loom Network - Medium
We’ve been talking a lot about how validators play a critical role in ensuring the strongest possible security and performance for PlasmaChain.
As you might imagine, it’s not a trivial undertaking for them to pull that off. Running a full validator node requires serious technical expertise and investment, so in exchange for their services, we need to make sure they’re rewarded for their efforts.
Initially, we announced that PlasmaChain validators would be rewarded based on the fees generated on the network — DApp hosting fees paid by third-party developers, marketplace commissions, and Plasma transfer fees on payments.
However, just like how Bitcoin and Ethereum have block rewards and don’t rely solely on transaction fees, PlasmaChain will also have a pool of guaranteed block rewards that are released over time to the network validators.
To fund this pool of block rewards for years to come, Loom Network will be contributing the majority of the company’s remaining LOOM token reserve and releasing it over time.
In fact, 300M of the 350M remaining token pool will be put to work! You can think of that 300M LOOM as an “inflation supply”. (While the number of tokens is fixed at 1 billion, these 300M reserve tokens have never entered the circulating supply before now).
These block rewards will guarantee that validators can be profitable while the network is still being bootstrapped, until fees from DApp hosting and marketplace commissions are enough to cover the costs of securing PlasmaChain.
Let’s dig into some of the details and numbers around the block reward payout schedule, reward percentages, and lock-up bonus incentives…
Block Reward Payout Schedule
Each year, a maximum of 20% of the company’s remaining token pool will be paid out to validators.
The payments will be made every election cycle (2 weeks), and divided between ...
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Loom Network - Medium