How to calculate rewards

Reward calculation

Currently rewards are calculated this way:

  • Fetch iglobal by calling getNetworkInfo method of chain contract (cx00..00) divide by 10**18 (to convert from units in loop)
  • Fetch iprep by calling getNetworkInfo method of chain contract (cx00..00)
  • Fetch totalPower by calling getNetworkInfo method of chain contract (cx00..00) Fetch prep power (power) by calling getPRep method chain contract (cx00..00)
  • Fetch commissionRate by calling getPRep method chain contract (cx00..00) divide by 10000
VVMP=ValidatorandVoterMonthlyRewardVVMP=prepPower∗(iglobal∗iprep10000)totalPowerVVMP = Validator \enspace and \enspace Voter \enspace Monthly \enspace Reward \\ VVMP = prepPower * \frac{\Big(iglobal * \frac{iprep}{10000}\Big)}{totalPower} \\ VoMP=VoterMonthlyRewardVoMP=VVMP∗(1−commissionRate)VaMP=ValidatorMonthlyRewardVaMP=VVMP∗commissionRateVoMP = Voter \enspace Monthly \enspace Reward \\ VoMP = VVMP * (1 - commissionRate) \\ VaMP = Validator \enspace Monthly \enspace Reward \\ VaMP = VVMP * commissionRate

Reward dilution for voters due to bond mechanism

If the validator has bonded more than 5% of their voted amount (delegated amount + bonded), as new voters add delegation to the prep the prepPower variable will increase which means the validator and voters will receive more rewards.

If the bond is equal or less than 5% any increase in delegation (new voters delegating more to the validator) will only dilute the rewards of all the voters because the prepPower will not increase.

bond≤5%  ⟹  prepPowerdoesntincreaseswithnewvotersprepPower=min(bonded∗20,bonded+delegated)Delegatedamountincreasewithoutincreaseinbonding  ⟹  NochangeinprepPower  ⟹  Nochangeinrewards  ⟹  generatesrewarddilutionbond \le 5\% \implies prepPower \enspace doesnt \enspace increases \enspace with \enspace new \enspace voters \\ prepPower = min \Big(bonded*20, bonded+delegated\Big) \\ Delegated \enspace amount \enspace increase \enspace without \enspace increase \enspace in \enspace bonding \implies \\ No \enspace change \enspace in \enspace prepPower \implies No \enspace change \enspace in \enspace rewards \implies \\ generates \enspace reward \enspace dilution

If prepPower doesnt increase then voters monthly reward gets divided by a bigger amount of delegated (voters)

Rewards & PenaltiesGovernance
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