Collator & Delegator Rewards

peaq/krest tokenomics is designed in a way to incentivize different network participants. Collators play an important role in the network as they not only maintain the state by running a full node but also propose blocks, which are later validated by the Relay Chain validators.

Collators together with delegators receive 30% of the total rewards, consisting of new blocks being minted and transaction fees paid by the network users.

The active collator set consists of 32 collators, who are proposing new blocks in a round-robin manner. Any new block is being proposed by a single collator. The active collator set renews every round (1200 blocks or approximately every 4hrs). The mechanism of selecting collators in the active set is based on the total stake of the collator itself plus the stake of all of its delegations. If the active set is full and the new candidate has the exact same stake as the last member of the set (by total stake), the system favors the collator that has been in the pool the longest. This way we can ensure that only the collators with the highest total stake are periodically selected to be eligible block authors.

Delegators stake tokens on the collator of their choice, trying to select honest and well-performing collators. One collator can be supported by 25 delegators only. If there is a 26th delegator who would like to delegate to the same collator, then 25 delegators are selected based on the highest stake, and the delegator with the lowest stake is removed from the delegator list.

Total rewards are being split between collators and delegators using the following formulas:

Collator reward

(TotalRewards*CollatorStake*CollatorCoefficient)/(CollatorStake*CollatorCoefficient + DelegatorStake)

Delegator reward

(TotalRewards*DelegatorStake)/(CollatorStake*CollatorCoefficient + DelegatorStake)

CollatorCoefficient is a parameter, which allows us to fairly compensate collators for their work of running and maintaining hardware nodes, while also compensating delegators based on the staked amount. Currently, CollatorCoefficient is 8

Collator/Delegator reward calculation example

If collator Bob staked 1000 KREST and received delegations from Alice (100 KREST) and Ross (200 KREST) and total block rewards are 20 KREST. Then rewards will be distributed in the following way:

Bob: 20*1000*8/(1000*8+100+200) = 20*8000/8300 = 19.28 $KREST

Alice:20*100/(1000*8+100+200) = 2000/8300 = 0.24 $KREST

Ross: 20*200/(1000*8+100+200) = 4000/8300 = 0.48 $KREST

According to this model, delegators are incentivized to stake on collators with smaller total stake, as blocks are paying similar rewards, meaning that the delegator's portion of rewards will be lower when delegating to a collator with a higher total stake (self-bond plus delegated stake) when compared to a collator with a lower total stake.