The DMD Diamond ecosystem isn’t just about running a node and forgetting it. It requires some level of attention and participation, as your status influences your returns. To maximize your return, it is crucial to comprehend the two unique incentive routes: Validator Rewards and the Bonus Score. On the DMD Diamond blockchain, you can not earn both at the same time. However, either of the earnings depend absolutely on which state your node is (Active or Valid State).
The Active State: Earning Validator Rewards
When your node is in the Active set; you are on the front line validating transactions and proposing blocks. In this state, you stop earning Bonus Score and earn Validator reward as DMD at epoch end.
You may wonder how Validator Rewards are shared between a validator and the delegated stakers on top of it. At the end of each 12-hour epoch, rewards are distributed. An upfront 20% of the reward share goes to the node owner, before anyone else. The remaining 80% rewards are distributed proportionally based on the coins staked between the validator again (who double as the node owner) and the delegators who has their coins on him.
While you don’t earn a Bonus Score in active state, you can lose it. If your node behaves poorly; such as missing Key Writes or disconnecting, your accumulated scores will be slashed, even while you are technically in the active set.
The Valid (Standby) State: Earning the Bonus Score
If you aren’t selected for the current active set but your node is in Valid state, you are on Standby (meaning; you are ready and eligible to be part of subsequent active sets). You won’t be earning block or validator rewards at that state, but you will be earning Bonus Score.
Bonus Score serves like your reputation currency. The higher your score, the higher your probability of being selected for the next Active set. It’s a mechanism designed for DMD Diamond network resilience. It is a way of incentivizing people to keep their candidate nodes running even when they aren’t currently earning DMD.
You earn 15 points (bonus scores) per epoch just for staying online and available. When you stay available for 33 days (66 epochs) starting from a minimum score (which is 1), you’d rack up nearly 1,000 bonus scores (maximum bonus score). If you are invalid or underperforming, your score takes a hit. For instance; when you are unavailable when you should be, you lose 15 points per that epoch. A temporary disconnection in your internet can cost up to -100 points per epoch. Failing to participate in the security generation process is a heavy -100 point hit.
Conclusion
When the blockchain is ready to pick the next 25 validators, it looks at three criteria which includes; The Stake Amount (Higher stakes up to the 50,000 DMD cap get more priority), The Bonus Score (Your history of reliability on the network matters), and Randomization (A touch of randomness ensures the big validator players don’t monopolize the slots, hence, keeping the network decentralized). To succeed on the DMD Diamond blockchain, availability is key. Be available to earn Bonus Score to increase your probability to get selected as part of active set, and then perform flawlessly while Active to reap the validator DMD rewards.
