In decentralized ecosystems, Epoch acts like a heartbeat that ensures every operation on the network is in sync. While most crypto earners pay attention entirely to the APY (Annual percentage yield), the utmost staking reward experience lies in understanding the mechanics behind the Epoch rewards. As a validator or delegated stakers on the DMD Diamond network; it is important you understand how the network validator size, timing and reward distribution percentage works.
The 12-Hour Pulse on the DMD Diamond Blockchain
The standard timeframe for an Epoch is 12 hours. However, on the DMD Diamond blockchain; Epoch rewards are not strictly fixed in situations where Epoch clock changes. For instance; if an Epoch ends under 12 hours, rewards are proportionally reduced. By design, the network scales down the reward to match the shorter duration. In situations where Epoch runs above the standard 12 hours, the rewards to validators will not increase.
Epoch Reward’s Distribution Model
The distribution model of Epoch rewards to validators on the DMD Diamond blockchain is a 20/80 split model. Prior to the general reward distribution, an upfront 20% of the validator reward is paid directly to the node owner because he owns/runs the node. Then, the remaining 80% is distributed proportionally among validators and delegated stakers on top of them based on their coin ownership. Node owners also get a portion of the 80% reward, because he has his amount of coins staked on his validator node too.
For example; we have a total stake of 50, 000 DMD on a node. The node owner staked 25, 000 DMD (50% of the total 50, 000 DMD stakes), and the delegates stake the remaining 25 000 DMD (50% of the total stake) on top of him. The node owner takes 20% upfront of the total epoch rewards, plus half of the 80% rewards (40%) because he has half of the total stakes, amounting to 60% of the total Epoch rewards. The remaining 40% of the reward goes to the delegated stakers based on their coin ownership on that validator.
Epoch rewards are typically a fraction of the DMD Diamond blockchain liquidity. It is tied to the economic status of the DMD Diamond ecosystem’s pots, which serve like a buffer making the reward system model sustainable and predictable even in times of crypto market volatility. DMD Diamond’s Epoch rewards are calculated using the formula below:
Epoch Reward = (Reinsert Pot + Delta Pot)/6000
To learn more about what Reinsert and Delta Pots are, and other DMD Diamond blockchains keywords, click here!
Furthermore; if you are not technical savvy to run a node, you can take advantage of the configurable node-operator share option via the Diamond-UI to delegate your node-operatorship to another person who is technical enough to run your node. Since a node owner gets an upfront 20 percent of each epoch reward because he owns the node. From this, a percentage is shared with the node operator for his role. The node owner reward (20%) is configurable for each pool, allowing a portion of this share (0.01% – 20% (20% means 100% of the node owner reward)) to be forwarded to the node runner or operator.
The Power of 25 active validator candidates on the DMD Diamond’s Network
In accordance with the DMD Diamond’s coin-economics, fewer validator participants on the network (below the standard 25 validators per epoch) does not translate a bigger pie size to them. Rather; the Epoch rewards are calculated based on a fixed set of 25 active validator candidates.
In a situation where our network epoch ends with fewer than 25 standard eligible validators, epoch rewards are never redistributed to make those validators present richer. The calculation formula remains constant even when epoch ends with fewer validators:
Validator Reward Share = (Epoch Reward – 10% of Governance Pot)/25
For example; if an Epoch ends with 20 active validators, the reward shares for the remaining missing 5 validators are not redistributed on those 20 validators. They will not earn more because we have a smaller validator set.
You can learn more about the DMD Diamond blockchain via our Whitepaper!
