Figure 5: Illustration of Rewards Workflows.
At the last block of a round, rewards are calculated and distributed. Currently, 90% of the rewards go to the validators and 10% of the rewards go to the System Reward Contract. Of the 90% paid to validators, some percentage (x%) is taken as a commission by the validator before paying out their delegates. The System Reward Contract accumulates rewards to pay out both relayers and verifiers with a current maximum cap of 11 million of accumulated CORE rewards (10m relayer rewards and up to 1m verifier rewards that are self-replenishing) before burning excess rewards. Verifiers are paid immediately upon successful submission and relayers are paid every 100 BTC blocks.

Node Rewards and Distribution to Delegators

The two categories of rewards for validators are (1) base rewards (newly minted CORE) and (2) fees collected from transactions in each block. Validators are required to share rewards with the delegators who staked their CORE with them in addition to those delegating hash power. Given each validator has an equal probability to produce blocks, in the long run all stable validators should get a similar portion of the reward.
Validators can decide how much to give back to the delegators who delegated their CORE or their hash power with them. These validators are incentivized to greatly reward their delegators in order to attract more hash power and stake. After taking their fees, the protocol uses a function to determine the split between staked rewards and hash power rewards for a validator defined as:
rH = rHp/tHpm/SR (2)
rS = rSp/tSp ∗ (1 − m)/SR (3)
rH = validator rewards attributed to hash power
rS = validator rewards attributed to staking
R = overall rewards attributed to all delegators
rHu = rH/rHp (4)
rSu = rS/rSp (5)
rHu = validator hash power rewards per unit
rSu = validator staking rewards per unit
Note that these functions are designed to create an active market for rewards and encourage competition amongst the validator set for both delegated hash power and delegated stake. By the same mechanism, delegators will try to optimize their own rewards by choosing validators with lower amounts of delegated hash power and stake.

Applied Example of Node Rewards and Distribution

Let's assume there are 2 validators and both are elected:
  • A: 2 units of hash power, 1 unit of stake
  • B: 1 unit of hash power, 4 units of stake
Let’s also assume there are 10 total units of BTC hash power on the Core network, so validator 1 has 20% of the hash power and validator 2 has 10% of the hash power. Similarly, we assume there are 20 total units of stake on the CORE network, so validator 1 has 5% of stake and validator 2 has 20% of stake. We also set m to 2/3 for this example.
For the simplicity of the calculation, we set the number of earned rewards to distribute to 1 for both validators.
SA = 2/10 ∗ 2/3 + 1/20 ∗ 1/3 = 9/60 (6)
SB = 1/10 ∗ 2/3 + 2/10 ∗ 1/3 = 8/60 (7)
rHA = (2/10 ∗ 2/3)/SA = 8/9 (8)
rSA = (1/20 ∗ 1/3)/SA = 1/9 (9)
rHB = (1/10 ∗ 2/3)/SB = 1/2 (10)
rSB = (2/10 ∗ 1/3)/SB = 1/2 (11)
Reward per Unit:
rHuA = rHA/2 = 4/9 (12)
rSuA = rSA/1 = 1/9 (13)
rHuB = rHB/1 = 1/2 (14)
rSuB = rSB/4 = 1/8 (15)

Relayer Rewards

Relayers earn a portion of the base system rewards and transaction fees for cross-chain communications. Relayer rewards are distributed in batches every 100 BTC blocks. Relayers claim their rewards periodically.

Verifier Rewards

CORE slash suggestions can be submitted by anyone and ensure that malicious and harmful actors are punished. The transaction submission requires evidence and fees, but accurate submissions earn rewards that exceed the costs. Rewards are paid out immediately from the System Rewards Contract, in the same transaction, when successful.