Rewards Formula

Primary Network Validator Rewards

Consider a Primary Network validator which stakes a $Stake$ amount of AVAX for $StakingPeriod$ seconds.

The potential reward is calculated at the beginning of the staking period. At the beginning of the staking period there is a $Supply$ amount of AVAX in the network. The maximum amount of AVAX is $MaximumSupply$. At the end of its staking period, a responsive Primary Network validator receives a reward.

$$Potential Reward = \left(MaximumSupply - Supply \right) \times \frac{Stake}{Supply} \times \frac{Staking Period}{Minting Period} \times EffectiveConsumptionRate$$

where,

$$MaximumSupply - Supply = \text{the number of AVAX tokens left to emit in the network}$$ $$\frac{Stake}{Supply} = \text{the individual's stake as a percentage of all available AVAX tokens in the network}$$ $$\frac{StakingPeriod}{MintingPeriod} = \text{time tokens are locked up divided by the $MintingPeriod$}$$ $$\text{$MintingPeriod$ is one year as configured by the network).}$$ $$EffectiveConsumptionRate =$$ $$\frac{MinConsumptionRate}{PercentDenominator} \times \left(1- \frac{Staking Period}{Minting Period}\right) + \frac{MaxConsumptionRate}{PercentDenominator} \times \frac{Staking Period}{Minting Period}$$

Note that $StakingPeriod$ is the staker's entire staking period, not just the staker's uptime, that is the aggregated time during which the staker has been responsive. The uptime comes into play only to decide whether a staker should be rewarded; to calculate the actual reward only the staking period duration is taken into account.

$EffectiveConsumptionRate$ is the rate at which the Primary Network validator is rewarded based on $StakingPeriod$ selection.

$MinConsumptionRate$ and $MaxConsumptionRate$ bound $EffectiveConsumptionRate$:

$$MinConsumptionRate \leq EffectiveConsumptionRate \leq MaxConsumptionRate$$

The larger $StakingPeriod$ is, the closer $EffectiveConsumptionRate$ is to $MaxConsumptionRate$. The smaller $StakingPeriod$ is, the closer $EffectiveConsumptionRate$ is to $MinConsumptionRate$.

A staker achieves the maximum reward for its stake if $StakingPeriod$ = $Minting Period$. The reward is:

$$Max Reward = \left(MaximumSupply - Supply \right) \times \frac{Stake}{Supply} \times \frac{MaxConsumptionRate}{PercentDenominator}$$

Note that this formula is the same as the reward formula at the top of this section because $EffectiveConsumptionRate$ = $MaxConsumptionRate$.

For reference, you can find all the Primary network parameters in the section below.

Delegators Weight Checks

There are bounds set of the maximum amount of delegators' stake that a validator can receive.

The maximum weight $MaxWeight$ a validator $Validator$ can have is:

$$MaxWeight = \min(Validator.Weight \times MaxValidatorWeightFactor, MaxValidatorStake)$$

where $MaxValidatorWeightFactor$ and $MaxValidatorStake$ are the Primary Network Parameters described above.

A delegator won't be added to a validator if the combination of their weights and all other validator's delegators' weight is larger than $MaxWeight$. Note that this must be true at any point in time.

Note that setting $MaxValidatorWeightFactor$ to 1 disables delegation since the $MaxWeight = Validator.Weight$.

Notes on Percentages

PercentDenominator = 1_000_000 is the denominator used to calculate percentages.

It allows you to specify percentages up to 4 digital positions. To denominate your percentage in PercentDenominator just multiply it by 10_000. For example:

• 100% corresponds to 100 * 10_000 = 1_000_000
• 1% corresponds to 1* 10_000 = 10_000
• 0.02% corresponds to 0.002 * 10_000 = 200
• 0.0007% corresponds to 0.0007 * 10_000 = 7

Primary Network Parameters on Mainnet

For reference we list below the Primary Network parameters on Mainnet:

• AssetID = Avax
• InitialSupply = 240_000_000 Avax
• MaximumSupply = 720_000_000 Avax.
• MinConsumptionRate = 0.10 * reward.PercentDenominator.
• MaxConsumptionRate = 0.12 * reward.PercentDenominator.
• Minting Period = 365 * 24 * time.Hour.
• MinValidatorStake = 2_000 Avax.
• MaxValidatorStake = 3_000_000 Avax.
• MinStakeDuration = 2 * 7 * 24 * time.Hour.
• MaxStakeDuration = 365 * 24 * time.Hour.
• MinDelegationFee = 20000, that is 2%.
• MinDelegatorStake = 25 Avax.
• MaxValidatorWeightFactor = 5. This is a platformVM parameter rather than a genesis one, so it's shared across networks.
• UptimeRequirement = 0.8, that is 80%.

Interactive Graph

The graph below demonstrates the reward as a function of the length of time staked. The x-axis depicts $\frac{StakingPeriod}{MintingPeriod}$ as a percentage while the y-axis depicts $Reward$ as a percentage of $MaximumSupply - Supply$, the amount of tokens left to be emitted.

Graph variables correspond to those defined above:

• h (high) = $MaxConsumptionRate$
• l (low) = $MinConsumptionRate$
• s = $\frac{Stake}{Supply}$