Welcome back to the second part of our EOS IO Dawn 4.0 guide.
We have already discussed the following:
In the second part we are going to talk about:
Last Irreversible Block Algorithm
#4 Block Producer Rewards
We have already told you how the DPOS consensus mechanism in EOS works. For a quick summary, EOS network has 21 block producers and those 21 take care of consensus and network health. Traditional consensus mechanisms like proof of work(POW) and proof of stake(POS) have a more immediate reward system. Having said that, EOS’s DPOS doesn’t really have anything like that. Instead, it has an inbuilt inflation system which increases the overall supply by 5% every year.
These surplus tokens are then distributed accordingly (more on that in a bit).
According to Block. One, this inflation system is the way to go forward for the long-term development of the EOS project.EOS Reward Distribution
Image Credit: Medium
Hmm..what is going on here?
The inflation rate of EOS per year is 5% which is divided into two parts:
1% which goes to the producers.
4% which goes for worker proposal systems (more on this in a bit.)
The main logic behind the distribution algorithm is to make sure:
The producers are paid sufficiently for their service.
No one is paid in an insufficient way to not cover their costs.
Everyone who qualifies must get a minimum per day payment so that “wealthy individuals who have no intention of producing blocks don’t attempt to earn interest on their producer candidate by voting on themselves.”
Like we have mentioned, there are 21 active block producers, however, there can be any number of standby producers as well, who may have received a certain number of votes in the election, however, they weren’t able to qualify in the top 21....