Block reward distribution refers to the method by which newly created cryptocurrency and transaction fees are allocated to network participants. This mechanism compensates miners or validators for their work in verifying and adding new blocks to the blockchain. The specific distribution rules are embedded within a blockchain’s protocol, influencing network security and participant incentives. It forms a fundamental component of a cryptocurrency’s economic policy.
Context
News frequently covers alterations in block reward distribution, particularly during events like Bitcoin halvings, which significantly modify the supply schedule. Debates surrounding proof-of-work versus proof-of-stake mechanisms often involve discussions about their respective reward distribution models. These distributions are key to understanding the economic security and decentralization of a blockchain network.
SPARC introduces a non-linear, tier-based reward mechanism for Proof-of-Stake, strategically incentivizing smaller operators to enhance network decentralization and security.
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