Dynamic Block Rewards

Definition ∞ Dynamic block rewards represent a mechanism in blockchain protocols where the compensation provided to validators or miners for proposing and validating blocks adjusts based on predefined network conditions. These conditions might include network congestion, transaction volume, staking participation rates, or overall network security requirements. The purpose is to maintain network stability, incentivize participation, and manage inflation or deflation of the native cryptocurrency. This adaptive approach aims to optimize network performance and economic health.
Context ∞ Dynamic block rewards are a key feature in many modern proof-of-stake blockchains, designed to ensure long-term sustainability and security. News frequently discusses proposed changes or implementations of these reward structures in various protocols. The effectiveness of dynamic rewards in balancing validator incentives with token supply dynamics is a recurring topic.