Non-linear rewards are compensation structures where the payout does not increase proportionally with the input or effort. In blockchain protocols, this means that the benefits received by participants, such as stakers or miners, do not scale directly with their contribution, such as the amount of tokens staked or computational power provided. Such reward mechanisms are often designed to disincentivize excessive concentration of power or to encourage broader participation by offering diminishing returns beyond a certain threshold. This approach aims to promote greater decentralization and prevent the accumulation of undue influence.
Context
The implementation of non-linear rewards is a critical design consideration for proof-of-stake networks seeking to optimize decentralization and security. A key debate involves finding the right balance to adequately incentivize participation without encouraging stake concentration or creating disincentives for large contributors. Future protocol upgrades may further refine these reward curves to adapt to evolving network dynamics and maintain a healthy distribution of power.
A new mechanism dynamically scales slashing penalties by stake concentration, creating a self-regulating security equilibrium that disincentivizes validator centralization.
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