Protocol rewards are incentives distributed by a blockchain network’s underlying rules to participants who contribute to its operation and security. These rewards typically consist of newly minted tokens or transaction fees, allocated to validators, miners, or stakers for their computational work or capital commitment. They are fundamental to maintaining network consensus and integrity.
Context
The design and distribution of protocol rewards are central to the economic models of all cryptocurrencies and are a frequent topic in news and analyses. Changes to reward schedules, such as halving events or adjustments in staking yields, significantly influence investor behavior and network security. These rewards sustain the decentralized operation of digital asset systems.
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