What Is the Economic Incentive for an Honest Validator?
The primary economic incentive for an honest validator is the reward for successfully validating and adding a new block to the blockchain. This reward typically consists of newly minted coins (block reward) and the transaction fees from the block's included transactions.
This consistent revenue stream, provided they follow the protocol rules and avoid slashing, is what drives validators to secure the network.
Glossar
Honest Validator
Validator ⎊ An Honest Validator is a participant in a Proof-of-Stake (PoS) cryptocurrency network who diligently performs their assigned duties, which include proposing and attesting to new blocks according to the protocol's explicit rules.
Economic Incentive
Incentive ⎊ An Economic Incentive is a financial reward or penalty structurally embedded within a blockchain protocol or smart contract designed to guide participant behavior toward actions beneficial for the network's security and operation.
Validator
Role ⎊ A validator is a critical network participant in a Proof-of-Stake blockchain responsible for proposing, verifying, and attesting to new blocks of transactions to maintain consensus and secure the distributed ledger.
Incentive
Mechanism ⎊ Incentive structures within cryptocurrency, options trading, and financial derivatives function as engineered protocols to align the interests of diverse participants, influencing behavior and mitigating agency problems.
Transaction Fees
Fee ⎊ Transaction fees, inherent in cryptocurrency, options, and derivatives markets, represent the cost of executing trades and utilizing network infrastructure.