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Tangle Network
Payouts

# Payouts Overview

Running a collator node on the Tangle Network allows you to connect to the network, sync with a bootnode, obtain local access to RPC endpoints, and also author blocks. The network rewards collators (users running collator nodes and actively producing blocks) by paying a set amount of network tokens as rewards.

The main purpose of a collator is to produce blocks and support block liveness on the network. From there, collators offer up blocks to validators on the relay chain for finalization. This is similar to the role of miners in Proof of Work networks but, unlike miners, collator nodes do not contribute to the safety of the network and are critical to liveness, decentralization, censorship resistance, and security. Essentially, collators work to produce state transition proofs for validators based on the Polkadot and Kusama relay chains and maintain a full node on both the relay chain and parachain in which they operate.

## How are rewards calculated

The collator rewards are paid out every block, the rewards consists of multiple components:

(1) Transaction fees from all transactions in the block
(2) Tips paid by users
(3) Network reward amount

The collator reward is initially paid out from the collator reward pot alloted at the time of genesis. Once the initial genesis supply for collator rewards has been exhausted, the network will issue new amount of currency (at a predetermined rate of inflation) every block to continue rewarding the collators. The block authors are chosen using Aura (opens in a new tab) and ensures every collator gets a chance at block authoring.

## Reward Payout Schedule

The collator rewards are paid out every 100 blocks. Please note that simply authoring a block does not guarantee a reward, the block has to be accepted and finalised in the canonical chain for the payout to be valid. Also important to remember that rewards are only paid out to block authoring collators, simply running a node/full-node does not make you eligible for a reward.

## Payout Example

Lets say Alice is running a collator node on the Tangle Network, the collator node just authored a block, for simplicity lets consider the block contains 100 transactions each paying 0.1 TNT in transaction fees, 5 transactions each with a tip of 1 TNT.

This block has generated a total of 15 TNT in transaction fees and tips. The transaction fee is divided between the treasury and block authory in 80:20 split. Also lets assume the RewardAmount for Tangle Network is set at 25 TNT.

For the above block, the reward paid to Alice account is as follows

ComponentPayout
TransactionFees2 TNT (20% of transaction fees)
Tips5 TNT (100% of transaction tips)
Network Reward25 TNT
Total Payout32 TNT