# Rewards

## **Node Rewards and Distribution to Delegators**

Validator rewards in the Core network consist of two categories:

1. Base rewards, i.e., newly minted CORE;
2. Fees collected from transactions in each block;

All rewards are calculated and distributed when the last block of a round is mined. Currently, 90% of these rewards are allocated to validators, while 10% are directed to the [System Reward Contract ](https://github.com/coredao-org/core-genesis-contract/blob/master/contracts/SystemReward.sol)(discussed in the next section). Validators take a commission from their share of rewards before distributing the remainder to their delegators. Over time, validators are incentivized to remain competitive by attracting delegators with lower commission rates and robust hybrid scores.

Validators share rewards among delegators—including CORE stakers, BTC stakers, and hash power delegators—based on proportions determined by the following updated formulas:

* Hash power rewards: $$rH = ( \frac{(\frac {rHp}{tHp}) × m}{S} ) × R$$
* CORE staking rewards: $$rS = ( \frac{(\frac {rSp}{tSp}) × k}{S} ) × R$$
* BTC staking rewards: $$rB = ( \frac{(\frac {rBp}{tBp}) × l}{S} ) × R$$

Where:

* **rH:** Rewards attributed to delegated hash power (DPoW).
* **rS:** Rewards attributed to CORE staking (DPoS).
* **rB:** Rewards attributed to BTC staking.
* **R:** Total rewards allocated to all delegators.
* **m:** Proportion of rewards allocated to hash power.
* **k:** Proportion of rewards allocated to CORE staking.
* **l:** Proportion of rewards allocated to BTC staking.
* **S:** Hybrid score of the validator.

### Per Unit Reward Calculation

Per unit reward calculations determine the rewards distributed for each staked unit of hash power, CORE, or BTC:

* Per unit hash power reward: $$rHu = \frac {rH} {rHp}$$
  * Per unit CORE reward: $$rSu = \frac {rS}{rSp}$$&#x20;
  * Per unit BTC reward: $$rBu$$ of Pₙ  $$=  \frac {rB}{rBp} ×$$ Yield Multiplier for Levelₙ

Where:

* **rHu** is the validator hash power rewards per unit;
* **rSu** is the CORE token staking rewards per unit;
* **rBu** of Pₙ is the BTC staking rewards per unit for delegator with Pₙ BTC yield level
* **Yield Multipliers:** Each boosted yield level has a specific multiplier (e, f, g, h, ..., etc.) that is determined by a user's staking data as well as system dual staking settings.  multiplied to rewards earned per unit of BTC staked (for baseline). The settings are subject to change and are configurable through governance voting.

These calculations ensure proportional rewards are distributed based on individual contributions to a validator’s delegation pool.

### Impact of Dual Staking on BTC Rewards

With the introduction of Dual Staking, BTC staking rewards are now tiered based on the amount of CORE staked relative to BTC. BTC rewards are no longer evenly distributed across all participants. Instead, they are allocated dynamically based on dual staking thresholds, with higher tiers generally receiving a greater proportion of the rewards.

This tiered structure introduces variability in BTC staking returns, aligning incentives across the Core ecosystem while maintaining proportionality in reward distribution.

Key Considerations

* Validators compete for delegators by offering lower commission rates and improving their hybrid scores.
* Delegators optimize their staking returns by distributing their delegations across validators based on individual preferences.
* BTC staking rewards are influenced by dual staking tiers, encouraging greater network participation without prescribing specific strategies.

In [Appendix B](../appendices/appendix-b), you’ll find a worked-out example of Core’s rewards mechanics.

## **Relayer and Verifier Rewards**

Now that validator rewards have been covered, let’s talk about how relayers and verifiers are remunerated.&#x20;

Above, we mentioned that base rewards are calculated and distributed when the last block of a round is mined, with 90% going to the validators and 10% to the System Rewards Contract. The System Reward Contract accumulates rewards to remunerate relayers and verifiers. As things stand, there is a cap of 10 million total CORE rewards in the System Reward Contract. Currently, any rewards in excess of this amount are burned. However, Core plans to transition away form this burning mechanism and adopt a “revenue redistribution model”, where instead of burning, these access rewards will be redistributed to be utilized in network activities like validator incentives and other operational tasks.&#x20;

Recall that relayers are responsible for communicating the Bitcoin block headers to the Core network. They earn a portion of the base system rewards and transaction fees for this cross-chain communications work. Relayer rewards are distributed in batches, every 100 Bitcoin blocks. Relayers claim their rewards periodically.

Recall that verifiers monitor the behavior of validators and report them if they engage in double signing or other malicious activity. When successful, rewards are paid out immediately from the System Rewards Contract, in the same transaction.

