Validation-client Economics

Validator-clients are eligible to receive protocol-based (i.e. via inflation) rewards issued via stake-based annual interest rates (calculated per epoch) by providing compute (CPU+GPU) resources to validate and vote on a given PoH state. These protocol-based rewards are determined through an algorithmic disinflationary schedule as a function of total amount of circulating tokens. Additionally, these clients may earn revenue through fees via state-validation transactions and Proof-of-Replication (PoRep) transactions. For clarity, we separately describe the design and motivation of these revenue distriubutions for validation-clients below: state-validation protocol-based rewards, state-validation transaction fees and rent, and PoRep-validation transaction fees.