Covalent Network Rewards
The Covalent Network will reward Network Operators who perform work on the network i.e. produce Block Specimens or re-execute blocks to produce Block Results. Rewards are based on:
how much the operator has at stake - the higher the stake, the higher the opportunity to do work and earn rewards
the actual contribution, i.e., work performed on the network
When a Network Operator fulfills more network roles, further rewards are available to them.
Bootstrapping the Network
The initial staking yield and network rewards are supplied through the Staking allocation and this will be used to supplement network rewards for up to 4 years.
As time elapses, the staking contract will emit rewards based on a rate determined by the smart contract such that the proof-of-stake validation remains profitable. The reward emission rate is denominated in CQT per epoch (24 hours) which means the staking yield will change as the staked CQT changes. The CQT emission will be monitored and updated by the contract owner as the quantity of staked CQT grows such that a reasonable staking yield is maintained.
Here's more information on the Emission Schedule.
Becoming Self-Sustainable
Ultimately, the aim is for the Covalent Network to become economically self-sustainable. As documented in CQT Operating on the Covalent Network, users will eventually be paying Query Operators to query the Covalent API. Query Operators will then "pay into" a network fund (proportionate to the amount of data they’ve fetched from the network) that pays out in turn to the production operators (i.e. Block Specimen Producers) as network rewards.
Network Operator Reward Models
BSPs and BRPs produce a good; the Block Specimen and Block Result respectively. They are rewarded for doing so. In the long run, the price for this good will be determined by the free market; Query Operators being the primary purchaser. However, until then, Covalent will be the only buyer of the Block Specimen and Block Result. Therefore, setting a fixed price for Block Specimens and Block Results.
The current reward model plays out over the course of an epoch; every 24 hours. A set amount of CQT will be emitted per epoch from the Staking Contract Reward pool. This reward pool is filled using the Staking Allocation and maintained by the contract owner.
Here's more information on the Emission Schedule.
Block Specimen
To determine the price of a Block Specimen, the number of Block Specimens produced, as well as the number of BSPs, is considered. With that being said, the formulae are as follows:
block_specimen_price = token_emission_rate * (bsp_operator_stake / total_bsp_stake) * (1 / blocks_per_epoch) bsp_reward_per_epoch = block_specimen_price * num_specimens_produced
Block Result
To determine the price of a Block Result, the number of Block Results, as well as the number of BRP Operators, is considered. With that being said, the formulae are as follows:
block_result_price = token_emission_rate * (refiner_operator_stake / total_refiner_stake) * (1 / blocks_per_epoch) refiner_reward_per_epoch = block_result_price * num_results_produced