Delegation Pool Rewards Explainer

This page gives a detailed explanation about rewards for delegation pools.

Overview

The rewards transferred to a delegation pool are distributed based on a time-weighted delegation amount. Within the same pool, if more delegators join, the rewards (temporally fixed, as they are transferred every 24 hours at 0:00 UTC) will be shared among all participants, potentially reducing the rewards for an individual in the short term. However, as the pool grows with larger delegation amounts, the daily rewards transferred to the pool can also increase. This leads to a gradual rise in the total claimable rewards for all participants.

For instance, when a new participant delegates a significant amount, the proportional share of rewards for existing participants might initially decrease due to the adjustment in the total time-weighted delegation amount. This happens because the claimable function calculates the rewards for each participant based on their time-weighted contribution relative to the overall pool size. However, as the system stabilizes and the increased delegation amount results in higher daily rewards, all participants, including the new and existing ones, benefit from the larger pool of rewards over time.

This mechanism ensures a dynamic balance between fairness and incentive for long-term delegation. Existing participants are rewarded for their earlier contributions through accumulated time-weight factors, while new participants contribute to the growth of the reward pool. As the delegation pool matures, the fluctuations in individual rewards diminish, creating a more stable and predictable distribution. This equilibrium encourages sustained engagement and supports the long-term sustainability of the reward system.