Node Operator
Liquidity ProviderSystem Income
Every time a block is added to the system's blockchain, it calculates System Income. System Income is equal to Swap Fees plus Block Rewards. System Income is then split between Node Operators and Liquidity Providers. This split is set according to the costs each role bears and the Balancer, i.e. the degree of balance in the system.
Node Rewards
ᚱ 1000
ᚱ1005
ᚱ0
Liquidity Rewards
ᚱ500
ᚱ495
ᚱ0
Explainer
Every time a block is added, total income is calculated. System Income is made up of Swap Fees and Block Rewards.
System Income is split according to—
- Node Operator Costs
- Liquidity Provider Costs
- Balancer
Node Operators bear higher costs than Liquidity Providers. So the protocol splits System Income 67% to Node Operators and 33% to Liquidity Providers. This should leave income for the two roles roughly equal.
If the system's capital balance becomes unsafe or inefficient, the Balancer tweaks the split to favour either Node Rewards or Liquidity Rewards. For example, if the system is unsafe because Pooled Rune is equal to Bonded Rune, Balancer will push the income split in favour of Node Rewards.
The amount of Swap Fees may be higher than the amount specified by the Income Split. This could happen later on as the network is more established and Block Rewards are lower. In this case, these extra Swap Fees are used to supplement Node Rewards.
The opposite may be true – Swap Fees may be lower than the amount specified by the Income Split. This could be the case in the early days of the network when usage and Swap Fees are low. In this case Block Rewards are used to make up the difference and are passed on as Liquidity Rewards.
