Is it a bad idea to give rewards proportional to efforts?

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Unlike other blockchains such as Bitcoin that give fixed rewards for mining BTC, Jax.Network rewards miners proportional to their efforts. Rewards proportional to miners’ efforts are beneficial to the network because it ensures that even small-scale miners get rewarded. The method contrasts with most Proof-of-Work (PoW)-enabled blockchains that favor mining pools and users with extensive computational resources.     

What does a reward proportional to efforts mean?

To understand how Jax.Network incentivizes miners proportional to their efforts; you need to know how a PoW consensus algorithm works. In a PoW-enabled blockchain, miners invest their time, effort, computational power, and electricity to solve a complex computational problem. Any node that successfully adds a block to the distributed ledger gets rewarded with new coins. In the case of Bitcoin, such a node receives 6.25 BTC (as of 2021). 

The intensity at which a node solves this computational problem is measured by the hashrate. For successful mining, miners have to attempt different combinations while solving the computational problem assigned with the block header, starting with a nonce of zero. 

The process continues with permutations and combinations until the target is achieved. Miners with extremely high hashrates have a better chance of reaching the target nonce sooner than others and, hence, receive higher rewards than those generating lower hashrates. However, statistically speaking, any miner will receive a reward proportional to their respective hashrate, abiding by the principle 1 CPU = 1 vote. 

Miners also compete for transaction fees. Miners who mine lots of blocks are awarded transaction fees. Theoretically, this covers electricity consumption, data storage costs, and extra data processing fees.  

The rationale for rewards on the Jax.Network shards   

Jax.Network uses sharding to ensure the scalability of the network. Sharding is simply the partitioning of data on a blockchain to reduce the workload. This data split is known as “shards.” JAX is a native cryptocurrency of Jax.Network, which is awarded for mining on the shard chains.

Unlike Bitcoin, miners on the shard chains are rewarded with new JAX coins based on their computing power inputted in maintaining the network – verifying transactions on the chains. In other words, the block reward is not fixed like on Bitcoin but will vary according to the total hashrate on the shard at block creation. This reward mechanism is more like an incentive that encourages both large- and small-scale miners to mine JAX since every one of them gets rewarded based on their computing power. 

This reward mechanism is also crucial to the stability of JAX. Ultimately, it helps the network to minimize centralization on the network. 

A perfect solution to block creation problems

Developers modified the effort to reward proportionality schemes to reflect the reality of mining and motivate miners to continue mining blocks. It is impossible to prevent collisions on the blockchain if multiple nodes are mining simultaneously. It is equally hard to determine the first miner to solve the problem because of countless minor but critical delays in data transmission. 

Rewarding miners whose blocks do not appear on the main blockchain is more like a consolation prize. The miner gets a partial reward for the effort spent on solving the problem, and no effort goes to waste. Ideally, miners are motivated to be the first to solve the problems and get the expected reward. 

On one side, this partial reward system also deters selfish mining and miners seeking rewards through harmful conduct to the Jax.Network blockchain. While on the other, it also ensures that all shards are equal in value. Shards will not be created at the same time. Having a fixed block reward would break this equality. Imagine, for the sake of argument, a ten-block reward on each shard. Shard one has 1000 blocks, 10000 coins in circulation, and shard two has only 100 blocks or 1000 coins. The exchange rate between the two shards becomes 1:10 instead of being 1:1. Having a proportional reward solves this issue. 


The effort to reward proportionality schemes works when properly implemented. Jax.Network rewards miners based on their mining efforts. It also rewards miners who may have solved the problem simultaneously as miners but whose blocks were not placed on the main blockchain. 

Overall, reward proportional to effort achieves the goal of promoting many transactions with low processing delays by having a high block creation rate while keeping all shards equal in value.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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