Miners often get fixed rewards whenever they generate a new block, irrespective of the mining difficulty. As of this writing, any Bitcoin miner who successfully verifies a block (often after every 10 minutes) receives 6.25 BTC as an incentive. The Bitcoin protocol automatically halves the reward after every four years to limit coin issuance and ensure a maximum supply of 21 million coins.
This arrangement ultimately reduces the rate at which new Bitcoins are released into circulation, thereby creating scarcity. Although the halving process benefits Bitcoin investors, it somewhat demotivates validators, small-scale miners.
As an improvement on the fixed reward rule, Jax.Network has come up with a unique universal reward system for miners based on the complexity of the mined block.
Understanding the Universal Reward Function in Jax.Network
Jax.Network has two native coins, JXN and JAX, which have different investment purposes and utilities. Let’s take a closer look at each of them.
JXN coin is mined on the beacon chain. It is issued based on the fixed reward system, which is more beneficial to the investors for speculative reasons since the coin becomes a deflationary asset. However, miners who are mining Jax.Network shard chains are rewarded with JAX coins. Here, miners are rewarded based on the newly proposed universal reward function, which sets mining rewards based on the mining complexity of the block.
The most crucial outcome of this reward scheme is that the JAX coin miner receives rewards according to the executed amount of work. Thanks to this reward function, the expected value of JAX is equal across shards. This allows Jax.Network to fulfill the underlying philosophy of cryptocurrencies as systems for decentralized global payments.
|Parameter of comparison||JXN||JAX|
|Reward Scheme||Like Bitcoin, JXN follows a fixed reward scheme; miners receive 20 JXN coins per valid block mined on the beacon chain.||JAX follows the new universal reward function where miners can only receive rewards based on their hash power committed to maintaining the network, provided they have sent their BTC+JXN coinbase reward to an invalid address.|
|Stability||This reward scheme makes the coin a speculative asset. Hence, it is not stable.||Jax.Network incentivizes miners to mint more JAX coins in a high-demand situation, making it less volatile and more stable. The coin value is underwritten by the electricity cost necessary to print 1 JAX.|
Effects of Universal Reward Function on JAX Coin
This reward scheme applied in the shard chains has multiple benefits. Some of them are:
- The reward scheme sets a balance between strong and weak nodes. Jax.Network does not reward blindly based on the number of shards that miners merge-mine. Instead, it is based on the quality of each block which satisfies more miners because if a miner cannot merge-mine across all shards due to insufficient bandwidth, they can choose to mine only a chunk of shards.
- JAX reduces volatility. Jax.Network employs rule-based monetary economics where the issuance of JAX can also be increased when there is more demand for the coins. This approach helps keep the coin stable without pegging it to fiat currencies or a basket of other stablecoins, instead, its value is based on its cost of production. It’s a kilowatt-hour cryptocurrency.
The reward for mining JAX coins depends on the complexity of the mined block. Differentiating between strong and weak nodes helps solve issues with security and hidden penalties. Jax.Network is the first network to eliminate these issues. Along with its unique reward function, JAX has the potential to become a reliable, stable, and secure electronic cash.