PoP Reward Summary
PoP Mining puts data on the BTC Mainnet, and requires a quantity of BTC to cover the associated transaction fees.
A PoP reward is paid out 500 blocks after the block which is secured by a PoP transaction.
The reward process is not linear; there are several dimensions to the incentivization structure behind the system:
- Secured block position (and how important that block is to PoP security)
- Speed of publication in the Bitcoin blockchain
- Number of PoP transactions submitted per block
- Difficulty based on prior PoP publication quantity
Different block positions pay different rewards.
Every 20th block (so blocks 0, 20, 40, ...) is a "keystone" (which has higher value to the security of the consensus protocol), and pays roughly 3x the normal reward. Therefore miners have high incentive to secure these blocks.
Between the keystones there are three reward levels, (blocks 1, 4, 7, 10, 13, 16, and 19 at level one, blocks 2, 5, 8, 11, 14, and 17 at level two, and blocks 3, 6, 9, 12, 15, and 18 at level three). These reward levels are all generally within 10% of each other, with level three being the highest.
Speed in the next BTC block
The sooner a PoP Transaction is included in BTC (relative to other PoP transactions securing the same block) the more useful it is, therefore the higher the payout will be. For example, if the first PoP transaction securing VBK block 'n' is in BTC block 'm', all other PoP transactions for block 'n' will be compared based on their timeliness relative to BTC 'm'.
All else equal, higher BTC transaction fees will get a transaction included sooner. Therefore in general higher BTC fees will result in higher PoP rewards (up to the threshold where additional fees provide no additional assistance in getting into the next BTC block).
Number of PoP transactions
Normally the reward would be split among all transactions. The more transactions, the more it is split among, the lower an individual transaction.
Number of PoP miners
Reward is split among PoP miners (by address) - in general the more miners (or the more PoP transactions miners are doing), the less any miner receives for a single PoP transaction. This is analogous to hashrate; the higher the combined hashrate of all miners is, the lower the expected reward-per-hash.
Difficulty based on prior PoP payouts
The average PoP reward spread across many blocks will be 43.75. If previous blocks had less than 43.75 (such as 0), then future blocks will have greater reward such that it averages out.
Cap per individual transaction
There are thresholds (based on recent PoP history) such that the most a transaction can get is "X", even if no other PoP transactions occur for that particular block. Therefore it may merit a single PoP Miner to perform multiple pop transactions securing a single block in order to earn a "unlock" a larger share of the block reward.