Economic Model
Overview
GenLayer's economic model is designed to incentivize participants to maintain the network's security and functionality. It involves staking, rewards, transaction fees, and penalties.
Key Components
- Staking: Validators must stake tokens to participate in the validation process, aligning their interests with the network's health.
- Rewards: Validators receive rewards for correctly validating transactions.
- Transaction Fees: Users pay fees for transaction processing, which are partly used to reward validators.
- Slashing: Validators acting maliciously or incompetently can have their staked tokens slashed as a penalty.
Incentive Mechanisms
- Positive Incentives: Rewards and fees motivate validators to act in the network's best interest.
- Negative Incentives: Slashing and penalties deter malicious behavior.
Economic Security
- Stake-Based Security: The amount staked by validators serves as a deterrent against attacks, as they risk losing their stake.
- Balancing Supply and Demand: The economic model aims to balance the supply of validation services with demand from users.