Reputation System

The Reputation System holds Validating Nodes (VNs) accountable by assigning them a reputation score based on their actions. This system properly incentivizes nodes to collaborate with the network by rewarding good behavior, while punishing misconduct or inactivity. By implementing penalties and slashing for poor performance, the reputation system ensures fairness and integrity, aligning the interests of all participants and maintaining a reliable, transparent network.

Reputation System Flow

1. Reputation Gain/Loss - VNs can gain reputation points through successful validations and challenges, as well as lose reputation for failed validations, invalid challenges, misconduct, and inactivity.

2. Punishment Process - is gradually applied when a node’s reputation drops due to misbehavior. Slashing penalties are applied to their rewards and in some cases, the node may be excluded from validating for a period, depending on how low their reputation is.

3. Reputation Score Ranges - VNs are categorized into reputation ranges, which determine their slashing penalties and possible exclusion from validation. Higher reputation results in smaller penalties, while lower reputation leads to stricter punishments and longer exclusion periods.