Challenge Results
Last updated
Last updated
The 60% of transaction fees collected are locked in the Treasury for 14 days, acting as a prize pool that both Validating Nodes (VNs) and the Sequencer "compete" for. The outcome of this competition depends on whether the Sequencer behaves correctly or whether a challenge raised by VNs is successful.
The system is designed to align the incentives for both parties:
| Sequencer's Incentive | Validating Nodes (VNs) Incentive |
|---|---|
This dynamic creates a natural balance in the system, where the Sequencer works to avoid mistakes and secure the Treasury revenue, while the VNs are motivated to uphold the integrity of the system by ensuring the Sequencer processes transactions correctly.
If the VNs raise a valid challenge and prove that the Sequencer was wrong or misbehaving, the locked funds in the Treasury are awarded to the VNs.
Here's what happens:
The VNs who agreed to the challenge are rewarded with 60% of the transaction fees that have accumulated in the Treasury for the past 14 days.
The Sequencer loses out on the 14-day worth of revenue and faces reputational damage.
Example: Let’s assume the network processed $10 million in transactions in one month, generating $10,000 in fees:
$1,000 goes to the VNs as part of the regular fee structure.
$1,000 goes to YAMATA as part of the regular fee structure.
$2,000 is allocated to the Future Reward Pool.
$6,000 is locked in the Treasury for 14 days.
If the challenge is successful, the $6,000 in the Treasury is distributed to the challenging VNs as a reward for identifying the Sequencer’s misbehavior. This serves as a significant incentive for VNs to remain vigilant and challenge the Sequencer when appropriate.
If the VNs fail to prove the Sequencer’s misbehavior, the challenge is unsuccessful, and the 14-day locked funds continue to be gradually released to YAMATA.
Here’s what happens:
The Sequencer is proven correct, and the locked funds continue to be gradually released to YAMATA as a reward for maintaining proper behavior.
The challenging VNs face reputational damage and are penalized for raising an unsuccessful challenge.
Example, using the same numbers, if the VNs’ challenge is unsuccessful:
The $6,000 in the Treasury keeps gradually being released to YAMATA, rewarding the platform for the Sequencer’s correct behavior.
The VNs receive no additional rewards, and YAMATA gains the full value of the locked funds.
The Sequencer's goal is to never make a mistake in processing transactions. By behaving properly, the Sequencer ensures that the 14-day worth of revenue locked in the Treasury is released to YAMATA, maintaining a steady stream of revenue for the platform.
The VNs' incentive is to monitor the Sequencer closely and catch any misbehavior. If VNs can successfully prove that the Sequencer acted incorrectly, they are rewarded with the locked funds as compensation for their successful challenge.
