Mining works because people are greedy. To protect a PoS chain, consensus participants need to make enough to make it “worth” participating, but nothing more.
If consensus participants were only exposed to transaction fees on the network, I do not think the financial incentive of being a consensus PoS node would be high enough. There is research that if bitcoin were to run just on fees, they would be between $18,700 and $108,700 per transaction.
This is part of the dilemma of bitcoin - If it is a store of value, there will be fewer transactions and fees will be higher. For it to be some form of money, fees would need to be substantially lower but with much higher throughput. Bitcoin cannot scale to that level, and layer two solutions like Lightning avoid paying miner fees.
Pocket Network can be run without a blockchain. Validator nodes can check each other’s transactions in a p2p network and receive fees directly from developers. As a result of the economic model, the blockchain part is required to keep the integrity of fees earned, since they are minted and not directly transferred by the developer using a node’s services. I bring this up to highlight the importance of those staking POKT to keep consensus of the blockchain. It is a critical layer that keeps the system running, and as a result consensus participants should earn some percentage of the relays completed.
With that said, the following is my proposal for consensus nodes receiving some amount of reward from relays:
A couple assumptions first:
- 100% of fees for transactions are burned
- Blocks with no relays have some mechanism to allow for the block to propagate with no reward
With these assumptions we can state that the only way for PoS to work is if consensus participants are exposed to some of the upside from relays completed by Federated Nodes. It is an open question as to how much consensus participants should be allowed to earn; but let’s assume that 1% of the total block reward goes to consensus participants.
This allows the incentive of the consensus participants to scale as the network scales in relay volume. By exposing them to some of the upside from relays, it aligns all participants of the network in the same direction.