What is the basis for weighted reward, calculated from both total and my effective balance?


Question: What is the basis for weighted reward, calculated from both total and my effective balance?

Weighted reward is a concept that helps to distribute rewards fairly among validators in a proof-of-stake system. It is calculated from both the total balance and the effective balance of each validator.

The total balance is the amount of stake that a validator has deposited to the system. The effective balance is the amount of stake that is actually used to calculate the validator's weight in the consensus mechanism. The effective balance is capped at a maximum value, which is currently 32 ETH.

The weighted reward is the product of the total balance and the effective balance divided by the square of the total balance. This formula ensures that validators with higher effective balances get higher rewards, but also that validators with lower total balances get higher rewards per unit of stake.

The rationale behind weighted reward is to incentivize validators to keep their effective balances as high as possible, while also preventing large validators from dominating the system. By capping the effective balance, the system reduces the advantage of having a large stake. By rewarding validators with lower total balances more, the system encourages decentralization and participation of smaller validators.

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