While there’s no exact formula for calculating how much HNT you’ll earn over a given period, there are some higher level concepts, design elements, and rules to keep in mind that will help better explain what you might earn and why. This section covers these, as well as some mining and token reward basics.
How Do Hotspots Earn Helium Tokens?
The Helium blockchain rewards Hotspots for providing wireless coverage and verifying the Helium Network. Hotspots are rewarded in Helium Token, $HNT.
Every epoch, the current consensus group mines approximately 30 blocks on the blockchain. In each block, Hotspots perform various types of work and are awarded according to the following distribution:
|PoC Challenger||Rewarded to any Hotspot that creates a valid PoC challenge and submits the corresponding receipt to the blockchain.|
|PoC Challengees||Awarded to any Hotspot that transmits a POC packet after being targeted by the challenger.|
|Witnesses||Distributed to all Hotspots that witness a beacon packet as part of a PoC Challenge.|
|Consensus Group||Divided equally among the Validators that are part of the outgoing Consensus Group, responsible for mining blocks.|
|Security||Awarded to Helium, Inc and other Network investors who hold Security Tokens.|
|Network Data Transfer||Distributed each epoch to Hotspots that route LongFi sensor data for sensors on the Network during that epoch.|
Do I Have To Actively Participate to Earn Rewards Once My Hotspot is Deployed?
No. Once your Hotspot is completely deployed and fully synced with the Helium blockchain, you as the owner are not required to do anything else in order to earn $HNT. Your Hotspot will perform all of the above activities on its own while it runs.
Target $HNT Production Per Epoch
As of August 1, 2021 (the most-recent halving), the target production rate for new $HNT minted per month is 2,500,000. This means that, if the blockchain performs as designed, it will produce 2,500,000 HNT per month. This target rate is based on the following two parameters, as defined in their specific chain variables:
- Target block time is 60 seconds.
- Target epoch size is 30 blocks.
Recall that, in the Helium blockchain, blocks contain some number of individual transactions, and epochs are comprised of all the blocks mined by the current Consensus Group since the last epoch.
So, if the Network achieves its target block time of 60 seconds, and target epoch of 30 blocks, the blockchain will produce 2,500,000 HNT per month. Per epoch, this equals roughly 1712.704154343 HNT. The math for this is as follows:
- (43200 minutes per month / 30 minutes per epoch) = 1440 epochs per month
- (2500000 tokens minted per month / 1440 epochs per month) = 1736.1111 HNT per epoch
At any point you can go to the Helium blockchain Explorer to view recent block and epoch statistics, past $HNT production numbers, and much more.
HNT Distributions Per Epoch
As calculated above, the target HNT per epoch is approximately 1736.1111. The next logical question is, “Where does all this HNT go?” Let’s take a look.
Below are the mining rewards per epoch as of August 1, 2021. For every complete epoch, marked by the election of a new Consensus Group, all the HNT produced are distributed over the following reward types:
|Reward Type||Percentage||HNT Earned by Reward Type|
|Network Data Transfer||Up to 35%||_Up to 607.6389|
Rewards Change Over Time
In the above table you can see the maximum allotted rewards per reward type in accordance with HIP 10 (described below). If you want to see the current reward type percentage, you can always query the Chain Variables API. The next maximum allotted rewards change is currently scheduled for August 1, 2022.
HIP10 and Variable HNT Rewards for Network Data Transfer
As noted above, HIP10 was activated on August 24th, 2020. HIP10 was introduced by Helium Community Member hashc0de and was adopted by the Helium Community. It ensures that $HNT is rewarded at a rate of 1:1 to the amount of Data Credits (DCs) routed by any given Hotspot per epoch. In doing so, the Network Data Transfer reward is proportional to the DC spent that epoch. This proportional relationship between Network Data Transfer reward type and DC is capped at 35% (607.6389 HNT). Therefore, if the DC burned doesn’t equal the value of 607.6389 HNT, the remaining HNT is redistributed to the Proof of Coverage (PoC) rewards groups pro-rata.
Here are a few examples to illustrate how this works in practice:
Example 1: DC Burn does not exceed 35% HNT
- In a given epoch, 2,000,000 DCs are transferred across the network
- The HNT Oracle Price is $2.00
- In this scenario, total HNT value of DC transferred in this epoch is 10HNT. This calculation is:(2,000,000 DC * $0.00001 / $2 HNT Oracle Price)
- These 10 HNT would be split proportionally to the Hotspots who did the work routing packets at the 1:1 rate.
- The remaining 597.6389 from the Network Data Transfer reward would be distributed ratably among the Challengers, Witnesses and Challengees.
- 20.6457 to the Challenger group
- 461.5945 to the Witness group
- 115.3986 to the Challengee group
Example 2: DC Burn exceeds 35% HNT
- In a given epoch, 500,000,000 DCs are spent on data transfer across the network
- The HNT Oracle Price is $2.00
In this scenario, total HNT value of DC transferred in this epoch is 2500HNT. This calculation is:(500,000,000 DC * $0.00001 / $2 HNT Oracle Price)
- Because the Network DC burn exceeded the 607.6389 available to the Network Data Transfer reward, all Hotspots who did the work over this epoch with split the full 1113.0145HNT proportionally.
Additional Notes on Reward Types and Payouts
- All Valdators in the Consensus group will earn an equal reward.
- All Hotspots participating in PoC, including Challengers, Challengees and Witnesses will earn rewards proportional to how many events they participated in out of the total number of events per epoch.
- All Hotspots participating in Network Data Transfer will earn rewards proportional to their share of the total data transfer in that epoch, as shown above.
- Hotspots can earn one or more reward types during any given epoch.
- Hotspots are only eligible to submit one Proof of Coverage Challenge – which results in them earning the PoC Challenger reward – up to once per 360 blocks.
- PoC Challenger, PoC Challengee, and Witness reward types get distributed in the epoch that includes the corresponding PoC receipt.
- A Hotspots can earn more than one PoC Challengee and Witness rewards per epoch.
The Helium blockchain is still new and growing quickly, so there are bugs to be squashed and optimizations to be made. Target block and epoch times can be difficult to attain consistently. To account for this, the Helium blockchain uses something called proration to ensure that the target of 2,500,000 is achieved even if block and epoch times aren’t on target.
Target HNT Depends on Blocks, Not Clocks
It’s easiest to think of target HNT production over the span of one month. If the blockchain performs on target, resulting in roughly 1460 epochs per month, then 2,500,000 new HNT will be produced. “One month” is a period of time measured by a clock. However, under the hood, we use block time, and the resulting epochs, to mark HNT production against our target. So when blocks are slow, HNT production is reduced proportionally.
Occasionally, due to the rapid growth of the network, there can be less-than-optimal block times. This results in slower epochs. When this happens the blockchain will produce less HNT over the same period of time. This may seem counterintuitive. Shouldn’t the blockchain produce more HNT when block times are slower to ensure the 2,500,000 per month target is hit? No. Again, think blocks, not clocks. Here’s a step-by-step example to make it clearer:
- Let’s assume for a given 60 minute period, the average block time was 120 seconds (which is double the target of 60 seconds).
- This would mark 30 blocks over the 60 minute period, conclude an epoch, and result in HNT rewards being distributed.
- As with any epoch, we would distribute the target of (approximately) 1736.1111 HNT.
- However, since this epoch took twice as long as normal – 60 minutes versus 30 minute target – the blockchain essentially distributes HNT at half the normal rate.
The most important take away here is that, when block times slow and HNT production is reduced, everyone participating in the Network – Witnesses, Challengers, Security Token Holders, etc. – is impacted equally (with the exception of Consensus Group members; more on this below). So, although it’s annoying that the effective rate of HNT may have dropped over a given period of time, know that you’re not the only one earning less. And this is by design.
The only group that doesn’t see its HNT reduced per epoch when blocks are slow is the Consensus Group. Currently there are 40 members of each Consensus Group, sharing 6% of the HNT produced per epoch.
This amount stays fixed while every other category of HNT payout is prorated so that members of the Consensus Group are incentivized to keep elections fast. Otherwise, a malicious Consensus Group member might be inclined to prolong elections. This could be done, for example, to prevent a subsequent election, thus ensuring current membership in the Consensus Group stays intact. By distributing a fixed amount of HNT per 30 block epoch (as opposed to prorating payouts), we remove the incentive to disrupt elections.