Difference between revisions of "Node Provider Remuneration"

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Node providers receive rewards (remuneration) for operating node machines that run the IC network. The single source of truth for node provider rewards is the NNS, where changes can only be made through NNS proposals adopted by the IC community.
+
== Rewards ==
  
−
This page summarizes the current node provider rewards and serves to discuss proposals for future reward models. The NNS distributes rewards depending on:
+
Node Providers receive rewards (remuneration) for owning node machines that run in the Internet Computer network. Node Provider rewards are set by the NNS DAO, with changes only possible through NNS proposals adopted by the Internet Computer community.
  
−
* the node hardware version
+
The '''NNS mints Node Provider Rewards every ~2,629,700 seconds''', which is 1/12th of a year. It uses the 30-day moving average price of ICP in Special Drawing Rights (XDR), an international reserve asset created by the International Monetary Fund (IMF). This value is tracked on the [https://dashboard.internetcomputer.org Internet Computer Dashboard] on the "Conversion Rate" chart. (See [[How the 30-Day Moving Average Is Calculated]].) Rewards for the previous month are converted to ICP and transferred to account of the principal registered by the Node Provider in the [[Node Provider Onboarding|Node Onboarding]] process.
−
* geography
 
  
−
taking into account the fact that different hardware versions have different capex and opex that vary with the geography. The prices listed for hardware are based on quotes received from different vendors. See [https://wiki.internetcomputer.org/wiki/Node_provider_hardware#Gen_2 <span class="underline">Node Provider Hardware</span>] for more details on validated hardware configurations. The calculations assume an amortization of CAPEX over 4 years. The actual hardware and operational expenses may differ depending on negotiation of individual NPs with their vendors. All prices are in XDR.
+
These are the current rewards, but reward changes can be proposed to the NNS and adopted by voters at any time.
  
−
[[File:Remuneration V2.1.jpg|alt=|600x600px]]
+
== Remuneration models ==
 +
The NNS distributes rewards depending on:
  
−
The above table clarifies the relationship between the different Hardware types and Remuneration models. Gen1 Hardware has been used by Node Providers to set up nodes during Genesis launch. For these Node Providers, what is called V1 (Version 1) Remuneration model applies. The V1 remuneration model is described below. As work is being done to upgrade the Gen1 hardware with additional storage, the V1 remuneration will need to be updated in the future. This updated remuneration, which will be called V1.1 (Version 1.1) remuneration, will be described in a separate wiki page once an NNS motion proposal for this remuneration has been worked out in detail.  
+
* The generation of the node hardware (gen-1/gen-2)
 +
* Geographic location
 +
* The total number of nodes a provider operates<br />
 +
Different hardware generations lead to varying capital expenditures (CAPEX) and operating expenditures (OPEX), which can also fluctuate based on geographic location. Furthermore, certain locations are deemed more valuable for enhancing network decentralization, resulting in higher rewards for Node Providers in those areas.
  
−
For the further growth of the IC network, a [https://wiki.internetcomputer.org/wiki/Node_provider_hardware#Gen_2 <span class="underline">Gen2 HW specification</span>] has been defined. The new Hardware specification is generic (instead of vendor specific) and supports VM memory encryption and attestation which will be needed in future features on the IC. Since the HW specification is different, a new version of the remuneration, which will be called V2 (Version 2) remuneration model is defined, and is described below. In the future, a remuneration will be proposed that is fully decentralized and includes both automated incentives, rewards and penalties. For clarity, this will be called V3 (Version 3) remuneration.
+
Two [[Node Provider Machine Hardware Guide|node machine hardware generations]] are currently recognized: gen-1 and gen-2. Each hardware generation is associated with its own remuneration model. Some cost estimates are provided for the current 2nd generation, but keep in mind that actual hardware and operational expenses may differ.
 +
{| class="wikitable"
 +
|Hardware Type
 +
|Remuneration Model
 +
|-
 +
|Gen-1
 +
|Gen-1 type-0
 +
|-
 +
|Gen-1 + storage upgrade
 +
|Gen-1 type-1
 +
|-
 +
|Gen-2
 +
|V2: Gen-2 remuneration
 +
V2.2: Gen-2 remuneration update
 +
|-
 +
|Gen-3
 +
|V3: Gen-3 remuneration
 +
|}In the future, a remuneration model will be proposed that includes both automated incentives, rewards, and penalties.
  
−
== Rewards ==
+
== Current Gen-1 Remuneration Model ==
  
−
The '''NNS mints Node Provider Rewards every ~2,629,700 seconds''', which is 1/12th of a year. It uses the 30-day moving average price of ICP in XDR. This value is tracked on the [https://dashboard.internetcomputer.org "Internet Computer Dashboard"].
+
Nodes purchased prior to Genesis were considered Gen-1 nodes. All nodes started out as type-0 with the following calculations: 
−
 
 
−
== Version 1 Remuneration Model (Genesis) ==
 
−
 
 
−
The initial remuneration model included a margin of 150%, accounting for the fact that early NPs took on a significant risk when they decided to invest into hardware and operations prior to Genesis. In other words, the rewards distributed were 2.5 times the expected expenses. The following table provides an overview of expenses and rewards paid, broken down by geography.
 
  
 
{| class="wikitable"
 
{| class="wikitable"
−
|
+
|'''TYPE-0'''
−
|Total costs over 4 years
+
|Reward per month (in XDR)
−
|Incl. profit margin
 
−
|Reward per month
 
 
|-
 
|-
 
|USA
 
|USA
−
|16766
 
−
|41915
 
 
|873
 
|873
 
|-
 
|-
 
|US - FL/GA/CA
 
|US - FL/GA/CA
−
|20876
 
−
|52190
 
 
|1087
 
|1087
 
|-
 
|-
 
|EU
 
|EU
−
|20870
 
−
|52175
 
 
|1087
 
|1087
 
|-
 
|-
 
|Asia
 
|Asia
−
|23271
 
−
|58178
 
 
|1212
 
|1212
 
|}
 
|}
  
−
After the first nodes were up and running, the decision was made to increase the storage capacity of all nodes to support larger subnet states. This required additional hardware and operational expenses. Once the additional storage is usable by the IC, it is proposed to update the Gen-1 remuneration model to cover all expenses. This will be detailed in a separate motion proposal to be voted upon by the community.
+
After the first nodes were up and running, the decision was made to increase the storage capacity of all nodes to support larger subnet states. Thus, a type-1 table was created to reward for the additional costs that the extra storage incurred. Rewards were also broken down further by country. These type-1 values include both the original equipment costs incurred by Gen-1 Node Providers, their operating costs, and the varied costs that Node Providers incurred to purchase the additional storage, ship it to their data centers, and get it installed in each server.  
  
−
== Version 2 Remuneration Model ==
+
{| class="wikitable"
 +
|'''TYPE-1'''                               
 +
|Total rewards per node (in XDR)
 +
|-
 +
|US - California
 +
|1600
 +
|-
 +
|US - other
 +
|1499
 +
|-
 +
|Canada
 +
|1624
 +
|-
 +
|Slovenia
 +
|1720
 +
|-
 +
|Switzerland
 +
|1696
 +
|-
 +
|EU - other
 +
|1584
 +
|-
 +
|Singapore
 +
|1842
 +
|-
 +
|Japan
 +
|1773
 +
|}
 +
An [[Proposed Gen-1 Remuneration Model|Interim Gen-1 Remuneration Model]] has been approved for when the original 48-month agreements are completed.
 +
 
 +
== Gen-2 Remuneration Model ==
  
−
This section presents a proposal for a new remuneration model for 2nd generation Node Providers.
+
This section presents the remuneration model for 2nd generation Node Providers.
  
−
Based on the feedback from NPs and the community on the initial V2 remuneration proposal, discussed in this [https://forum.dfinity.org/t/the-state-and-direction-of-decentralization-nodes-on-the-internet-computer/9170/128?u=svenf forum post], the following updates are proposed:
+
Based on the feedback from Node Providers and the community, discussed in this [https://forum.dfinity.org/t/the-state-and-direction-of-decentralization-nodes-on-the-internet-computer/9170/128?u=svenf forum post], the Gen2 remuneration model is based on the following principles:
−
* Higher rewards for the first nodes of a new NP in order to attract more NPs in an effort to improve ownership decentralization.
+
* Higher rewards for the first nodes of a new Node Provider in order to attract more Node Providers in an effort to improve ownership decentralization.
 
* More refined rewards for nodes in new geographies, like South America, Africa, Asia and Australia, to stimulate further geographical decentralization.
 
* More refined rewards for nodes in new geographies, like South America, Africa, Asia and Australia, to stimulate further geographical decentralization.
  
−
Therefore it is proposed to introduce a node reward model parametrized by:
+
 
−
* '''Geography multiplier (mult)''': This multiplier will be lower, namely 2, for regions with many nodes (e.g. Europe and North America), and higher, namely 3, for regions where there are currently limited nodes present (such as Africa and South America)  
+
The node reward model is parametrized by:
−
* '''Reduction coefficient (r)''': The node reward of the n-th node of a Node Provider is multiplied by r ^ (n-1). The reduction coefficient r is dependent on the geography of the Node Provider. As a result, the first nodes of a Node Provider get attractive rewards but it is increasingly less attractive to add additional nodes.  
+
*'''Geography multiplier (mult)''': This multiplier will be lower, namely 2, for regions with many nodes (e.g. Europe and North America), and higher, namely 3, for regions where there are currently limited nodes present (such as Africa and South America)
 +
*'''Reduction coefficient (r)''': The node reward of the n-th node of a Node Provider is multiplied by r ^ (n-1). The reduction coefficient r is dependent on the geography of the Node Provider. As a result, the first nodes of a Node Provider get attractive rewards, but it is increasingly less attractive to add additional nodes.
 +
 
 +
 
 
The rewards are furthermore dependent on estimated capital and operational expenses that vary based on geographies. A table with the concrete numbers follows below.
 
The rewards are furthermore dependent on estimated capital and operational expenses that vary based on geographies. A table with the concrete numbers follows below.
  
 
In summary, for a geography '''g''', let
 
In summary, for a geography '''g''', let
 
* mult('''g''') be the geography multiplier
 
* mult('''g''') be the geography multiplier
−
* cost('''g''') the total costs over 4 years for acquiring and maintaining a gen 2 node in g in XDR
+
* cost('''g''') be the total costs over 4 years for acquiring and maintaining a gen 2 node in g in XDR
 
* r('''np''', '''g''') be the reduction coefficient
 
* r('''np''', '''g''') be the reduction coefficient
 +
  
 
The monthly reward for the n-th node of a Node Provider ('''np''') in geography '''g''' are defined as follows:
 
The monthly reward for the n-th node of a Node Provider ('''np''') in geography '''g''' are defined as follows:
−
 
+
reward('''g, n''') = cost('''g''') * mult('''g''') * r('''np, g''') ^ (n-1) / (4 * 12)
−
reward('''g, n''') = cost('''g''') * mult('''g''') * r('''np, g''') ^ (n-1) / (4 * 12)
+
If a Node Provider has nodes in more than one type or geography but within the same country, the NNS knows that they are in the same country and counts the combined total of nodes, each according to their own type and geography.
  
 
The total costs over 4 years are multiplied by the geography multiplier, multiplied by the reduction coefficient, and divided by 4 years times 12 months. As a result, rewards for nodes in new geographies and for Node Providers with few nodes are higher. Thereby, a geographical and ownership decentralization is incentivized. The following table shows the geography-dependent values and the monthly reward for the first node onboarded.  
 
The total costs over 4 years are multiplied by the geography multiplier, multiplied by the reduction coefficient, and divided by 4 years times 12 months. As a result, rewards for nodes in new geographies and for Node Providers with few nodes are higher. Thereby, a geographical and ownership decentralization is incentivized. The following table shows the geography-dependent values and the monthly reward for the first node onboarded.  
Line 79: Line 119:
 
|Total cost over 4 years
 
|Total cost over 4 years
 
|Multiplier
 
|Multiplier
−
|Monthly reward for 1st node
+
|Monthly reward for 1st node (in XDR)
 
|Reduction coefficient r
 
|Reduction coefficient r
 
|-
 
|-
Line 119: Line 159:
 
|}
 
|}
  
−
Note that the reduction coefficient r('''np, g''') is applied per (Node Provider + Country) pair. This means if there is more than one node provider in the same country, r('''np, g''') is calculated separately for them. For instance: NP A has 10 nodes in France (EU); reduction coefficient for the 1st node of NP A is 0.95, and for the 10th node is 0.95 ^ 9 = 0.63. If there is NP B with 10 nodes in France (EU) as well, they will get the same rewards as NP A.
+
Note that the reduction coefficient r('''np, g''') is applied per (Node Provider + Country) pair. This means if there is more than one Node Provider in the same country, r('''np, g''') is calculated separately for them. For instance: Node Provider A has 10 nodes in France (EU); reduction coefficient for the 1st node of Node Provider A is 0.95, and for the 10th node is 0.95 ^ 9 = 0.63. If there is Node Provider B with 10 nodes in France (EU) as well, they will get the same rewards as Node Provider A.  
−
 
 
−
As another example, below table shows the calculation of the rewards of the 1st to the 10th node for a Node Provider in South Africa.  
 
−
 
 
−
reward('''south africa, n''')
 
−
 
 
−
= cost('''south africa''') * mult('''south africa''') * r('''south africa''') ^ ('''n'''-1) / (4 * 12)
 
−
 
 
−
= ( 21’455 + 22’531) * 3 * 0.98 ^ ('''n'''-1) / (4 * 12)
 
−
 
 
−
= 2748 * 0.98 ^ ('''n'''-1)
 
  
 +
As an example, the below table shows the calculation of the rewards of the 1st to the 10th node for a Node Provider in South Africa.
 +
reward('''south africa, n''')
 +
= cost('''south africa''') * mult('''south africa''') * r('''south africa''') ^ ('''n'''-1) / (4 * 12)
 +
= ( 21’455 + 22’531) * 3 * 0.98 ^ ('''n'''-1) / (4 * 12)
 +
= 2748 * 0.98 ^ ('''n'''-1)
 
{| class="wikitable"
 
{| class="wikitable"
 
|N-th node
 
|N-th node
 
|Multiplier (rounded)
 
|Multiplier (rounded)
−
|Monthly remuneration (rounded)
+
|Monthly remuneration (rounded, in XDR)
 
|-
 
|-
 
|Node 1
 
|Node 1
Line 175: Line 210:
 
|0.98 ^ (10-1) =0.8337477621
 
|0.98 ^ (10-1) =0.8337477621
 
|2291  
 
|2291  
−
|}
+
|}  
  
−
Since the aim is to grow the IC network outside of existing geographies, a remuneration proposal will be prepared for South America, Australia, as well as other regions, which will be subsequently added to the reward table.  
+
[[File:Profit margin for each additional node graph for remuneration V2.png|1000px]]
  
−
[[File:Reward minus costs NP remuneration V2.png|750px]]
+
The above figure shows the additional cash flow (investments minus costs) a Node Provider receives for adding an additional node for three regions (South Africa, Europe and USA) that can be calculated based on the Version 2 remuneration model. Note that the calculation does not take into account the time value of the cash flows (i.e. discounted value), but purely the cash flows or rewards and expenses.  
  
−
The above figure shows the additional cash flow (investments minus costs) a NP receives for adding an additional node, for three regions (South Africa, Europe and USA) that can be calculated based on the V2 remuneration model. Note that the calculation does not take into account the time value of the cash flows (i.e. discounted value), but purely the cash flows or rewards and expenses.  
+
What is visible from this graph is that adding additional nodes only generates additional cash flow for a specific number of nodes, in a specific region. For example, in Europe adding up to approximately 15 nodes will generate additional cash flow, whereas for the US region, this is only 2 nodes.  
  
−
What is visible from this graph is that adding additional nodes only generates additional cash flow for a specific number of nodes, in a specific region. For example, in Europe adding up to approximately 15 nodes will generate additional cash flow, whereas for the US region this is only 2 nodes.  
+
Potential new Node Providers can make a full calculation themselves of the Internal Rate of Return, Payback period and cash flow based on their actual CAPEX and OPEX costs. Of course, these actual CAPEX and OPEX costs may differ from the costs on which the remuneration is based, depending on the specific contracts the new Node Provider has been able to negotiate with hardware vendors and DC operators.  
  
−
Potential new NPs can make a full calculation themselves of the Internal Rate of Return, Payback period and cash flow based on their actual CAPEX and OPEX costs. Of course, these actual CAPEX and OPEX costs may differ from the costs on which the remuneration is based, depending on the specific contracts the new NP has been able to negotiate with hardware vendors and DC operators.
+
=== Version 2.1 Remuneration Model ===
 +
The Version 2.1 remuneration model replaces the Version 2 remuneration for 2nd generation Node Providers. It includes the following changes compared to Version 2, based on discussion in this [https://forum.dfinity.org/t/the-state-and-direction-of-decentralization-nodes-on-the-internet-computer/9170/192 forum thread]:
  
−
The V2 remuneration proposal only applies for a limited period in which the team and community are working on updated remuneration proposals.  
+
* No entry for the region Asia will be used anymore. For the Asia region, specific country entries will be used.
 +
* Specific entries for Hong Kong and India will be added to the remuneration table.
 +
* The multiplier is set to a value of 2 for all countries. In future, this might be updated through a new NNS proposal if the community determines that the risk premium for projects should be different for different countries (for example, if the risk of running in node in one specific country is higher than the risk of running in node in another country, this might validate a different multiplier).
 +
* A limit is set to the number of nodes in new countries for which the remuneration applies. Once this is reached, the reduction coefficient for additional nodes will be adjusted to allow adding only one or two nodes for this country, similar to existing countries like the U.S. and Switzerland. Currently, the limit of number of nodes per country is set to 50 nodes, which allows NP’s to add a node in that specific country to every available subnet and have a small set of additional nodes in case nodes are unhealthy or require maintenance.
 +
* Version 2 was relevant for a limited time period in 2023. Version 2.1 became the current model as of May 2023.
  
−
== Version 2.1 Remuneration Model ==
 
−
The proposed remuneration model V2.1 will replace the remuneration V2 for 2nd generation Node Providers with the following changes compared to V2, based on discussion in this [https://forum.dfinity.org/t/the-state-and-direction-of-decentralization-nodes-on-the-internet-computer/9170/192 forum thread]:
 
  
−
* No entry for the region Asia will be used anymore. For the Asia region, specific country entries will be used.
 
−
* Specific entries for Hong Kong and India will be added to the remuneration table. In future, through community proposals, other country entries will be added as well.
 
−
* The multiplier is set to a value of 2 for all countries. In future, this might be updated through a new NNS proposal if the community wants that the risk premium for projects should be different for different countries (for example, if the risk of running in node in one specific country is higher than the risk of running in node in another country, this might validate a different multiplier).
 
−
* A limit is set to the number of nodes in new countries for which the remuneration applies. Once this is reached, the reduction coefficient for additional nodes will be adjusted to allow adding only one or two nodes for this country, similar to existing countries like the U.S. and Switzerland. Currently, the limit of number of nodes per country is set to 50 nodes, which allows NP’s to add a node in that specific country to every available subnet and have a small set of additional nodes in case nodes are unhealthy or require maintenance.
 
−
* For the few Node Providers that have started the onboarding process based on remuneration V2. This will cover a maximum of 12 nodes in these countries. For any new Node Providers and new nodes, the Remuneration model V2.1 will apply.
 
  
 +
The following table shows the geography-dependent values and the monthly reward for the first node onboarded based on the Remuneration Version 2.1.
  
−
The following table shows the geography-dependent values and the monthly reward for the first node onboarded based on the Remuneration V2.1.
+
With this latest update, there are sufficient node machines for running the current load of canisters on every subnet, and for the decentralisation of the subnets measured in Nakamoto coefficients; no new country entries will be added. Work is in progress on an IC Topology Roadmap for the next half year and the next year, with the objective to assess how many node machines and where new node machines are required for further growth and decentralisation of the IC network. Based on that it will be discussed on the IC forum what changes to make to the Node Provider remuneration table and subsequent proposals will be submitted to the NNS for the community to vote upon.  
  
 
{| class="wikitable"
 
{| class="wikitable"
Line 205: Line 239:
 
|Total costs over 4 years
 
|Total costs over 4 years
 
|Multiplier
 
|Multiplier
−
|Monthly reward for 1st node
+
|Monthly reward for 1st node (in XDR)
 
|Reduction coefficient r
 
|Reduction coefficient r
 
|-
 
|-
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|2
 
|2
 
|1542
 
|1542
 +
|0.95
 +
|-
 +
|Israel
 +
|49500
 +
|2
 +
|2063
 
|0.95
 
|0.95
 
|-
 
|-
Line 274: Line 314:
 
|0.7
 
|0.7
 
|-
 
|-
−
|Asia HK
+
|Hong Kong
 
|46141
 
|46141
 
|2
 
|2
Line 280: Line 320:
 
|0.95
 
|0.95
 
|-
 
|-
−
|Asia India
+
|India
 
|50377
 
|50377
 
|2
 
|2
 
|2100
 
|2100
 +
|0.95
 +
|-
 +
|South Korea
 +
|51774
 +
|2
 +
|2158
 +
|0.95
 +
|-
 +
|Sri Lanka
 +
|52800
 +
|2
 +
|2200
 +
|0.95
 +
|-
 +
|Georgia
 +
|57455
 +
|2
 +
|2394
 
|0.95
 
|0.95
 
|-
 
|-
Line 290: Line 348:
 
|2
 
|2
 
|2310
 
|2310
 +
|0.95
 +
|-
 +
|Australia
 +
|47000
 +
|2
 +
|1958
 +
|0.95
 +
|-
 +
|New Zealand
 +
|47000
 +
|2
 +
|1958
 +
|0.95
 +
|-
 +
|Panama
 +
|51774
 +
|2
 +
|2158
 +
|0.95
 +
|-
 +
|Costa Rica
 +
|51774
 +
|2
 +
|2158
 +
|0.95
 +
|-
 +
|Colombia
 +
|57455
 +
|2
 +
|2394
 
|0.95
 
|0.95
 
|}
 
|}
 +
 +
== Reward calculator ==
 +
For your convenience, we prepared the following [https://www.calconic.com/calculator-widgets/ic-node-provider-rewards/659d42a6d96fa70029e56629?layouts=true calculator for the node rewards]
 +
 +
== Trustworthy Node Metrics ==
 +
In February 2024, Trustworthy Node Metrics were introduced on the IC, in an attempt to provide greater visibility into node performance, stability, and reliability. These metrics could potentially be used to influence node rewards in the future.
 +
 +
There is a forum post here https://forum.dfinity.org/t/trustworthy-node-metrics-for-useful-work/22989, then
 +
 +
Blog post on Medium here: https://medium.com/dfinity/dont-trust-verify-new-node-metrics-on-the-internet-computer-367cc154a572
 +
 +
And technical documentation and instructions here: https://dfinity.github.io/dre/trustworthy-metrics/trustworthy-metrics.html

Latest revision as of 20:30, 29 February 2024

Rewards

Node Providers receive rewards (remuneration) for owning node machines that run in the Internet Computer network. Node Provider rewards are set by the NNS DAO, with changes only possible through NNS proposals adopted by the Internet Computer community.

The NNS mints Node Provider Rewards every ~2,629,700 seconds, which is 1/12th of a year. It uses the 30-day moving average price of ICP in Special Drawing Rights (XDR), an international reserve asset created by the International Monetary Fund (IMF). This value is tracked on the Internet Computer Dashboard on the "Conversion Rate" chart. (See How the 30-Day Moving Average Is Calculated.) Rewards for the previous month are converted to ICP and transferred to account of the principal registered by the Node Provider in the Node Onboarding process.

These are the current rewards, but reward changes can be proposed to the NNS and adopted by voters at any time.

Remuneration models

The NNS distributes rewards depending on:

  • The generation of the node hardware (gen-1/gen-2)
  • Geographic location
  • The total number of nodes a provider operates

Different hardware generations lead to varying capital expenditures (CAPEX) and operating expenditures (OPEX), which can also fluctuate based on geographic location. Furthermore, certain locations are deemed more valuable for enhancing network decentralization, resulting in higher rewards for Node Providers in those areas.

Two node machine hardware generations are currently recognized: gen-1 and gen-2. Each hardware generation is associated with its own remuneration model. Some cost estimates are provided for the current 2nd generation, but keep in mind that actual hardware and operational expenses may differ.

Hardware Type Remuneration Model
Gen-1 Gen-1 type-0
Gen-1 + storage upgrade Gen-1 type-1
Gen-2 V2: Gen-2 remuneration

V2.2: Gen-2 remuneration update

Gen-3 V3: Gen-3 remuneration

In the future, a remuneration model will be proposed that includes both automated incentives, rewards, and penalties.

Current Gen-1 Remuneration Model

Nodes purchased prior to Genesis were considered Gen-1 nodes. All nodes started out as type-0 with the following calculations:

TYPE-0 Reward per month (in XDR)
USA 873
US - FL/GA/CA 1087
EU 1087
Asia 1212

After the first nodes were up and running, the decision was made to increase the storage capacity of all nodes to support larger subnet states. Thus, a type-1 table was created to reward for the additional costs that the extra storage incurred. Rewards were also broken down further by country. These type-1 values include both the original equipment costs incurred by Gen-1 Node Providers, their operating costs, and the varied costs that Node Providers incurred to purchase the additional storage, ship it to their data centers, and get it installed in each server.

TYPE-1 Total rewards per node (in XDR)
US - California 1600
US - other 1499
Canada 1624
Slovenia 1720
Switzerland 1696
EU - other 1584
Singapore 1842
Japan 1773

An Interim Gen-1 Remuneration Model has been approved for when the original 48-month agreements are completed.

Gen-2 Remuneration Model

This section presents the remuneration model for 2nd generation Node Providers.

Based on the feedback from Node Providers and the community, discussed in this forum post, the Gen2 remuneration model is based on the following principles:

  • Higher rewards for the first nodes of a new Node Provider in order to attract more Node Providers in an effort to improve ownership decentralization.
  • More refined rewards for nodes in new geographies, like South America, Africa, Asia and Australia, to stimulate further geographical decentralization.


The node reward model is parametrized by:

  • Geography multiplier (mult): This multiplier will be lower, namely 2, for regions with many nodes (e.g. Europe and North America), and higher, namely 3, for regions where there are currently limited nodes present (such as Africa and South America)
  • Reduction coefficient (r): The node reward of the n-th node of a Node Provider is multiplied by r ^ (n-1). The reduction coefficient r is dependent on the geography of the Node Provider. As a result, the first nodes of a Node Provider get attractive rewards, but it is increasingly less attractive to add additional nodes.


The rewards are furthermore dependent on estimated capital and operational expenses that vary based on geographies. A table with the concrete numbers follows below.

In summary, for a geography g, let

  • mult(g) be the geography multiplier
  • cost(g) be the total costs over 4 years for acquiring and maintaining a gen 2 node in g in XDR
  • r(np, g) be the reduction coefficient


The monthly reward for the n-th node of a Node Provider (np) in geography g are defined as follows: 

reward(g, n) = cost(g) * mult(g) * r(np, g) ^ (n-1) / (4 * 12)

If a Node Provider has nodes in more than one type or geography but within the same country, the NNS knows that they are in the same country and counts the combined total of nodes, each according to their own type and geography.

The total costs over 4 years are multiplied by the geography multiplier, multiplied by the reduction coefficient, and divided by 4 years times 12 months. As a result, rewards for nodes in new geographies and for Node Providers with few nodes are higher. Thereby, a geographical and ownership decentralization is incentivized. The following table shows the geography-dependent values and the monthly reward for the first node onboarded.

Geography Total cost over 4 years Multiplier Monthly reward for 1st node (in XDR) Reduction coefficient r
USA 31034 2 1294 0.7
US - FL/GA/CA 37031 2 1542 0.7
EU 36996 2 1542 0.95
Asia Singapore/Japan 40508 2 1688 0.7
Asia non Singapore 40508 3 2532 0.98
South Africa 43986 3 2748 0.98

Note that the reduction coefficient r(np, g) is applied per (Node Provider + Country) pair. This means if there is more than one Node Provider in the same country, r(np, g) is calculated separately for them. For instance: Node Provider A has 10 nodes in France (EU); reduction coefficient for the 1st node of Node Provider A is 0.95, and for the 10th node is 0.95 ^ 9 = 0.63. If there is Node Provider B with 10 nodes in France (EU) as well, they will get the same rewards as Node Provider A.

As an example, the below table shows the calculation of the rewards of the 1st to the 10th node for a Node Provider in South Africa. 

reward(south africa, n)
= cost(south africa) * mult(south africa) * r(south africa) ^ (n-1) / (4 * 12)
= ( 21’455 + 22’531) * 3 * 0.98 ^ (n-1) / (4 * 12)
= 2748 * 0.98 ^ (n-1)
N-th node Multiplier (rounded) Monthly remuneration (rounded, in XDR)
Node 1 0.98 ^ (1-1) =1 2748
Node 2 0.98 ^ (2-1) =0.98 2693
Node 3 0.98 ^ (3-1) =0.96040 2639
Node 4 0.98 ^ (4-1) =0.941192 2586
Node 5 0.98 ^ (5-1) =0.92236816 2534
Node 6 0.98 ^ (6-1) =0.9039207968 2483
Node 7 0.98 ^ (7-1) =0.885842309 2434
Node 8 0.98 ^ (8-1) = 0.8681255332 2385
Node 9 0.98 ^ (9-1) =0.8507630226 2337
Node 10 0.98 ^ (10-1) =0.8337477621 2291

Profit margin for each additional node graph for remuneration V2.png

The above figure shows the additional cash flow (investments minus costs) a Node Provider receives for adding an additional node for three regions (South Africa, Europe and USA) that can be calculated based on the Version 2 remuneration model. Note that the calculation does not take into account the time value of the cash flows (i.e. discounted value), but purely the cash flows or rewards and expenses.

What is visible from this graph is that adding additional nodes only generates additional cash flow for a specific number of nodes, in a specific region. For example, in Europe adding up to approximately 15 nodes will generate additional cash flow, whereas for the US region, this is only 2 nodes.

Potential new Node Providers can make a full calculation themselves of the Internal Rate of Return, Payback period and cash flow based on their actual CAPEX and OPEX costs. Of course, these actual CAPEX and OPEX costs may differ from the costs on which the remuneration is based, depending on the specific contracts the new Node Provider has been able to negotiate with hardware vendors and DC operators.

Version 2.1 Remuneration Model

The Version 2.1 remuneration model replaces the Version 2 remuneration for 2nd generation Node Providers. It includes the following changes compared to Version 2, based on discussion in this forum thread:

  • No entry for the region Asia will be used anymore. For the Asia region, specific country entries will be used.
  • Specific entries for Hong Kong and India will be added to the remuneration table.
  • The multiplier is set to a value of 2 for all countries. In future, this might be updated through a new NNS proposal if the community determines that the risk premium for projects should be different for different countries (for example, if the risk of running in node in one specific country is higher than the risk of running in node in another country, this might validate a different multiplier).
  • A limit is set to the number of nodes in new countries for which the remuneration applies. Once this is reached, the reduction coefficient for additional nodes will be adjusted to allow adding only one or two nodes for this country, similar to existing countries like the U.S. and Switzerland. Currently, the limit of number of nodes per country is set to 50 nodes, which allows NP’s to add a node in that specific country to every available subnet and have a small set of additional nodes in case nodes are unhealthy or require maintenance.
  • Version 2 was relevant for a limited time period in 2023. Version 2.1 became the current model as of May 2023.


The following table shows the geography-dependent values and the monthly reward for the first node onboarded based on the Remuneration Version 2.1.

With this latest update, there are sufficient node machines for running the current load of canisters on every subnet, and for the decentralisation of the subnets measured in Nakamoto coefficients; no new country entries will be added. Work is in progress on an IC Topology Roadmap for the next half year and the next year, with the objective to assess how many node machines and where new node machines are required for further growth and decentralisation of the IC network. Based on that it will be discussed on the IC forum what changes to make to the Node Provider remuneration table and subsequent proposals will be submitted to the NNS for the community to vote upon.

Geography Total costs over 4 years Multiplier Monthly reward for 1st node (in XDR) Reduction coefficient r
US 31034 2 1294 0.7
US California 37031 2 1543 0.7
Canada 37031 2 1543 0.7
Germany 36996 2 1542 0.7
Switzerland 36996 2 1542 0.7
France 36996 2 1542 0.7
Belgium 36996 2 1542 0.7
Slovenia 36996 2 1542 0.7
Europe (other than above) 36996 2 1542 0.95
Israel 49500 2 2063 0.95
Japan 40508 2 1688 0.7
Singapore 40508 2 1688 0.7
Hong Kong 46141 2 1922 0.95
India 50377 2 2100 0.95
South Korea 51774 2 2158 0.95
Sri Lanka 52800 2 2200 0.95
Georgia 57455 2 2394 0.95
South Africa 55455 2 2310 0.95
Australia 47000 2 1958 0.95
New Zealand 47000 2 1958 0.95
Panama 51774 2 2158 0.95
Costa Rica 51774 2 2158 0.95
Colombia 57455 2 2394 0.95

Reward calculator

For your convenience, we prepared the following calculator for the node rewards

Trustworthy Node Metrics

In February 2024, Trustworthy Node Metrics were introduced on the IC, in an attempt to provide greater visibility into node performance, stability, and reliability. These metrics could potentially be used to influence node rewards in the future.

There is a forum post here https://forum.dfinity.org/t/trustworthy-node-metrics-for-useful-work/22989, then

Blog post on Medium here: https://medium.com/dfinity/dont-trust-verify-new-node-metrics-on-the-internet-computer-367cc154a572

And technical documentation and instructions here: https://dfinity.github.io/dre/trustworthy-metrics/trustworthy-metrics.html

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