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How are nodes outside of the top 100 incentivised to “step in” if any of the top 100 validators drop out?

The Radix Protocol selects the top 100 nodes by delegated stake at the beginning of every epoch

If any top 100 validator nodes unregister (and just become a “full node” again), or if token holders remove enough delegated stake to drop that validator out of the top 100 (e.g. because the validator is non-performant or no longer trusted by stakers), that validator will be replaced at the next epoch boundary.

When this occurs, it opens an opportunity for other registered validator nodes that weren’t previously in the top 100 to move into the validator set and immediately earn network emission rewards.

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