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How do XRD emissions work?

XRD emissions are new XRD tokens created by the Radix Protocol to incentivize good network security and performance. Emissions of new XRD tokens happen at the end of fixed periods of network time called epochs. The Radix Protocol is configured to aim for epochs to last approximately 5 minutes. To achieve this, the number of rounds per epoch is adjusted dynamically by the protocol. 

At the end of each epoch, the Radix Protocol adds a fixed amount of XRD tokens to the circulating supply as emissions. The amount of XRD emitted is set so that a total of roughly 300m XRD tokens are emitted over the course of one year.  The rate at which XRD tokens are emitted per epoch can be adjusted periodically to achieve the 300m XRD per year target. See What is the Radix Foundation's policy for network fee and network emissions updates for more.

The Radix Protocol calculates the amount each validator within the validator set is due and deposits the newly emitted XRD into the “staked” pool within the validator component, without affecting the supply of Liquid Stake Units. This effectively increases the value of all issued Liquid Stake Units for that validator. Validator fees are automatically taken at this time as well; the validator component simply funnels the appropriate percentage of the emissions to a separate “vault” (a container inside a component that holds resources), which can only be accessed by the holder of the validator owner badge.

A validator component only receives its allocated quantity of XRD emissions for a given 5-minute epoch if it successfully participated in consensus during that entire epoch.  The emissions for that validator for that epoch are effectively burned. This is important to ensure that stakers choose good, performant nodes – and that node-runners are incentivized to run them.

At the start of each epoch, the total amount of XRD staked to each validator node is checked, and a new validator set of 100 is automatically selected for the full duration of that epoch. This means that the total amount of XRD emitted at an epoch’s end is automatically distributed to stakers and node-runners based on the validator list and stakes set at the epoch’s start.

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