Discover Taiko's unique payment structures in blockchain network 😱

Understanding Taiko Network: How Participants are Rewarded

In order for a network to function effectively, mechanisms must be in place to regulate activities. This is crucial in the realm of blockchains, where smart contracts enable secure and transparent transactions. Different network participants play distinct roles in ensuring the smooth operation of these complex systems. However, these participants need incentives to fulfill their roles effectively. Payment structures play a vital role in incentivizing these participants. Let’s explore how various Taiko network participants contribute to the ecosystem and the rewards they stand to receive in return.

The Lifecycle of a Taiko Transaction

Before delving into the rewards earned by Taiko participants, it’s important to grasp the fundamentals of how a transaction unfolds. On layer 1 (L1), which represents the Ethereum blockchain in its simplest form, a basic transaction involves sending a specific amount of ETH from one account to another. The process includes a wallet, transaction address, and a node that disseminates the transaction to all its peers until it is included in a block.

Layer 1 (L1) transaction process

Basic transaction details
Involvement of wallet, transaction address, and node
Transaction propagation to peers
Inclusion in a block

Transactions become more intricate on layer 2 (L2), where a transaction sent to a node could be centralized or local. An entity consolidates all transactions, and the sequencer, managed by the L2 team, arranges them, potentially deriving value from sequencing changes.

The Taiko Transaction Journey

Taiko strives for Ethereum-equivalence, incorporating slower zk-proof generation. Transactions are initially posted to L1, which determines the block order, followed by block confirmation. L2 nodes observe the L1 state, essentially mirroring L1 activities.

Taiko network transaction flow

Execution on L1
Definition of block order
Confirmation and smart contract involvement
Monitoring by L2 nodes

The Taiko transaction cycle entails a smart contract on L1 where transactions are deposited, and the initial caller secures the block. The individual invoking the smart contract and announcing the block must furnish a proof within a specified timeframe.

Key Participants in the Taiko Network

There are four primary participants in the Taiko ecosystem: users, L2 block proposers, block provers, and L1 validators. Each participant either pays a fee or receives a reward based on their contributions.

Users

Transaction initiation
L2 Taiko transaction fee payment
Gas price fluctuation based on network congestion

L2 Block Proposers

Identification and bundling of transactions
Submission of block to L1 via Taiko L1 smart contract
Priority fee reward for the first proposer

Block Provers

Generation of validity proofs
Hardware costs for proof verification
Fee cut from block proposer’s reward

L1 Validators

Transaction collection and block creation
Independent determination of block order on L1
Staking requirement or node operation

Exploring the Taiko DAO

Instead of dissipating a portion of the fee, a share of each Taiko transaction fee is channeled to the Taiko DAO treasury. This allocation enables funds to be utilized for purposes like monetary policy and risk management. The percentage of the L2 fee directed to the DAO hinges on EIP-1559 and the prevailing congestion level on L2.

Hot Take: Elevating the Taiko Network Participation

As a part of the dynamic Taiko network, your engagement influences the ecosystem’s vitality and efficiency. By understanding the roles and rewards of each participant, you can contribute effectively and benefit from the network’s success. Embrace your position in the Taiko community and explore the diverse opportunities it offers. Your involvement is a key driver in shaping the future of decentralized transactions within the blockchain realm. Join the movement, be rewarded, and make an impact!