Payout timing

Tezos rewards are paid out by the protocol at the end of a given cycle.

By default, TRD then distributes these rewards at the beginning of the next cycle.

Bakers may elect to pay their delegators early to appear more competitive or trustworthy. But bakers paying early effectively give an “advance” to their delegators. This means that they have a lower balance at any given point in time.

TRD behavior is to pay out the last released payment cycle. Last released payment cycle will be calculated based on the formula: current_cycle + 6 - release_override.

A cycle on mainnet lasts 3 days.

The --release_override -R parameter lets the baker override when rewards are released (paid out). Its default value is 0, which is a deprecated choice.

Possible choices are:

  • 0: pay rewards when they are “unfrozen” - 11 to 12 cycles after delegation. Note that the concept of freezing is a holdover from the old “Emmy” consensus algorithm and does not apply anymore with the current Tenderbake consensus algorithm.

  • -5: pay rewards after the cycle runs - 6 to 7 cycles after delegation. The recommended default choice.

  • -11: pay rewards when baking rights are assigned, referred as “adjusted early payouts” (see below) - 1 to 2 cycles after delegation.

Adjusted early payouts

A release_override of -11 will trigger adjusted early payouts.

When selected, this option calculates and pays out the expected rewards based on baking and endorsing rights only. It does not takes into account fee income, denunciation income or rescued block income. It also assumes perfect behavior of the baker and other bakers.

The resulting rewards are thus an estimation. When the cycle actually runs, TRD runs the calculations for this cycle again, based on the rewards type configured (ideal or actual). It then computes the “overestimate” or overpaid value.

TRD then attempts to claim back this overestimate by adjusting the amount paid. This does not always work. If the delegator has emptied their account or changed delegate, there is no longer any payout to offset a past overestimate. Thus, users are advised caution when using this feature.

The estimate can also be lower than the final amount, for example if fees were earned in excess of the missed income, or if blocks have been rescued by the baker. In this case, the overestimate will show a negative amount, the delegator has been underpaid and will be compensated with a positive adjustment.

Overestimate, adjustment and adjusted amount paid can be seen in the calculations CSV file.

Example:

Cycle 100: Frank and Cindy both delegate 1000 tez to Jane’s bakery. For simplicity, Jane’s bakery has no fee and no other delegators. Her bakery is configured with a release_override of -11 and rewards_type actual.

Cycle 103: Since release_override is set to -11, payout for cycle 108 happens during cycle 103. Frank and Cindy’s delegation is taken into account to compute cylce 108’s rights. Jane’s bakery is expected to earn 80 tez rewards for cycle 108 from baking and endorsing rewards. Frank and Cindy contribute 10% each to Jane’s staking balance. They each receive 8 tez as part of the payout for cycle 108.

A calculations/108.csv file is generated which shows Overestimate: pending as cycle 108 has not run yet.

Cycle 104-108: same as cycle 103: Frank and Cindy receive 10% each of the estimated reward.

Cycle 109: Jane’s bakery is expected to earn 60 tez from baking and endorsing rewards for cycle 114, so each delegator should be paid 6 tez. TRD runs the calculations for cycle 108 again and finds that Jane earned 0.5 tez fee for baking a block, and failed to bake the other block, a loss of 20 tez. Overall, Jane’s bakery overestimated its earnings by 19.5 tez. It therefore substracts 1.95 tez of cycle 108 payout to cycle 114 payout (which happens at cycle 109). Frank and Cindy receive 4.05 tez as adjusted amount for cycle 114.

calculations/108.csv file is updated with a total overestimate of 19.5 and their distribution across delegates: 1.95 tez for Frank and for Cindy. calculations/114.csv file mentions an adjustment of 1.95 tez for Frank and Cindy.

Had Frank left the bakery at cycle 104, Jane’s bakery would have been unable to recover his overpaid 1.95 tez.