Rewards and Penalties

Being a validator in the Gnosis network comes with various responsibilities, rewards, and potential penalties. In this guide, we break them down to help you better understand your staking performance on AVADO.

Rewards

Your validators will receive two streams of rewards, on the Execution Layer and the Consensus Layer, respectively:

	Execution Layer	Consensus Layer
Purpose	Maintain the global ledger of Gnosis transactions.	Maintain the integrity and security of Gnosis Proof of Stake consensus network.
Validator Duties	Produce blocks	Produce attestations Propose blocks Participate in sync committees Report slashings
Frequency of Duties	Random	Attestations: once every epoch Proposer and sync committees: random Slashing: by chance
Components of Rewards	Transaction fee	Attester fee Proposer fee Sync committee fee Slasher fee
Size of Rewards	Highly variable	Relatively predictable based on network conditions and set formulae
Reward Token	xDAI	GNO
Distribution of Rewards	Immediate upon block production	Accrue on validator balance, then periodically "skimmed" by a sweep mechanism.
Destination of Rewards	Fee Recipient Address	Claimable to Withdrawal Address

Where can I see the Execution and Consensus Rewards?

The Charts tab on gnosischa.in displays Execution and Consensus rewards in green and blue, respectively.

In this example, the validator received some proposals and earned both Execution (green) and Consensus (blue) incomes. The Execution income represents the reward for block production, while the Consensus income is a combined fee for attestations and block proposals. These rewards are notably larger than the typical daily income earned solely from attestations.

Where do the Rewards Go?

Let's re-revisit The Gnosis Staker's Journey diagram for better context:

Fee Recipient Address

Execution Layer rewards (in xDAI) are directed to the Fee Recipient Address.

Recall that you can set a default Fee Recipient Address for all your validators, and you can change the Fee Recipient Address any time for individual validators if you wish. See: Set Default Fee Recipient Address.

The Fee Recipient Address is only relevant when your validator is assigned to produce a block and receives transaction fees. Transaction fees are payments made by Gnosis users to validators for including their transactions.

The xDAI rewards are immediately available once a block proposal is made.

Withdrawal Address

Consensus Layer rewards (in GNO) are accrued to the Withdrawal Address.

Recall that you have the option to set a Withdrawal Address in the following ways:

• Initially during the Key Generation process. If you used the Gnosis Wagyu Key Gen software, you had the opportunity to set the Withdrawal Address and include it in the deposit data file when making the GNO deposit.

• At any later time using tools like AVADO's Withdrawal Address Tool: You will need to use your 24-word secret recovery phrase for this purpose.

The Withdrawal Address can only be set once and cannot be changed. You can verify the status of your Withdrawal Address by visiting your Validator Page on the gnosischa.in website and checking under the Deposits tab. Once a Withdrawal Address has been set, you should see withdrawal credentials that start with 0x01.

If you have set up a Withdrawal Address, your Consensus Layer rewards (validator balance above 1 GNO) will be periodically transferred, or "skimmed", from the Beacon Chain to your Withdrawal Address. These are known as partial withdrawals, and happen periodically on "validator sweep".

GNO Rewards need to be manually claimed

Unlike Consensus Rewards on Ethereum which are automatically sent to the Withdrawal Address, the Consensus Rewards on Gnosis Chain (in GNO) are initially sent to the Gnosis Chain Deposit Contract. These rewards are then available to be claimed manually.

See below for instructions on how to claim these rewards.

Validator Sweep

The process of scanning validators for withdrawals occurs sequentially, starting from the validator with index number 0 and progressing in one direction like a clock hand. When the last validator is reached, the sweep process starts over again from the beginning.

During the sweep process, each validator's account is evaluated for potential partial or full withdrawals. The time it takes for the sweep to reach a specific validator and process their withdrawal depends on the total number of validators on the network.

Withdrawal History

To access the full history of withdrawals processed for your validator and check the expected timing of the next withdrawal, you can navigate to the Withdrawals tab on your Validator Page on gnosischa.in.

Alternatively, you can find the same information by searching for your Withdrawal Address on gnosisscan. Please note that withdrawals are not regular Gnosis transactions and will not appear under the Transactions tab. Instead, you need to look under the Withdrawals tab on gnosisscan to locate them. Additionally, you will observe a corresponding increase in your GNO balance when withdrawals are processed.

Withdrawals are not regular Gnosis transactions. They do not show up under the Transactions tab on gnosisscan. Instead, look under the Withdrawals tab to find them.

Claiming the GNO Rewards

Unlike Consensus Rewards on Ethereum which are automatically sent to the Withdrawal Address, the Consensus Rewards on Gnosis Chain (in GNO) are initially sent to the Gnosis Chain Deposit Contract. These rewards are then available to be claimed manually.

There are two options to claim these rewards:

Option 1: Claim on the Gnosis Chain Deposit Site

1. Visit the Gnosis Chain Deposit Site (this is the same web site for the initial deposit of 1 GNO).

2. Connect your wallet hosting the Withdrawal Address.

3. Go to the Autoclaim Rewards tab. Your claimable balance will be shown.

4. You can click Manual claim to make a one-time manual claim of the balance. Sign the transaction on your wallet. Once the transaction goes through, the GNO balance shall immediately become available at your Withdrawal Address.

5. Alternatively, you can also set up Automated claim with your preferred frequency and threshold, to do this automatically.

Option 2: Claim by Interacting with the Gnosis Chain Deposit Contract

You can claim your GNO rewards by manually calling the claimWithdrawal(address) or claimWithdrawals(addresses) methods in the Gnosis Chain Deposit Contract.

1. Visit the Gnosis Chain Deposit Contract on gnosisscan.io.

2. Click on the Contract tab, then navigate to the Write as Proxy sub-section.

3. Click Connect to Web3 to connect your wallet. You can use any wallet for this purpose; it doesn't have to be your Withdrawal Address as anyone can trigger a withdrawal claim.

4. In the contract interface, locate the claimWithdrawal method. Enter the Withdrawal Address for which you want to claim rewards. If you have multiple addresses to claim, format them as an array, like [address1, address2, address3] and use the claimWithdrawals method instead. Remember to include the square brackets and replace address1 etc. with the actual Gnosis addresses.

5. Click the Write button and confirm the transaction on your wallet.

6. Once the transaction is confirmed and included in a block, you should see the GNO tokens transferred to your Withdrawal Address.

Penalties

Validators are penalized for small amounts of GNO if they are offline and fail to perform their assigned duties. The penalties are comparable to the rewards for the same period of time.

Missed Duties	Panelties
Missed Attestations	The penalties for missing the target and source votes are equal to the rewards the attester would have received had they submitted them. This means that instead of having the reward added to their balance, they have an equal value removed from their balance. No penalty for missing the head vote (i.e. head votes are only rewarded, never penalized). No penalty associated with the inclusion delay - the reward will simply not be added to the validator's balance.
Missed Proposals	No penalty for failing to propose a block. You simply lose the rewards (on both Execution and Consensus Layers).
Missed Sync Committees	There is no penalty for missing a sync committee (except the lost rewards)

Penalties are not the same as Slashing

In any case, the penalties are small amounts of GNO that are approximately equal to the rewards the validator would have received if they had not missed their duties.

Penalties are not the same as slashing! Read on for more details.

Slashing

Slashing is reserved for more serious offenses. Validators can be slashed for actions such as double signing or other malicious behavior that compromises the security and integrity of the network. In these cases, 1/32 of a validator's staked GNO is immediately burned, and the validator enters a removal process from the chain.

Realistically, the only condition that can cause a slashing is if you run your validator's keys on two nodes at the same time (such as running more than one AVADO, and loading the same keys into both). Don't let this happen, and you won't get slashed.

Missing attestation duties do not result in slashing.