Mining and Token Rewards | Helium Documentation (2024)

While there's no exact formula for calculating how much HNT you'll earn over a given period, thereare some higher-level concepts, design elements, and rules to keep in mind that will help betterexplain what you might earn and why. This section covers these, as well as some mining and tokenreward basics.

How Do Hotspots Earn Helium Tokens?​

The Helium Network rewards Hotspots for providing wireless coverage and verifying the HeliumNetwork. Helium has migrated to Solana. All LoRaWAN Hotspots now mine IOT, while HNT is emitted intothe subnetwork Treasury. IOT Holders can redeem their IOT for HNT. The redemption ratio iscalculated every day anew (in technical terms: at the end of each "epoch") as the ratio between theamount of existing IOT tokens and the amount of HNT in the subnetwork Treasury at the time.

Every epoch, the current consensus group mines approximately 30 blocks on the blockchain. In eachblock, Hotspots perform various types of work and are awarded according to the followingdistribution:

Do I Have To Actively Participate to Earn Rewards Once My Hotspot is Deployed?

No. Once your Hotspot is completely deployed and onboarded to the Helium blockchain, you as theowner are not required to do anything else to earn IOT. Your Hotspot will perform all of the aboveactivities on its own while it runs.

Target HNT Production Per Epoch​

As of August 1, 2021 (the most recent halving), the target production rate for new HNT minted permonth is 2,500,000. This means that, if the blockchain performs as designed, it will produce2,500,000 HNT per month. This target rate is based on the following two parameters, as defined intheir specific chain variables:

• Target block time is 60 seconds.
• Target epoch size is 30 blocks.

Recall that, in the Helium blockchain, blocks contain some number of individual transactions, andepochs are comprised of all the blocks mined by the current Consensus Group since the last epoch.

So, if the Network achieves its target block time of 60 seconds, and target epoch of 30 blocks,the blockchain will produce 2,500,000 HNT per month. Per epoch, this equals roughly 1736.1111HNT. The math for this is as follows:

• (43200 minutes per month / 30 minutes per epoch) = 1440 epochs per month
• (2500000 tokens minted per month / 1440 epochs per month) = 1736.1111 HNT per epoch

What Are The Current Block and Epoch Times?​

At any point, you can go to the Helium blockchain Explorer to viewrecent block and epoch statistics, past HNT production numbers, and much more.

HNT Distributions Per Epoch​

As calculated above, the target HNT per epoch is approximately 1736.1111. The next logicalquestion is, "Where does all this HNT go?" Let's take a look.

Below are the mining rewards per epoch as of August 1, 2022. For every complete epoch, marked by theelection of a new Consensus Group, all the HNT produced are distributed over the following rewardtypes:

Rewards Change Over Time

In the above table, you can see the maximum allotted rewards per reward type following HIP 10(described below). The next maximum allotted rewards change is currently scheduled for August 1,2023 and will be updated along with changes related to the havening to maintain max HNT supply.

HIP-10 and Variable HNT Rewards for Network Data Transfer​

As noted above,HIP-10 was activated on August 24th, 2020.

It ensures that HNT is rewarded at a rate of 1:1 to the amount of Data Credits (DCs) routed by anygiven Hotspot per epoch. In doing so, the Network Data Transfer reward is proportional to the DCspent in that epoch. This proportional relationship between Network Data Transfer reward type and DCis capped at 37.50% (651.0417 HNT). Therefore, if the DC burned doesn't equal the value of651.0417 HNT, the remaining HNT is redistributed to the Proof of Coverage (PoC) rewards groupspro-rata.

Here are a few examples to illustrate how this works in practice:

Example 1: DC Burn does not exceed 37.50% HNT

• In a given epoch, 8,000,000 DCs are transferred across the network
• The HNT Oracle Price is $8.00
• In this scenario, the total HNT value of DC transferred in this epoch is 10 HNT. Thiscalculation is:(8,000,000 DC * $0.00001 / $8.00 HNT Oracle Price)
• These 10 HNT would be split proportionally to the Hotspots that did the work routing packets atthe 1:1 rate.
• The remaining 641.0417 from the Network Data Transfer reward would be distributed by weightamong the Witnesses and Beaconers.
  • 128.2083 to the Beaconer group => 4.73/(4.73+18.92) = 20%
  • 512.8333 to the Witness group => 18.92/(4.73+18.92) = 80%

Example 2: DC Burn exceeds 37.50% HNT

• In a given epoch, 800,000,000 DCs are spent on data transfer across the network
• The HNT Oracle Price is $8.00

In this scenario, the total HNT value of DC transferred in this epoch is 1000 HNT. Thiscalculation is:(800,000,000 DC * $0.00001 / $8.00 HNT Oracle Price)

• Because the Network DC burn exceeded the 651.0417 available to the Network Data Transfer reward,all Hotspots that did the work over this epoch will split the full 1000 HNT proportionally.

Additional Notes on Reward Types and Payouts​

• All Hotspots participating in PoC, including Beaconers and Witnesses will earn rewardsproportional to how many events they participated in out of the total number of events per epoch.
• All Hotspots participating in Network Data Transfer will earn rewards proportional to theirshare of the total data transfer in that epoch, as shown above.
• Hotspots can earn one or more reward types during any given epoch.
• PoC Beacon and Witness reward types get distributed in the epoch that includes thecorresponding PoC receipt.
• A Hotspots can earn more than one PoC Beacon and Witness reward per epoch.

HNT Proration and Slow Block Times​

The Helium blockchain is still new and growing quickly, so there are bugs to be squashed andoptimizations to be made. Target block and epoch times can be difficult to attain consistently. Toaccount for this, the Helium blockchain uses something called proration to ensure that the targetof 2,500,000 is achieved even if block and epoch times aren't on target.

Target HNT Depends on Blocks, Not Clocks

It's easiest to think of target HNT production over one month. If the blockchain performs on target,resulting in roughly 1440 epochs per month, then 2,500,000 new HNT will be produced. "One month"is a period of time measured by a clock. However, under the hood, we use block time, and theresulting epochs, to mark HNT production against our target. So when blocks are slow, HNT productionis reduced proportionally.

What Happens to HNT When Block Times are Slow?​

Occasionally, due to the rapid growth of the network, there can be less-than-optimal block times.This results in slower epochs. When this happens the blockchain will produce less HNT over thesame period of time. This may seem counterintuitive. Shouldn't the blockchain produce more HNT whenblock times are slower to ensure the 2,500,000 per month target is hit? No. Again, think blocks,not clocks. Here's a step-by-step example to make it clearer:

• Let's assume for a given 60 minute period, the average block time was 120 seconds (which isdouble the target of 60 seconds).
• This would mark 30 blocks over the 60 minute period, conclude an epoch, and result in HNTrewards being distributed.
• As with any epoch, we would distribute the target of (approximately) 1736.1111 HNT.
• However, since this epoch took twice as long as normal - 60 minutes versus 30 minute target -the blockchain essentially distributes HNT at half the normal rate.

When Block Times Slow Down, Everyone Earns Less​

The most important takeaway here is that, when block times slow and HNT production is reduced,everyone participating in the Network - Witnesses, Security Token Holders, etc. - is impactedequally (except for Consensus Group members; more on this below). So, although it's annoying thatthe effective rate of HNT may have dropped over a given period of time, know that you're not theonly one earning less. And this is by design.

Consensus Groups and Slow Block Times​

The only group that doesn't see its HNT reduced per epoch when blocks are slow is the ConsensusGroup. Currently, there are 43 members of each Consensus Group, sharing 6% of the HNT produced perepoch.

This amount stays fixed while every other category of HNT payout is prorated so that members of theConsensus Groups are incentivized to keep elections fast. Otherwise, a malicious Consensus Groupmember might be inclined to prolong elections. This could be done, for example, to prevent asubsequent election, thus ensuring current membership in the Consensus Group stays intact. Bydistributing a fixed amount of HNT per 30 block epoch (as opposed to prorating payouts), we removethe incentive to disrupt elections.