Shardeum has 3 types of nodes :

1. Validator nodes
2. Archive nodes
3. Standby nodes

Each of these are necessary to the health of the system and have to be incentivized to run the nodes. The incentive structure for each of them :

Constant Node Distribution :

Divide the incentives in such a way that number of nodes remain in a 50:30:20 ratio for Validator : Archive : Standby

Things to consider : Validator and Standby nodes would have similar cost of running but Archive nodes would require much heavier hardware & computing thus it would be more expensive. We are assuming an archive node costs 3x validator node.

Total Rewards >= # of Nodes x Cost per node

Validator :
Rv = Cv x Nv
= C x 0.5x (50%)
= 0.5Cx

Archive :
Ra = Ca x Na
= 3C x 0.3x (Cost of running 3x validator)
= 0.9Cx

Standby :
Rs = Cs x Ns
= C x 0.2x
= 0.2Cx

Rv : Ra :Rs = 0.5 : 0.9 : 0.2 = 32:56:12

So,

Validator nodes : 50% nodes in system - 32% Rewards - ~6M SHM*

Archive nodes : 30% nodes in system - 56% Rewards - ~10M SHM

Standby nodes : 20% nodes in system - 12% Rewards - ~2M SHM

Benefits :

1. Provide fixed incentives to the node runners
2. Miners would change to different types of system based on the advantages being provided

Disadvantages :

1. Very high distribution to Archive nodes
2. Node rewards aren’t fixed, dependent on the number of nodes in the system, lower the better

Workaround: Few 100 archive nodes would be enough to maintain security of the system, they do not need to scale with the total number of nodes, have a hardcap on the token distributed to archive nodes (<5m $)

Calculation Reference:

Shardeum Total Supply : 508 M

Available Supply : 250 M

Staked Supply (80%) : 200 M

*Inflation Rewards (9%) : 18M token per year

Dollar Rewards (500 Mn FDV) : 18 Mn