Incentives and Penalty Mechanism

The Incentive Mechanism & Reputation System in WebHash Protocol ensures sustainable, fair, and transparent rewards for storage nodes while maintaining high-performance and reliable decentralized hosting.

It is designed to:

✅ Encourage honest participation by rewarding nodes for storage, uptime, and bandwidth served. ✅ Punish unreliable nodes through a penalty & slashing system. ✅ Incentivize long-term stability by boosting high-reputation nodes. ✅ Ensure economic sustainability through smart contract-based automated payments.

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1. Key Components of the Incentive System

The WebHash Incentive Mechanism is governed by smart contracts that automate:

Component	Purpose
RewardContract	Calculates and distributes rewards to nodes.
ReputationSystem	Tracks node performance, affecting rewards & penalties.
PenaltyEnforcement	Detects misbehavior and applies penalties/slashing.
WebHash DAO Governance	Adjusts reward policies and resolves disputes.

Each storage node must periodically report metrics and verify its activity on-chain to remain eligible for rewards.

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2. Reward Structure & Calculation

Rewards are distributed based on four key metrics:

Metric	Definition	Weight in Rewards
Storage Capacity	Amount of data pinned (MB/GB).	40%
Uptime	Availability measured in percentage.	30%
Bandwidth Served	Total retrievals processed by the node.	20%
Reputation Score	Determines if a node qualifies for bonus rewards.	10%

A node with high uptime, more stored data, and frequent retrievals will receive the maximum possible rewards.

A. RewardContract (Smart Contract)

The RewardContract manages reward distribution based on on-chain node metrics.

i. Data Structure

struct NodeMetrics {
    uint256 storedData; // Total stored data in MB
    uint256 uptime; // Uptime percentage (0-100)
    uint256 retrievalCount; // Number of data retrievals served
    uint256 reputationScore; // Current node reputation
    uint256 lastUpdated; // Last metrics submission timestamp
}
mapping(address => NodeMetrics) public nodeMetrics;

ii. Reward Calculation Formula

function calculateRewards(address node) public view returns (uint256) {
    NodeMetrics memory metrics = nodeMetrics[node];
    uint256 reward = (metrics.storedData * STORAGE_WEIGHT) + 
                     (metrics.uptime * UPTIME_WEIGHT) + 
                     (metrics.retrievalCount * BANDWIDTH_WEIGHT);

    if (metrics.reputationScore > 800) {
        reward += (reward * REPUTATION_BONUS) / 100; // Bonus for high-reputation nodes
    }

    return reward;
}

✅ Prevents manipulation by ensuring all reward conditions are on-chain verified.

iii. Claiming Rewards

Nodes can claim their accumulated rewards using:function claimRewards() external;

Nodes must submit proof-of-storage & activity before claiming.

✅ Rewards are locked for 3 epochs to prevent abuse.

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3. Reputation System

The ReputationSystem maintains a score-based ranking for each node, determining its eligibility for rewards and risk of penalties.

A. Reputation Score Calculation

Each storage node starts with 1,000 reputation points.

Action	Impact on Reputation
Successful content storage & retrieval	+10 points per request
Consistently submitting storage proofs	+50 points every 24 hours
Node downtime > 10% in an epoch	-100 points
Failing to store assigned content	-300 points
Submitting false proofs (fraud)	-500 points (Severe penalty & slashing)

If a node's reputation drops below 300, it becomes ineligible for rewards.

i. Smart Contract for Reputation Scoring

function updateReputation(address node, int256 delta) external {
    nodeMetrics[node].reputationScore += delta;
    if (nodeMetrics[node].reputationScore < 300) {
        deactivateNode(node); // Remove ineligible nodes
    }
}

✅ Prevents unreliable nodes from consuming rewards.

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4. Penalty & Slashing System

The PenaltyEnforcement mechanism ensures network integrity by penalizing fraudulent or inactive nodes.

A. Types of Penalties

Violation	Penalty
Not submitting storage proof	Temporary suspension until proof is submitted.
Failing storage verification	Loss of rewards for that epoch.
Repeated downtime (3 strikes)	Reputation score deduction.
False storage claim (Fraud)	Immediate slashing (stake burned).

B. Smart Contract-Based Slashing

✅ Nodes must stake WebHash tokens to participate. ✅ If they engage in fraudulent behavior, their stake is slashed.

function slashNode(address node) external {
    require(nodeMetrics[node].reputationScore < 300, "Node still valid");
    uint256 slashAmount = stakedTokens[node] / 2; // 50% penalty
    burn(slashAmount);
}

✅ Prevents malicious actors from exploiting the system.

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5. WebHash DAO Governance & Dispute Resolution

The WebHash DAO oversees:

• Reward policies

• Reputation adjustments

• Penalty enforcement

Nodes can contest penalties by filing disputes via smart contracts.

A. Dispute Resolution Process

A node submits a dispute claim via:

function disputePenalty(address node) external;

✅ The WebHash DAO votes on whether to reinstate or penalize the node.

If fraud is confirmed, the stake is slashed, and the node is blacklisted. If the node is innocent, it regains lost reputation points.

✅ Ensures fair and decentralized governance over the network.

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6. Hosting Deals & Premium Incentives (WebHash Pro)

For guaranteed hosting services, WebHash allows direct payments to nodes for SLA-based premium hosting.

A. Hosting SLA Contract

✅ Users lock tokens to pay "Pro" nodes for guaranteed storage. ✅ Nodes must meet uptime & retrieval SLAs to receive full payment. ✅ Failure to meet SLA → Penalties and reduced payouts.

Key Functions

function createHostingDeal(address node, uint256 duration, uint256 lockedAmount) external;
function verifyNodePerformance() external;
function releasePayment() external;

✅ Allows nodes to earn stable, contract-based income.