# Incentive Structure

Cortensor's incentive structure is designed to encourage participation, ensure network reliability, and reward high-quality contributions. This multi-tiered system aligns the interests of node operators, validators, and users, creating a robust and efficient decentralized AI inference network.

### Token-Based Rewards

Cortensor uses its native token, $COR, to incentivize various activities within the network:

**1. Network Incentives**

* **Proof of Inference (PoI) & Proof of Useful Work (PoUW)**: Nodes earn $COR tokens by participating in network validation tasks. These tasks are designed to assess the quality, accuracy, and usefulness of AI inference results. This ensures that nodes are consistently contributing valuable work to the network.

**2. User Payments**

* **AI Inference Tasks**: Nodes are rewarded with $COR tokens for fulfilling user requests for AI inference. The payment is based on the complexity and resource intensity of the tasks, ensuring that nodes are compensated fairly for their computational contributions.

**3. Staking Incentives**

* **Node Operator Staking**: All node operators are required to stake $COR tokens as a form of security deposit. This staking mechanism helps secure the network by ensuring that only committed operators participate. If nodes fail to meet performance or reliability standards, their staked tokens may be penalized.
* **Regular User Staking**: Regular users can stake $COR tokens to earn APR (Annual Percentage Rate) as a form of network security. This not only supports the network’s stability but also helps reduce sell pressure by incentivizing long-term token holding.

### Multi-Level Validation System

Cortensor employs a sophisticated validation system to maintain high standards across the network:

**1. Router Nodes**

* **Task Allocation**: Router nodes assign AI tasks to appropriate inference nodes and conduct initial result validation. They earn rewards for efficient task distribution and preliminary validations.

**2. Guard/Validation Nodes**

* **Comprehensive Validation**: These nodes perform detailed checks on inference results, scoring them for accuracy and reliability. Higher validation quality leads to increased rewards, reinforcing the importance of thorough verification.

### Reputation System

* **Performance-Based Reputation**: Node performance, accuracy, and consistency contribute to a reputation score. A higher reputation enhances a node’s opportunities for task assignments and rewards, promoting continuous improvement.

### Gamified Supply-Side Development

Cortensor's unique approach to building a robust supply side involves gamification:

**1. Level 1: Liveness and Health Checks**

* **Basic Operations**: Nodes are rewarded for maintaining consistent availability and responsiveness, ensuring a stable network foundation.

**2. Level 2: Capability Assessment**

* **Performance Evaluation**: Nodes are assessed based on speed, computational power, and reliability. Higher-performing nodes are eligible for more complex tasks and higher rewards, creating a competitive environment.

### AI Marketplace Incentives

* **Specialized Services**: Node operators can offer unique AI models or services in the Cortensor marketplace, earning additional rewards. Smart contracts manage these transactions, ensuring fair compensation for all contributors.

### Benefits of the Incentive Structure

* **Network Reliability**: Encourages consistent participation and high uptime across the network.
* **Quality Assurance**: Rewards nodes for delivering accurate, high-quality AI inference results.
* **Innovation**: Incentivizes the development and deployment of new AI models and services, driving continuous innovation.
* **Fair Compensation**: Ensures that contributors are rewarded proportionally to their efforts and resources, promoting fairness.
* **Scalability**: Attracts a diverse and growing participant base, enhancing the network's capabilities over time.

### Future Developments

Cortensor is committed to refining its incentive structure based on real-world performance and community feedback. Potential enhancements include:

* **Dynamic Reward Adjustments**: Adaptation of rewards based on network demand, resource availability, and task complexity.
* **Specialized Incentives**: Introduction of incentives for niche AI tasks or industry-specific applications, encouraging specialized contributions.
* **DeFi Integration**: Exploring integration with DeFi protocols to offer additional yield opportunities for $COR token holders.

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**Disclaimer:** This page and the associated documents are currently a work in progress. The information provided may not be up to date and is subject to change at any time.
