> For the complete documentation index, see [llms.txt](https://totochain.gitbook.io/totochain/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://totochain.gitbook.io/totochain/toto-chain-faq/rewards-and-incentives.md).

# Rewards and Incentives

## **What is the difference between TOTO (core asset) and POTENTIAL, and how are they earned?**

* **TOTO (Core Asset):** This is the main transferable asset of the Toto Chain. It can be traded, transferred, or used to pay for network fees.
* **POTENTIAL:** A non-transferable asset that can only be used for network fees and referring new users. It decays over 28 days if not used.

**Earning Mechanisms:**

* **Block producers earn POTENTIAL** by signing transactions and generating new blocks​.
* **TOTO (Core Asset) is earned by submitting fractional NFTs (fNFTs)** to the reward system. Block producers collect fNFTs, and when they accumulate enough, they can exchange them for core assets.

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## **How is the core asset claimed by a user calculated?**

When someone submits **fractional NFTs (fNFTs)**, the rewards they can claim depend on:

1. **The number of fNFTs submitted** – Users need to collect a complete set to claim the full NFT.
2. **The amount in the reward pool** – The available core asset in the pool at the time of claiming.
3. **The number of users referred** – A user's referral history influences their reward potential.
4. **Random selection** – Since fNFTs are distributed randomly, acquiring a full set can take time​.

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## **How are rewards for block production calculated and distributed?**

* **Block producers earn POTENTIAL** after producing blocks. The total POTENTIAL to be distributed is divided by the expected number of blocks over a given period​.
* **Block producers also receive fNFTs** as additional rewards. These can later be converted into core assets by submitting a full set​.
* **POTENTIAL decays over time** (28 days), encouraging continuous participation​.

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## **What is the halving mechanism for rewards, and how does it work?**

* The **TOTO rewards follow a halving cycle** every 28 days (called **Liquidity Halving**).
* Each cycle, the amount of core assets in the reward pool available for claims is cut in half.
* There is a **total of 13 halving cycles**, after which unclaimed assets in the reserve pool regenerate​.

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## **Can I earn additional rewards through activities like referrals or community contributions?**

Yes! Additional rewards can be earned through:

* **Referrals:** Block producers can set a **share parameter** for referrals, meaning they share a portion of their earned POTENTIAL with users they referred​.
* **Community Contributions:** Users and dApps can submit full **NFTs** to the reward pool, allowing contributors to earn rewards for supporting the ecosystem​.

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## **What is the relationship between node performance and the rewards earned?**

Currently, **node performance does not directly influence rewards**, but a **reputation system** is under development. In the future:

* Validators with better uptime and reliability could receive higher rewards.
* Underperforming nodes may lose eligibility for block production and, therefore, rewards​.

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## **Where are the fNFTs coming from?**

* fNFTs originate from **user-created NFTs** submitted to the reward pool.
* The blockchain automatically converts full NFTs into **fractional NFTs**, which are then distributed as rewards for block producers and referrals.
* Communities and dApps can also create NFTs and contribute them to the reward system​.

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## **What if there are no fNFTs?**

* If no fNFTs are available, **block producers still receive POTENTIAL** as rewards.
* The blockchain ensures that even in the absence of NFTs, **POTENTIAL continues to be distributed** to incentivize participation​.