Penalties: Who Benefits?

If you choose to become a Miner and interact with the HEX smart contract by committing to locking up your HEX (holding) for a specific time period, the HEX contract expects you to honor your commitment.

However, if you choose to end your Miner early, in other words, break your commitment (referred to as EES aka “emergency end stake“), then you will incur penalties.

Who gets the penalties?

The penalties for EES are split 50/50 between the Miners and the Origin Address (OA). 

50% of the penalties are distributed among the existing Miners, and the other 50% goes directly to the OA. Just like with your daily HEX Mining rewards, you receive more of the penalties with more Shares. 

What about when your Mining period ends? Is there a grace period for ending the Miner?

Yes. When your Miner ends, you have two weeks to interact with the HEX smart contract and end your Miner without penalties. Ending your Miner is necessary for the principle + rewards to become liquid again. If you ignore the Miner, you will begin to accrue daily penalties after 14 days.

If the Miner is abandoned and the user never interacts with the HEX smart contract to officially end the Miner, then the principle + yield remains UNMINTED, while penalties accrue. But the penalties will not actualize until the user ends the Miner.

Beginning and ending a Miner on Ethereum requires gas, and therefore the user must have enough ETH available to cover the transaction fee (gas fee) for both operations. The end Miner fee is significantly greater than the start Miner fee. This is very important, and factors heavily into Richard Heart’s decision to fork Ethereum and create PulseChain.