Block reward

In proof of work, as in Bitcoin, the coinbase transaction is the first in the block and mints the subsidy plus the fees for the miner. The subsidy halves every 210,000 blocks, roughly four years, at the halving event: it started at 50 BTC in 2009 and passed through 25, 12.5 and 6.25 down to 3.125 BTC after the April 2024 halving, with a hard cap of 21 million BTC. In proof of stake, as in Ethereum after The Merge, the proposer receives consensus rewards plus fees, where the base fee is burned under EIP-1559 and the proposer collects the priority fee, on top of any MEV. In DPoS, delegates share part of the reward with their voters according to the network's scheme.

It is the foundation of security economics: it aligns the producer's incentive with honesty, since attacking the network would destroy the value of the asset they earn. It determines the monetary and issuance policy of the asset, and it is the core concept for understanding long-term sustainability, namely what happens when the subsidy tends to zero and only fees remain.

The real examples are clear. Bitcoin combines the coinbase subsidy with a halving every 210,000 blocks. Ethereum adds validator rewards to the base-fee burn introduced by EIP-1559 in August 2021. Litecoin applies a halving every 840,000 blocks. The block reward is the incentive that sustains Nakamoto consensus in proof of work and validator economics after The Merge, and it absorbs the term coinbase, the transaction that mints it. Indirectly it also underpins censorship resistance, because producers have an incentive to include transactions for their fees.