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I’m trying to better understand the rewards and minting processes for ETH POS so I can potentially apply the logic to a protocol I’m building.

My question is what events lead to minting new ETH? My assumption is that the rewards given to stakers every 6.5 minutes is the minting event. So every 6.5 minutes, new ETH is minted and deposited into the validator’s wallet? Is that true?

If so, how does the fee I pay as a user making a transaction play into that? I’ve read that there is a base fee and a “tip” that gets added which goes to the validator. How does the fee I pay relate to the rewards given every 6.5 minutes?

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In Ethereum's proof-of-stake (POS) consensus mechanism, new ETH is minted through the process of block validation, also known as staking. Validators, also known as stakers, are chosen to create new blocks and are rewarded with a certain amount of ETH for each block they create. The reward amount is determined by the Ethereum protocol and is currently around 2 ETH per block. This reward is paid out every 6.5 minutes, on average.

When a user makes a transaction on the Ethereum network, they must pay a fee (also known as gas) in order to have their transaction processed and included in a block. The fee is paid in Ether and is used to compensate the miner or validator who includes the transaction in the block they are creating. The fee is not directly related to the reward paid to the validator for creating the block, but it is used to incentivize validators to include the user's transaction in the block they are creating. Additionally, a portion of the fee is also used as a "tip" to the validator to incentivize them to prioritize your transaction over others.

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  • Thanks that’s really helpful. Follow-up question. Is new ETH ever minted to cover a purchase? Or is all ETH for purposes of consumer and smart contract transactions already in circulation, and the ONLY mint event is for block rewards? Jan 27, 2023 at 17:58
  • New ETH is not minted to cover a purchase. All ETH for consumer and smart contract transactions is already in circulation and available for purchase on various exchanges. The only time new ETH is minted is through the process of block validation, also known as staking in Ethereum's proof-of-stake consensus mechanism. In this process, validators are chosen to create new blocks and are rewarded with a certain amount of ETH for each block they create. The reward is paid out to validators every 6.5 minutes, on average. This is the only way new ETH is minted and added to the circulating supply.
    – VX3
    Jan 27, 2023 at 19:11

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