# Smart Contract-Based Rewards Mechanism

Owners of the Kage VPN Router can opt-in to become node operators in our decentralized private storage network. By doing so, they contribute to the network's storage capacity and security, helping to create a robust, distributed data privacy ecosystem. When third parties use this decentralized storage network, they pay for the service using Kage VPN’s native cryptocurrency token, $KAGE. A share of this income is then distributed to node operators as a reward for their participation.

The reward distribution mechanism operates on a smart contract system. When a payment is made by a third-party user, the smart contract automatically calculates the appropriate share for each node operator based on their contribution to the network, such as the amount of storage provided and uptime reliability. These calculations ensure fair compensation, reflecting the value each operator adds to the network. Once the calculation is complete, the smart contract disburses $KAGE tokens directly to the node operators' wallets, providing a seamless and transparent reward process.

To participate, node operators need to register their Kage VPN Router on the network and configure it to opt-in as a storage node. The router will then periodically report its status and contribution metrics to the network, which are used for reward calculation. Operators can track their earnings in real-time through a user-friendly dashboard, where they can also manage their payout preferences and monitor network performance.

Using native token-based smart contracts to reward node operators provides several efficiencies to the Kage VPN business model. Firstly, it provides a seamless, automated way of making both microtransactions and large transfers that is trustless, secure, transparent and requires no continuous human intervention. The smart contracts can automatically ensure that the payment criteria are met and execute the payments globally in real-time, facilitating fast and seamless functioning of the network. Furthermore, using $KAGE tokens as rewards creates strong incentives for participation and loyalty within the network. As node operators earn $KAGE tokens, they become stakeholders in the ecosystem, aligning their interests with the success of the network. This will foster an engaged and committed community, as operators are motivated to maintain high standards of performance and contribute to the network's growth. Finally, it will naturally attract participants who value decentralization thereby selecting for a customer base that is well-suited to building out a decentralized ecosystem.

[<br>](https://kage-network.gitbook.io/kage-network/the-kage-decentralized-private-data-storage-network)
