> For the complete documentation index, see [llms.txt](https://l1x-sdk.gitbook.io/l1x-foundation/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://l1x-sdk.gitbook.io/l1x-foundation/l1x-technology-explained/l1x-reward-mechanism/consensus-mechanism-and-incentive-scheme.md).

# Consensus Mechanism and Incentive Scheme

The Proof of Participation consensus mechanism proposed is based on a resource allocation module where the participants in transaction or value transfer constitute the nodes and the network. The user 𝑢 is the initiator and the nodes 𝑛 will be used as the verifier on the network. Hence,

`𝐹=0 →𝑉={𝐺1,𝐺2,𝐺3,𝐺4}`` `*`(29)`*

Where 𝐹: Friction 𝑉 : Validator 𝐺 : Groups of (i) smart contract accounts, (ii) transactions, (iii) receipts, and (iv) others