The SKALE Network consists of a large set of nodes, all running concurrently and independently, validating transactions within the elastic sidechains they are overseeing. These nodes all make use of a unique set of SKALE contracts that run on the Ethereum mainnet. These smart contracts are where the SKALE token lives, where issuance occurs, and where rewards get disbursed to the node validators. These smart contracts are also where the analysis of the network takes place and where corrective actions are taken if there is bad behavior by one or more nodes.
Developers create chains by first selecting the size of the chain (small, medium, and large), duration of the chain (6mo, 12mo, 24mo), and then staking SKALE tokens in order to provision the network resources. These tokens get staked into the Ethereum mainnet via one of the SKALE contracts that reside there. Each month, a certain number of tokens from this developer stake gets moved into a bounty pool which is then used to pay the validators within the network. An inflation (issuance) event also takes place each month whereby new SKALE tokens are created via a contract on the mainnet, the result of which gets pushed into the bounty pool for payout to validators.
For example, if there are a thousand validator nodes in the network and they all perform well, they will each participate in the monthly proceeds from the bounty pool which includes a portion of the sidechain token stakes plus an inflation amount. The distribution to the validators is not necessarily shared equally as there is a modifier component that slightly adjusts the payout based on the duration of time tokens are staked into the network. Nodes with tokens that are locked up for twelve months, for example, will get a greater percentage than those locked-up for three or six months.