diff --git a/contracts/mixnet/src/contract.rs b/contracts/mixnet/src/contract.rs
index 4af5435880..65784a60cb 100644
--- a/contracts/mixnet/src/contract.rs
+++ b/contracts/mixnet/src/contract.rs
@@ -29,10 +29,13 @@ pub const INITIAL_GATEWAY_DELEGATION_REWARD_RATE: u64 = 110;
 pub const INITIAL_MIXNODE_ACTIVE_SET_SIZE: u32 = 100;
 pub const INITIAL_GATEWAY_ACTIVE_SET_SIZE: u32 = 20;
 
-// This is totally made up
-pub const INITIAL_INFLATION_POOL: u32 = 1_000_000_000;
+// This is totally made up, lets set the pool to billion nyms, so million billion micro nyms
+pub const INITIAL_INFLATION_POOL: u64 = 1_000_000_000_000_000;
 // Sybil attack resistance parameter
 pub const ALPHA: f64 = 0.3;
+// We'll be assuming a few more things, profit margin and cost function. Since we don't have relialable package measurement, we'll be using uptime. We'll also set the value of 1 Nym to 1 $, to be able to translate epoch costs to Nyms. We'll also assume a cost of 40$ per epoch(month), converting that to Nym at our 1$ rate translates to 40_000_000 uNyms
+pub const DEFAULT_PROFIT_MARGIN: f64 = 0.1; // Assume operators want a 10 % profit
+pub const DEFAULT_COST_PER_EPOCH: u32 = 40_000_000;
 
 fn default_initial_state(owner: Addr) -> State {
     let mixnode_bond_reward_rate = Decimal::percent(INITIAL_MIXNODE_BOND_REWARD_RATE);
diff --git a/contracts/mixnet/src/storage.rs b/contracts/mixnet/src/storage.rs
index 5032e3a9b3..7f23755670 100644
--- a/contracts/mixnet/src/storage.rs
+++ b/contracts/mixnet/src/storage.rs
@@ -61,11 +61,11 @@ pub fn mut_total_mix_stake(storage: &mut dyn Storage) -> Singleton<Uint128> {
     singleton(storage, TOTAL_MIX_STAKE_KEY)
 }
 
-fn inflation_pool(storage: &dyn Storage) -> ReadonlySingleton<u32> {
+fn inflation_pool(storage: &dyn Storage) -> ReadonlySingleton<u64> {
     singleton_read(storage, INFLATION_POOL_PREFIX)
 }
 
-pub fn mut_inflation_pool(storage: &mut dyn Storage) -> Singleton<u32> {
+pub fn mut_inflation_pool(storage: &mut dyn Storage) -> Singleton<u64> {
     singleton(storage, INFLATION_POOL_PREFIX)
 }
 
@@ -91,7 +91,7 @@ pub fn total_gateway_stake_value(storage: &dyn Storage) -> Uint128 {
     }
 }
 
-pub fn inflation_pool_value(storage: &dyn Storage) -> u32 {
+pub fn inflation_pool_value(storage: &dyn Storage) -> u64 {
     match inflation_pool(storage).load() {
         Ok(value) => value,
         Err(_e) => INITIAL_INFLATION_POOL,
@@ -135,18 +135,18 @@ pub fn decr_total_gateway_stake(
 }
 
 pub fn incr_inflation_pool(
-    amount: u32,
+    amount: u64,
     storage: &mut dyn Storage,
-) -> Result<u32, ContractError> {
+) -> Result<u64, ContractError> {
     let stake = inflation_pool_value(storage) + amount;
     mut_inflation_pool(storage).save(&stake)?;
     Ok(stake)
 }
 
 pub fn decr_inflation_pool(
-    amount: u32,
+    amount: u64,
     storage: &mut dyn Storage,
-) -> Result<u32, ContractError> {
+) -> Result<u64, ContractError> {
     // TODO: This could got to < 0
     let stake = inflation_pool_value(storage) - amount;
     mut_inflation_pool(storage).save(&stake)?;
diff --git a/contracts/mixnet/src/transactions.rs b/contracts/mixnet/src/transactions.rs
index ee74222063..f19acbed1a 100644
--- a/contracts/mixnet/src/transactions.rs
+++ b/contracts/mixnet/src/transactions.rs
@@ -1,7 +1,9 @@
 // Copyright 2021 - Nym Technologies SA <contact@nymtech.net>
 // SPDX-License-Identifier: Apache-2.0
 
-use crate::contract::{ALPHA, INITIAL_MIXNODE_ACTIVE_SET_SIZE};
+use crate::contract::{
+    ALPHA, DEFAULT_COST_PER_EPOCH, DEFAULT_PROFIT_MARGIN, INITIAL_MIXNODE_ACTIVE_SET_SIZE,
+};
 use crate::error::ContractError;
 use crate::helpers::{calculate_epoch_reward_rate, scale_reward_by_uptime, Delegations};
 use crate::queries;
@@ -457,6 +459,10 @@ pub(crate) fn try_reward_mixnode(
     })
 }
 
+fn price_for_uptime(uptime: u32) -> f64 {
+    uptime as f64 / 100. * DEFAULT_COST_PER_EPOCH as f64
+}
+
 pub(crate) fn try_reward_mixnode_v2(
     deps: DepsMut,
     env: Env,
@@ -520,9 +526,17 @@ pub(crate) fn try_reward_mixnode_v2(
     let sigma = stake_to_total_stake_ratio.min(one_over_k);
 
     let node_reward =
-        performance * income_global_mix * (sigma * omega_k + ALPHA * lambda * (sigma * k)) / (1. + ALPHA);
+        performance * income_global_mix * (sigma * omega_k + ALPHA * lambda * (sigma * k))
+            / (1. + ALPHA);
+
+    // Omitting the price per packet function now, it follows that base operator reward is the node_reward
+    let operator_profit = ((DEFAULT_PROFIT_MARGIN
+        + (1. - DEFAULT_PROFIT_MARGIN) * (lambda / sigma))
+        * (node_reward - price_for_uptime(uptime)))
+    .max(0.);
+    let operator_base_reward = node_reward.min(price_for_uptime(uptime));
+    let total_operator_reward = operator_base_reward + operator_profit;
 
-    
     // TODO:
     // Default profit margins and costs in order to determine owner and delegator shares.