> For the complete documentation index, see [llms.txt](https://docs.liqfinity.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.liqfinity.com/features/provide-liquidity-and-earn/reward-distribution.md).

# Reward Distribution

**Liquidity Provider Rewards**\
Liqfinity uses a **proportional pool model** to distribute rewards to liquidity providers.

#### How It Works

* **Proportional Ownership:** Rewards are based on two factors:
  1. **Your Share of the Pool** – If the pool is $1,000,000 and you contribute $100,000, you own 10%.
  2. **Your Tier** – Higher referral tiers unlock a bigger portion of the pool’s hourly fee distribution, with only **Diamond-tier** users receiving the full 90%.
* **Fee Distribution:**
  * Up to **90% of all hourly base fees** are allocated to liquidity providers.
  * Any unallocated portion (when users are not Diamond-tier) is redirected into the **platform treasury** as a backup reserve.

**Example:**

* The platform generates $100,000 in hourly fees.
* A Diamond-tier user with 10% of the pool earns $9,000.
* A lower-tier user with the same 10% share would earn less, since only part of the 90% pool is unlocked for them. The unused portion is redirected to the treasury.

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This ensures rewards are **fairly proportional to both contribution and tier**, while unused fees strengthen the platform’s long-term sustainability.