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# Reward distribution

## TakeRate​

When adding a new Alliance coin, a TakeRate can be defined. The TakeRate is a tax that redistributes a portion of staked Alliance coin to all stakers on-chain. The TakeRate is defined as a decimal percentage per unit of time. The interval by which this rate is claimed is determined by the module parameter TakeRateClaimInterval. When executed, the TakeRate amount is deducted from an Alliance asset’s staking pool and deposited into the reward pool, to be distributed to validators and delegators. For example, if the TakeRate is set to 1% and the TakeRateClaimInterval is set to 1 minute, the take rate would be applied to the asset's staking pool, deducting 1% of the pool every minute.

For more information on TakeRate deductions, visit the State transitions page.

When paired with a Liquid Staking Derivative (LSD), the yield rate of the LSD can be redistributed to all stakers. If the yield rate of the LSD is equal to the annualized amount deducted by the TakeRate, the native chain inflation of the LSD is essentially shifted to the chain the LSD is an Alliance asset on. For an example of how the take rate can be used with LSDs, visit the How Alliance works section.

## Rewards Distribution​

The following is an in-depth look at reward distribution. For general information on rewards, visit the How Alliance works page.

Rewards for staking come from three sources:

• Native inflation: inflation rewards minted by a chain with the x/mint module enabled.
• Transaction fees: gas fees or tax fees that are distributed to validators and delegators.
• TakeRate fees: the annualized redistribution of staked Alliance assets.

These rewards are distributed to stakers using the Cosmos-native x/distribution module. First, rewards are sent to the fee_collector module account. During the next begin-block event, all rewards are distributed to validators proportional to their reward power. Delegators can then claim their rewards from validators. For more information on reward calculations, visit the State transitions page.