# Rewards and Calculation Formula

This page details the reward calculation process and how to maximize rewards.

### Reward Structure

* **LYK-W**: 60% of total rewards, withdrawable to your wallet.
* **LYK-R**: 40% of total rewards, non-withdrawable rewards tokens.
* **Linking Periods**:
  * 12 Months: 40% of calculated rewards.
  * 24 Months or Max: 100% of calculated rewards.
* **Auto Linking**: When ON, LYK-W rewards are auto-swapped to Minting Utility Tokens (1:1) and relinked.
* **Hardware Boost**: Linked licenses receive a 10% reward boost proportional to NFT weightage.

### Reward Calculation Steps

#### Step 1: Minting Utility Tokens and Limit Calculation

Minting Utility Tokens are calculated based on linked amounts and the LYK price at linking time.

* **Formula** (Auto Compound OFF):

  ```
  Total Minting Utility Tokens = (Tokens Linked Day 0 * Price Day 0) + (Tokens Linked Day N * Price Day N)
  ```
* **Example**:
  * Day 0: 1000 Minting Utility Tokens at $2 = $2000.
  * Day 7: 500 Minting Utility Tokens at $1 = $500.
  * Total Minting Utility Tokens: $2000 + $500 = $2500.
* **Auto Compound ON**: Adds daily LYK-W rewards at current LYK price.
* **Linking Limit**:

  ```
  Max Tokens = (License Limit - Total Minting Utility Tokens) / Current LYK Price
  ```

  * Example: License limit $10,000, Minting Utility Tokens $5000, LYK price $2.

    ```
    Max Tokens = (10000 - 5000) / 2 = 2500 Minting Utility Tokens
    ```

#### Step 2: Base Lock Value (BLV)

BLV is the weighted average price of linked Minting Utility Tokens.

* **Formula**:

  ```
  BLV = (Sum of (Tokens Linked * Linking Price)) / Total Tokens Linked
  ```
* **Example**:
  * Day 0: 1000 Minting Utility Tokens at $2 = $2000.
  * Day 7: 500 Minting Utility Tokens at $1 = $500.
  * BLV = (2000 + 500) / (1000 + 500) = $1.66666.

#### Step 3: Price to Market (PTM)

* **Formula**: PTM = Current LYK Price (daily market price).

#### Step 4: Percentage Price Change

* **Formula**:

  ```
  % Change = (BLV - PTM) / BLV
  ```
* **Outcomes**:
  * Increase: PTM > BLV.
  * No Change: PTM = BLV.
  * Fall: PTM < BLV.

#### Step 5: Growth Level Price (GLP)

* **Increase or No Change**: GLP = PTM.
* **Fall**: Reduce previous day’s GLP based on disqualification table (ceiling-rounded to nearest 5%):

  ```
  GLP = Last GLP * (1 - Disqualified Reward %)
  ```
* **Disqualification Table**:

| **Disqualification Threshold (%)** | **Disqualified Reward (%)** |
| ---------------------------------- | --------------------------- |
| 0%                                 | 0.00%                       |
| 5%                                 | 2.50%                       |
| 10%                                | 3.50%                       |
| 15%                                | 5.00%                       |
| 20%                                | 10.00%                      |
| 25%                                | 15.00%                      |
| 30%                                | 20.00%                      |
| 35%                                | 25.00%                      |
| 40%                                | 30.00%                      |
| 45%                                | 35.00%                      |
| 50%                                | 40.00%                      |
| 55%                                | 45.00%                      |
| 60%                                | 50.00%                      |
| 65%                                | 55.00%                      |
| 70%                                | 60.00%                      |
| 75%                                | 65.00%                      |
| 80%                                | 70.00%                      |
| 85%                                | 75.00%                      |
| 90%                                | 80.00%                      |
| 95%                                | 80.00%                      |
| 100%                               | 80.00%                      |

#### Step 6: Daily Reward Percentage

* **Base Reward %**: Determined by license lifetime (e.g., 1080 days: 0.741%, 709 days: 0.226%).
* **Scenarios**:
  * **Increase, No Change, or Fall <10%**:

    ```
    Daily Reward % = Base % * (1 + (Last GLP - PTM) / PTM)
    ```
  * **Fall ≥10%**:

    ```
    Daily Reward % = Base % * (1 - Disqualified Reward %)
    ```
* **Max Capping**:

  ```
  Max Daily Reward % = Minimum(Daily Reward %, Base %)
  ```

#### Step 7: Final Rewards

* **12M Period**:

  ```
  Rewards = Total Minting Utility Tokens Linked * Max Daily Reward % * 0.4
  ```
* **24M or Max Period**:

  ```
  Rewards = Total Minting Utility Tokens Linked * Max Daily Reward %
  ```
* **Bifurcation**:

  ```
  LYK-W = Rewards * 0.6
  LYK-R = Rewards * 0.4
  ```
* **Hardware Boost**: 10% of license rewards (proportional to NFT weightage) added to LYK-W and LYK-R.

### Validations

* Ensure LYK-W (60%) and LYK-R (40%) bifurcation is accurate.
* Verify Auto Linking swaps LYK-W to Minting Utility Tokens at 1:1.
* Confirm reward calculations align with linking period and hardware boosts.

### Maximizing Rewards

* Choose 24M or Max periods for 100% rewards.
* Enable Auto Linking to relink LYK-W rewards.
* Link licenses to hardware for a 10% boost.
* Monitor price changes to optimize linking timing.

See Managing Licenses for linking actions or Managing Hardware for boost details.