> ## Documentation Index
> Fetch the complete documentation index at: https://docs.towns.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Distribution

> Token reward distribution is a key component of the Towns Network to align incentives between Node Operators and the goals of the network.

## Inflation Schedule

The first year's inflation of Towns token derives from the existing supply. Subsequent inflation occurs annually, starting at 8% and tapering to 2% after 20 years, per the predefined inflation [schedule](https://github.com/towns-protocol/towns/blob/main/packages/contracts/scripts/deployments/DeployTownsMainnet.s.sol#L27-L35).

## Token Inflation

Inflation is faciliated thorugh the `createInflation()` function callable by the DAO on Ethereum Mainnet up to once a year. This function mints the annual allocation of tokens and send them a designated contract on Ethereum Mainnet.

## Token Bridging

The aforementioned designated contract automatically bridges the tokens yielded by calling `createInflation()` to Base using `bridgeERC20To()` function, specifying the Distribution contract address on Base as the destination.

## Periodic Distribution

The Distribution contract accumulates the annual rewards and distributes them every two weeks. The distribution, representing 1/26 of the annual supply, is allocated to active operators and delegators from that period via the `distribute()` function.

## Allocation

At launch, distributions will be allocated equally amongst all approved active Node Operators. Each operator will receive their commission they specified when registering in the Node Operator Registry contract.

The remainder net of commission will be divided pro-rata amongst all the delegators who delegating to that operator for the entire period.

<Note>Delegators entering in the middle of a period will not be eligible for rewards until the following period.</Note>