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# Tempo Token Rewards

Tempo Token Rewards is a built-in mechanism that allows for efficient distribution of rewards to opted-in token holders proportional to their holdings, while maintaining low gas costs at scale and complying with [TIP-403 transfer policies](/docs/protocol/tip403/spec).

Traditional reward mechanisms require tokens to be staked in separate contracts, which fragments user holdings and adds complexity to wallet implementations. Tempo Token Rewards solves this by:

* **Built-in Distribution**: Rewards are integrated directly into the token contract, no separate staking required
* **Opt-in Participation**: Users choose whether to participate by setting a reward recipient
* **Proportional Distribution**: Rewards accrue based on token holdings automatically
* **Instant Rewards**: Distribute rewards immediately to opted-in holders
* **Efficient at Scale**: Constant-time updates regardless of the number of token holders
* **Policy Compliant**: All reward transfers respect TIP-403 transfer policies

## Links

<Cards>
  <Card description="Complete technical specification for rewards distribution" to="/docs/protocol/tip20-rewards/spec" icon="lucide:file-text" title="Rewards Specification" />

  <Card description="Distribute rewards to token holders" to="/docs/guide/issuance/distribute-rewards" icon="lucide:trending-up" title="Guide: Distribute Rewards" />
</Cards>