# Step Rewards

Step Rewards in XYO Layer One are designed to promote sustained participation by rewarding validators, producers, and passive stakers at specific milestone blocks.

### Key Features

* **Earned by:** Block Producers, Chain Validators, Pending Transaction Validators, System Stakers
* **Distribution:** From the Step Reward Pool at milestone blocks
* **Purpose:** Incentivizes long-term protocol engagement and decentralized network health
* **Triggers:** On Milestone Blocks (Step Triggers)

### Reward Pool Growth Over Time

* Every block contributes a portion of its reward to the Step Reward Pool.
* Since distributions only occur at milestones and never deplete the pool fully, the reserve grows over time.

### Proof of Participation

* Participants can submit a participation transaction to become eligible for Step Rewards.
* These transactions prove activity and put stake at risk for slashing, increasing accountability.