# Penalty Distribution

The 25% early withdrawal penalty is redistributed to strengthen the CipherX ecosystem:

* **60% → Staking Pool**\
  Returned to boost future staking rewards.
* **20% → Token Burn**\
  Permanently removed from circulation to reinforce the deflationary model.
* **20% → Treasury**\
  Allocated to ecosystem development, innovation, and partnerships.

Penalty-derived rewards re-enter the staking pool gradually over **30 days**, distributed smoothly in a per-second flow to maintain yield stability and ecosystem resilience.
