# Rewards
## How Rewards Accrue
Staking rewards are generated by WEMIX3.0 validators(WONDERs) and accumulated in the Reward Pool. These rewards are periodically compounded back into the staking pool, increasing the exchange rate between stWEMIX and WEMIX.
### **Reward Mechanism:**
* Staked WEMIX is delegated to the highest-performing WONDER
* The WONDER generates block rewards continuously
* Rewards accumulated in the Reward Pool
* Rewards are periodically claimed and compounded
* Exchange rate updates to reflect compounded rewards
### Compounding Process
When rewards are compounded:
* Accumulated WEMIX from the Reward Pool is claimed
* 10% protocol fee is collected (converted to stWEMIX, sent to Treasury, and burned)
* Remaining 90% is restaked in the Governance Contract
* Exchange rate increases to reflect net rewards
This automatic compounding mechanism means stWEMIX holders earn rewards without any manual actions.
### Reward Calculation
The exchange rate between stWEMIX and WEMIX is calculated based on:
* StakingAmount: Total WEMIX staked in Governance Contract
* ClaimAmount: WEMIX accumulated in Reward Pool
* Protocol Fee: 10% of ClaimAmount
* Exchange rate formula:
$$
Exchange \space Rate = {StakingAmount + ClaimAmount - feeWEMIX \over Total \space stWEMIX \space supply}
$$
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