# Reward Process

The **Reward Process** in the Yamata network is designed to promote **fairness and transparency** in the exchange by ensuring that both **Validating Nodes (VNs)** and the **Sequencer** are rewarded based on their performance, ensuring that rewards are distributed fairly for proper behavior while maintaining the integrity of the network.

<figure><img src="https://651401021-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FY2TowO8fF4a1GlgpRfIZ%2Fuploads%2FOAgZRdR4llMtKlIOAjbh%2Fimage.png?alt=media&#x26;token=e9e498d0-b098-4dcb-a972-13460340029d" alt=""><figcaption><p>Reward Process Flow</p></figcaption></figure>

1. [**Transaction Fee Distribution**](https://docs.yamata.io/yamata-nodes/reward-process/transaction-fee-distribution) **-** where fees are split into four different buckets for **Validating Nodes (VNs)**, **Yamata**, the **Future Reward Pool**, and the **Treasury**.
2. [**Challenge Results**](https://docs.yamata.io/yamata-nodes/reward-process/challenge-results) **-** If VNs successfully challenge the Sequencer, they are rewarded from the Treasury. If the challenge fails, the Sequencer receives the locked fees.
3. [**Validating Nodes (VNs) Rewards**](https://docs.yamata.io/yamata-nodes/reward-process/validating-nodes-vns-rewards) **-** given to VNs in the form of transaction fees, Treasury balance (when applicable), and base rewards from tokenomics for validating and overseeing the Sequencer.
4. [**Withdrawal Process**](https://docs.yamata.io/yamata-nodes/reward-process/withdrawal-process) **-** VNs can withdraw their rewards at any time, but slashing penalties are applied based on their reputation.