> For the complete documentation index, see [llms.txt](https://legal-x.gitbook.io/legal-x/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://legal-x.gitbook.io/legal-x/legal-token/tokenomics/reflections-explained.md).

# Reflections Explained

<figure><img src="/files/mnIACb3Hg7NsqPHpVh8M" alt=""><figcaption></figcaption></figure>

### <mark style="color:red;">What Are Reflections?</mark>

Reflections in crypto refer to a reward mechanism where token holders automatically receive a portion of transaction fees just for holding the token. This process is governed by the token's smart contract and ensures that rewards are distributed proportionally based on holdings.

### <mark style="color:red;">How Do Reflections Work?</mark>

1. **Reflection Collections** – A small percentage (e.g., 2%) is taken from each buy and sell transaction.
2. **Redistribution** – The reflections are then distributed to the holders proportionally.
3. **Auto-Compounding** – Since rewards are distributed in the same token, balances grow over time without requiring staking or claiming.

### <mark style="color:red;">Benefits of Reflection Tokens</mark>

* **Passive Income** – Earn more tokens automatically just by holding.
* **Encourages Holding** – Selling means missing out on future reflections.
* **No Staking Required** – Rewards are automatically distributed without additional steps.

### <mark style="color:red;">How Legal X Will Use Reflections</mark>

Legal X will implement a reflection mechanism to reward its community by redistributing a 2% percentage of transaction fees to all token holders. This ensures steady accumulation of tokens over time, incentivizing long-term holding and engagement. \
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The reflection system aligns with Legal X’s vision of creating a sustainable and rewarding ecosystem for its users.