> For the complete documentation index, see [llms.txt](https://p00ls.gitbook.io/p00ls-v2/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://p00ls.gitbook.io/p00ls-v2/token-distribution/understanding-token-distribution.md).

# Understanding Token Distribution

## Key Concepts

**Token Distribution** is the most important part of building a healthy creator token ecosystem.

* **Tokens are Earned, not Bought -** Tokens are distributed to holders based off of on-chain proofs of engagement (ex: holding an NFT, following on Lens). Because tokens are not [transferable](/p00ls-v2/p00ls-creator-tokens/transferability.md), they cannot be sold or bought.
* **Weekly Distribution** - Tokens are distributed weekly to eligible holders. This allows for a creator to take into account future states of their economy and community.
* **Eligible Holders** - Anyone who engages with a creator's web3 ecosystem can be eligible for rewards. The become eligible by holding an NFT, following on Sound.xyz, or any other [engagements](/p00ls-v2/token-distribution/token-rewards-general/engagement-types.md) that Creators add as [**Rewards** ](https://p00ls.gitbook.io/p00ls-v2/token-distribution/token-rewards-general)to their [**Token Economy**](https://p00ls.gitbook.io/p00ls-v2/token-distribution/token-economy). 
* **Biggest Holder = Most Engaged Holder** - A holder's token balance directly indicates their engagement within your community. If you're a Creator, your biggest token holder is your biggest fan.
* **Fully On-Chain** - Tokens are automatically airdropped to eligible addresses on-chain. This ensures full composability of a token holder community with other web3 protocols or dApps.

## Token Economy Management

Token distribution is managed through the Creator Portal. Your **Rewards** represent the eligible engagements available to your community. You can adjust, update, and edit your Rewards directly in the Creator Portal. 

To learn more, visit the [Token Rewards](/p00ls-v2/token-distribution/token-rewards-general.md) section. <br>


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