**I will prove in the following example, that I can calculate exactly how much wealth transfer is going to happen at my bakery due to this new LB policy, putting my bakery as example, which is at full capacity**

Baker share of the whole staking capacity is 9.31%, delegators have the rest of 90.69% share. Meaning that only 9.31% of the block reward is mine and 90.69% of the block reward is for my delegators.

Here is my baker share if you need proof

**Without liquidity baking (current status quo):**

thirty-seconds block reward of 40 TEZ (100% of the block reward)

Taking my 9.31% share, 40 * 0.0931 = 3.724 TEZ from that is mine WITHOUT a baking fee, because I donâ€™t charge to myself a baking fee.

Now 40 - 3.724 = 36.276

Now, I subtract the 10% baker fee: 36.276 * 0.10 = 3.6276 (this is what I earn due to the baker fee).

Now, 36.276 - 3.6276 = 32.6484, this is what I will distribute to the rest of my delegators with the baker fee subtracted already.

My total earning from the 30-second 40 TEZ block are = 3.724 + 3.6276 = 7.3516.

The earnings of my delegators to be distributed are = 32.6484

**Now with liquidity baking**

For the 40 TEZ (94% now of the TEZ printing machine) it all stay the same.

I earn 7.3516 and my delegators earns 32.6484 with the fee substracted already.

Now letâ€™s see what happens with the 2.5 extra printed TEZ.

Subsidy of 2.5 TEZ â†’ LPâ€™s

**Note**: lpâ€™s will either stake it right after they earn it, or dump it, buyers of that dump will also probably stake it

**Scenario 1)**

Traders recover 2.5 TEZ â†’ Burn **= means redistribution of 2.5 TEZ to all hodlers.**

**Note:** this is something everyone canâ€™t grasp in their minds, burn means redistribution of a quantity evenly to all hodlers*

My previous earnings of the 40 TEZ block were 7.3516

2.5 * 0.0931 (my staking share) = 0.23275

7.3516 + 0.23275 = 7.58435

The previous earnings of my delegators of the 40 TEZ block were 32.6484

2.5 * 0.9069 (their staking share) = 2.26725 TEZ

32.6484 + 2.26725 = 34.91565

So my total earnings and the earnings of my delegators in this scenario are:

7.58435 vs 34.91565

**Scenario 2)**

Traders recover 2.5 TEZ â†’ Reimburse to bakers

2.5 * 0.0931 (my staking share) = 0.23275 (I donâ€™t apply a baking fee to myself obviously)

Now, 2.5 - 0.23275 = 2.26725

Then I subtract a baker fee of 10% to that amount, so, 2.26725 * 0.10 = 0.226725

So, now that I subtracted the baker fee, I need to rest it from the 2.26725 - 0.226725 = 2.040525

2.040525 with the 10% baker fee already subtracted that I will distribute to my delegators.

My total earnings of that 2.5 block would be 0.23275 + 0.226725 = 0.459475

2.040525 of the 2.5 TEZ will be distributed to my delegators.

OKEY, now letâ€™s sum up all the profits of scenario 1) and compare them to scenario 2)

**Scenario 1) profits**

My baker: 7.3516 of the original 40 TEZ block + 0.23275 (of 2.5 TEZ of scenario 1) = 7.58435

Delegators: 32.6484 of the original 40 TEZ block + 2.26725 (of 2.5 TEZ of scenario 1 ) = 34.91565

**Scenario 2) profits.**

My baker: 7.3516 of the original 40 TEZ block + 0.459475 (of 2.5 TEZ of scenario 2) = 7.811075

Delegators: 32.6484 of the original 40 TEZ block + 2.040525 (of 2.5 TEZ of scenario 2 ) = 34.688925

**THE END RESULT IS:**

**Scenario 1 where the trading fee is burned, I earn 7.58435 and delegators earn 34.91565.**

**Scenario 2 where the trading fee is reimbursed to bakers, I earn 7.811075 and delegators earns 34.688925.**

**The result is that there will be a WEALTH TRANSFER of 0.226725 XTZ from baker to delegators due to this LB policy happening EVERY BLOCK**. **Thatâ€™s 2.9% of FORCED wealth transfer every block to delegators.**

*Delegators are not stealing anything either, is the result of bakers forcing other bakers to redistribute wealth due to this hidden TAX, they are reducing their own incentives.*