Reflection rewards are a mechanism where a percentage of every token transfer is collected as a fee and automatically redistributed to token holders or stakers. The redistribution 'reflects' a share of all trading activity back to participants.

On Solana, reflection rewards are typically implemented using Token-2022's transfer fee extension. A configurable percentage of each transfer is withheld and distributed to a rewards vault, from which stakers can claim their proportional share.

Reflection reward rates depend on trading volume — high volume generates more fees to distribute. This creates an incentive for long-term staking, as stakers benefit from the project's trading activity.