# Grove Network Mechanics

The mechanics of the Grove network are best shown through an example: if a founder who joined the Grove network committed 3% of their exit liquidity later sells the shares in their startup for $100M, they owe $3M to the network. For all others in the network, this $3M is received as a distribution. The distribution each network founder receives is pro rata to their initial contribution into the network. For example, a founder who owns 50% of a $20M company and commits 3% of their future liquidity at the time of joining Grove will receive double than a founder who owns 50% of a $10M company and commits the same percentage into the Grove network. For the Grove network to achieve its goal of making founders unambiguously better off, its mechanics need to do three things:

1. Establish founder quality
   • This is achieved through strict entrance criteria
2. Eliminate adverse selection
   • This is achieved through capping the maximum number of failed network participants to 30%
3. Incentivize community & referrals
   • This is achieved through network nodes