The distribution threshold is the balance at which a Split will be automatically distributed for the recipients, saving the recipients the hassle of having to do it manually. We strongly encourage all Splits to set a distribution threshold, since Splits without one set will need to be manually distributed by one of the recipients or a benevolent third party.

The distribution threshold automates distributing balances in a Split by incentivizing third parties to pay the transaction fee (gas). It does this by offering whoever distributes the balance a portion of the balance. It is calculated as reward = balance * fee.

For example, say Alice and Bob each receive 50% of a Split. If the threshold is set to 1 ETH (which roughly maps to a 0.2% fee), each time the balance in the Split reaches 1 ETH, a bot will automatically distribute the balance for both Alice and Bob. In exchange for doing this, the bot will receive a very small portion of the ETH (in this case, 0.2% of the balance).

This concept is common in distributed systems, since it’s a mechanism that ensures the system operates without requiring any single party to perform a specific action.