How Tiers work

I’ve got Affiliates Enterprise working well, I just want to make sure I’ve got Tiers set up correctly for my needs:

Standard Commission is 20% (0.20)
I have two tiers, Tier 1 is 4% (0.04) and Tier 2 is also 4% (0.04)

So, here’s what I expect:

John is an affiliate, everything he sells for me brings him 20% of the order total. John refers Bill as an affiliate.

All of Bill’s sales net him 20% of the total and John gets 4% from Bill’s sales for referring him. Bill refers Amy as an affiliate.

All of Amy’s sales net her 20% of the total and John and Bill each get 4% from Amy’s sales. Amy refers Mike as an affiliate.

All of Mike’s sales net him 20% of the total and Bill and Amy each get 4% from Mike’s sales for referring him. John drops off from receiving any further referral fees this far downstream.

Is that right?