I’m not sure if you’ve had a chance to review the documentation yet, but it explains a bit more in-depth on how to setup the Per-Level commission rates. Please, take a look at the MLM documentation to get a better idea of how it works.
An important thing to keep in mind is that each Level represents a level of Sub Affiliates in your structure. If you want the affiliate who Directly Referred the sale to receive 40%, you enter 40% in the AffiliateWP settings, under the General Tab. This is a 40% commission on a Direct Referral (Level 0). Then, according to your explanation, you will set Level 1 to 20% and Level 2 to 10% in the Per-Level Rates section.
Also, make sure that your Depth is set to at least 2, to ensure that User 1 can get paid from sales referred by User 3.
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