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  • Introduction
    • YieldFu: The Fu
  • YieldFu
    • $FU Value accrual
    • Tokenomics
    • Staking $FU
    • Bonding Treasury Management
    • CEX/ DEX Arbitrage System
    • Burn-To-Earn
    • Delta Neutral
  • Roadmap & Glossary
    • Roadmap
    • Glossary of Terms
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  • $FU Token
  • Burning Mechanism
  • Partner Token Exposure
  • Supply Dynamics
  • Value Accrual Mechanisms
  1. YieldFu

Tokenomics

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Last updated 6 months ago

The economic model of YieldFu revolves around its native token, $FU. This section explains the critical aspects of YieldFu's tokenomics, focusing on token utility, mechanisms affecting supply and value, and how these elements contribute to the protocol's overall ecosystem.

$FU Token

The $FU token is the cornerstone of the YieldFu ecosystem, serving several vital functions within the protocol:

  • Governance: $FU holders can influence protocol decisions through governance.

  • Staking: Users can stake $FU to earn rewards from various protocol activities.

  • Bonding: $FU is minted and distributed to users who provide liquidity via bonding.

  • Burning: $FU can be burned to gain exposure to partner projects.

Burning Mechanism

The burning mechanism is central to YieldFu's tokenomics, creating deflationary pressure while offering unique rewards:

  • User-Initiated Burns: Users can choose to burn their $FU tokens to gain exposure to partner projects.

  • Deflationary Effect: Regular burning activities contribute to reducing the overall supply of $FU over time.

Partner Token Exposure

The burning mechanism also drives YieldFu's partnership-driven reward system:

  • Partner Pool: Tokens from YieldFu's partner projects are pooled together.

  • Burn Weight: Users who burn $FU receive a burn weight in the protocol's burn wallet.

  • Reward Distribution: Partner tokens are distributed to burners based on their proportional burn weight.

  • Dynamic Exposure: As YieldFu forms new partnerships, the pool of potential reward tokens expands, increasing the appeal of the burn mechanism.

Supply Dynamics

Several mechanisms influence the supply of $FU tokens:

  • Minting:

    • New $FU tokens are minted as rewards for stakers.

    • Tokens are also minted to fulfill bonding contracts.

  • Burning:

    • User-initiated burns for partner exposure.

  • Locking:

    • Staked tokens are temporarily removed from circulation.

    • Bonded tokens are subject to vesting periods.

Value Accrual Mechanisms

The value of $FU is designed to increase through various protocol activities:

  • Treasury Growth: As the protocol accumulates assets through bonding, the backing per $FU token potentially increases.

  • Buybacks: A portion of bonding revenues is used for market buybacks, creating upward pressure on the $FU price.

  • Yield Opportunities: Staking and lottery staking incentivize holding $FU for longer periods.

  • Deflationary Pressure: The burning mechanism gradually reduces the supply of $FU.