Tokenomics
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.
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