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How often are Tokamak Network coins burned?

To maintain TOMO's value and incentivize network engagement, Tokamak Network incorporates a variable coin burn schedule linked to transaction fees and block rewards, adjusting the burn rate based on network activity.

Dec 27, 2024 at 02:14 am

Understanding Tokamak Network's Coin Burn Schedule

Key Points:

Tokamak Network employs a regular coin burn mechanism to reduce the supply of its native TOMO tokens.
The burn rate varies based on network activity and is tied to transaction fees and block rewards.
Token burning helps maintain TOMO's value, incentivize network participation, and control inflation.

Detailed Steps of the Coin Burn Process:

1. Transaction Fee Allocation:

A portion of transaction fees on the Tokamak Network is allocated for burning.
Users pay these fees in TOMO, contributing to the pool of tokens to be burned.
By burning a percentage of transaction fees, the network disincentivizes spam and promotes efficient block creation.

2. Block Reward Adjustment:

Block rewards in TOMO are also subject to burning.
A predetermined percentage of each block reward is automatically burned.
This mechanism helps control the token supply and reduces inflationary pressures.

3. Variable Burn Rate:

The burn rate on the Tokamak Network is not fixed but rather varies based on network activity.
When network activity is high, more fees are collected, leading to a higher burn rate.
Conversely, during periods of low activity, the burn rate decreases as fewer fees are accumulated.

4. Maintaining Value:

Token burning serves as a deflationary measure, reducing the overall supply of TOMO in circulation.
By reducing the supply of available tokens, burning helps maintain TOMO's value and prevent devaluation.

5. Incentive Mechanism:

Burning a portion of transaction fees and block rewards creates an incentive for users to participate in the network.
Users are encouraged to engage in transactions and validate blocks to earn rewards that can potentially increase in value as the token supply decreases.

6. Control over Inflation:

Inflation occurs when the supply of a token increases too rapidly, potentially leading to a decrease in its value.
Tokamak Network's coin burn mechanism helps control inflation by removing tokens from circulation, offsetting the new TOMO created through block rewards.

FAQs:

Q: What percentage of transaction fees is burned?

A: The percentage of transaction fees burned is adjusted dynamically based on network activity and can vary.

Q: How often is TOMO burned?

A: TOMO is burned regularly, with the exact frequency varying depending on the rate of token accumulation.

Q: How does token burning benefit TOMO holders?

A: By reducing the supply of TOMO, burning helps maintain its value, providing potential upside to holders.

Q: What is the long-term goal of the coin burn mechanism?

A: The long-term goal of the coin burn mechanism is to ensure the stability and value of the Tokamak Network's ecosystem.

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