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.