> For the complete documentation index, see [llms.txt](https://kayen-protocol.gitbook.io/documentation/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://kayen-protocol.gitbook.io/documentation/tokenomics/deflationary-mechanism.md).

# Deflationary Mechanism

In addition to the hardcap set on <mark style="color:red;">**KAYEN**</mark>, exotic deflationary mechanisms, inspired by Camelot's GRAIL & xGRAIL, effectively decrease the total supply.

### BuyBack & Burn

A share of the Protocol Earnings is dedicated to Buyback & Burning <mark style="color:red;">**KAYEN**</mark>, effectively applying a continuous buying pressure.

### xKAYEN Redeems

During <mark style="color:yellow;">**xKAYEN**</mark> -> <mark style="color:red;">**KAYEN**</mark> redemptions, if the vesting duration isn't the maximum, the <mark style="color:yellow;">**xKAYEN**</mark>:<mark style="color:red;">**KAYEN**</mark> ratio <mark style="color:red;">will be lower than 1:1, down to a minimum of 1:0.5</mark>. All of the excess <mark style="color:red;">**KAYEN**</mark> will automatically be burned.

Example:&#x20;

*If Alex redeems 1000 <mark style="color:yellow;">**xKAYEN**</mark> with the minimal 15-day vesting period, he will obtain a 1:0.5 ratio, and receive 500 <mark style="color:red;">**KAYEN**</mark> in the end. A total of 1000 - 500 = 500 <mark style="color:red;">**KAYEN**</mark> are burned during the early redemption.*

### <mark style="color:yellow;">**xKAYEN**</mark> deallocations

When deallocating <mark style="color:yellow;">**xKAYEN**</mark> from a Plugin, a deallocation tax is applied. It can vary between contracts, but will usually be of 0.5% and the corresponding <mark style="color:red;">**KAYEN**</mark> amount are automatically burned.


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