Managing BELT Supply

Why does BELT have no hard cap?

At present, BELT supply does not have a hard limit.

There's currently no hard cap on the supply of BELT token, making it an inflationary token.

While the community may be concerned because it seems like an inflationary token, members can rest assured as there are measures in place to counter inflation.

BELT's primary function is to incentivize providing liquidity to the pools. Without block rewards, there would be much less incentive to provide liquidity (LP fees etc. would remain).

How is BELT supply is reduced without a hard cap?

We aim to making deflation higher than emission by building deflationary mechanisms into Belt.Fi's products. The goal is for more BELT to leave circulation than the amount of BELT that is produced.

Reducing block emissions and BELT buyback + burn

Governance reducing block emissions (Inflation)

We slow inflation by changing the amount of BELT released with each block. While this has not yet been done, decisions will be made through transparent governance. As this happens, more BELT inflation will be allocated to DEAD pools and will be permanently burned.

BELT Buyback and Burning

Belt.fi has automatic buyback BELT token burns at a rate of 50% of trading fees. 8% of yield is used to buyback BELT and is burned. As the engagement and liquidity on Belt Finance grows, the burn amount will increase, eventually growing to a point where more is burned than minted.

Why BELT buyback + burning is important

While the buyback numbers may initially seem high, it is important to know that they are burned and not collected. This is so that the BELT token inflation is controlled and tokenomics made better.

The advantages to this system can be seen with a comparison to other protocols. For example, on Curve, 50% of trading fees is taken as an admin fee. Contrast this with Belt.fi, where a 50% buyback is not reallocated to any entity but is instead burned forever. When the fee is given to holders, as in Curve, this fee is not a help to the tokenomics, and does not have deflationary effect. When 50% of trading fees, and 8% of the yield is bought back as BELT and burned, it increases the scarcity and power of the BELT token.

As trading engagement on Belt.fi increases, this burning will grow will have a great impact to the BELT token economy, possibly to the point where the burn rate is higher than the emission rate.