Managing BELT Supply
At present, BELT supply increases with every block. The amount released per block will follow our halving schedule. BELT emissions will be halved repeatedly over a period of time. This will essentially create a max cap to BELT supply of around 22,108,836 BELT. The final number, however, will be lower because of continued burns (will be less than 22,108,836 BELT).
Besides halving, there are other measures in place to counter inflation.
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.
Halving Reducing block emissions (Inflation)
We slow inflation by changing the amount of BELT released with each block. While this has not yet been done, you can look at the schedule above to see when the halvings will occur. 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.
The amount of yield used to buyback and burn BELT will be increased within Q4 2021.
BELT Buyback to Staking Rewards
Another important buyback mechanism is 4% of base yield from all vaults put towards BELT buyback. This buyback amount is then used to rewards BELT staking participants. This puts BELT back towards the center of the platform and incentivizes holding the token for maximum rewards.
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 and base yield from strategy protocols 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.