Deflationary Mechanics
Every month, a portion of HYFY is permanently burned using revenue-funded allocations. Burns are:
- Irreversible — burned tokens are gone forever
- Reducing total circulating supply over time
- Publicly verifiable on Polygon with every burn transaction recorded on-chain
- Funded by real platform revenue, not market purchases
Deflationary Math in Plain Terms
HYFY starts with a fixed supply of 1,000,000,000 tokens and can only decrease from here. Every month, the burn pool funds permanent supply removal. As a simplified illustration of how burn volume scales with platform revenue:
| Monthly Net Revenue | Burn Pool | Note |
|---|---|---|
| $5,000 | ~$125 | Burns scale up as revenue grows |
| $25,000 | ~$625 | Token volume varies with market price |
| $100,000 | ~$2,500 | Dollar amount is revenue-fixed |
The exact number of HYFY burned each month depends on the market price at the month-end snapshot. Higher token prices mean fewer tokens burned per dollar; lower prices mean more tokens burned. The dollar amount is determined by revenue; the token quantity is market-determined. This design means the burn engine does not target a price artificially. It is a consistent, revenue-funded supply reduction that runs regardless of market conditions.
Karma Decay Mechanism
HYFY is also designed with a conditional decay mechanism for Karma. Inactive accounts under specific systemic conditions may have Karma reduced as a pressure-release valve, but only with mandatory 30-day advance notification and in-app alerts. Active users are never silently penalized.
Treasury Backing and Claim Safety
The Community Claims Pool (200,000,000 HYFY) is the lifetime budget for all user claim distributions. The protocol is structured so that the treasury holds significantly more HYFY than the outstanding Karma liability at any given time, maintaining a healthy over-collateralization ratio.
This means:
- The system never distributes more than revenue and treasury health can support
- Monthly claims are automatically moderated when treasury conditions require it
- The backing ratio is published every month in transparency reports and visible on the public Dune dashboard
Every claim that goes out has corresponding treasury support that ensures long-term solvency, not just short-term payouts.