> For the complete documentation index, see [llms.txt](https://wiki.elephant.money/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://wiki.elephant.money/ecosystem-tokens/trunk-token-elephant-money-stable/deflationary-mechanics.md). # Deflationary Mechanics TRUNK is a **hyper deflationary** token that rewards its holders with a share of the protocol profits in two ways: ### **Buybacks and burns**: 3% APR based on the size of the Elephant Treasury is used to buy back TRUNK off the market and burn 50% of it. This reduces the total supply of TRUNK and increases its scarcity and value. By decreasing the circulating supply of TRUNK, the buybacks and burns create a positive feedback loop that drives up the demand and price of TRUNK. The remaining 50% of the bought back TRUNK is used to mint TRUMPET, which is also burned. This leads to the second way of rewarding TRUNK holders. ### **TRUMPET distribution** 50% of the TRUNK from the buybacks are used to mint TRUMPET and burn it (reducing the overall supply ,while increasing the backing value -[ see more on the TRUMPET economics](/services/trumpet/trumpet-how-it-works.md)). The TRUNK that was used to mint TRUMPET is then distributed pro rata to all TRUMPET holders. This way TRUMPET holders receive a direct and non-inflationary yield from the TRUNK buybacks. By minting TRUMPET, TRUMPET holders are also contributing to the liquidity and stability of the TRUNK market. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://wiki.elephant.money/ecosystem-tokens/trunk-token-elephant-money-stable/deflationary-mechanics.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.