Deflationary Mechanics

Burn 🔥 Baby Burn 🔥

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). 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.