> 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/services/trumpet/trumpet-how-it-works.md).

# TRUMPET - How It Works

The $TRUMPET token is designed to reward long-term holding by increasing a holder's claim of the backing asset ($TRUNK). Similar to traditional staking and yield farming, as transaction volumes build, so to do the rewards for all holders. The difference and overall benefit between Trumpet token rewards to the rewards of traditional staking is the ratio of $TRUNK/$TRUMPET can only ever increase. This is because $TRUMPET does not employ a traditional liquidity pool for determining value.\
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The $TRUMPET token utilizes a built-in contract exchange system available exclusively on the Elephant.Money dApp, this removes the need for a traditional liquidity pool. Rather than a liquidity pool pair of the backing asset to the token using a traditional market maker method for exchange and price calculation, both assets are stored within the contract itself.\
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The price of $TRUMPET is simply $TRUNK Backing Supply divided by $TRUMPET Circulating Supply.\
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An easy way to understand how the price can go up both on sells and buys (redemptions and mints) we can simply think of the $TRUNK Backing Supply always having a net positive gain on each transaction.  For a redeem (sell), more tokens are burnt than paid out for a net gain in $TRUNK Backing Supply.  For a mint (buy), more $TRUNK is allocated to the $TRUNK Backing Supply than $TRUMPET tokens minted to circulation for a net gain as well.  The net gain comes from the mint/redeem fees adding more to the $TRUNK Backing Supply compared to the amount minted/paid out.

<figure><img src="/files/YcvBE7Q1Wech5k9ClGAs" alt=""><figcaption></figcaption></figure>


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