# 6. Economic Model

DegenFi uses $DGEN as its core platform asset with a total supply of 1 billion tokens, allocated as follows:

<figure><img src="https://2019578067-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FFpxw18iEUT1EuifFYua0%2Fuploads%2F0CJuZPnHR4HVmKcu7RGS%2FDegenFi%20-%20TW%20Poster%20-%20Chart%20-%202.png?alt=media&#x26;token=732b3c6d-bb2d-4328-a408-02105ff17eaa" alt=""><figcaption></figcaption></figure>

* **Ecosystem Development (10%):** Supports platform operations and growth, including R\&D, marketing, and user acquisition.
* **Community Incentives (70%):** Rewards platform users through staking, gaming, lending, and more. These tokens will be distributed based on participation in events, tasks, and contributions, strengthening the platform’s ecosystem.
* **Team & Advisors (5%):** Rewards the founding and development teams as well as advisors, ensuring a long-term commitment to platform innovation. These tokens are locked for two years and vested linearly over 12 months.
* **Foundation & Strategic Collaborations (10%):** Used for partnerships and alliances, including collaboration with other Memecoin projects, DeFi platforms, and related ecosystems.
* **Liquidity Pool & Marketing (5%):** Provides liquidity on DEXs, ensuring sufficient depth and market liquidity for $DGEN.

## 6.1 Token Utility

$DGEN serves several core purposes within the DegenFi platform:

1. **Governance:** Holders can participate in platform governance by proposing and voting on key decisions such as adjustments to the token economy, new feature rollouts, and partner selections.
2. **Payment Asset:** Used to pay transaction fees in futures and options trading, as well as for in-game purchases and other payments in the DegenFi ecosystem.
3. **Rewards:** Users can earn $DGEN by taking part in staking, lending, gaming, DeFi mining, and liquidity mining.
4. **Staking Asset:** Users can stake $DGEN to borrow other assets (e.g., USDT or ETH) or secure higher loan limits or lower interest rates.

## **6.2 Burn Mechanism**

DegenFi incorporates a token burn strategy to increase scarcity and potentially drive token value. The burn mechanism includes:

1. **Transaction Fee Burn**\
   DegenFi permanently burns 10% of each transaction fee, removing those tokens from circulation.
2. **Gaming Rewards Burn**\
   To maintain Memecoin scarcity, 5% of each distributed reward in gaming scenarios is burned, reducing the circulating supply of $DGEN.
3. **Platform Revenue Burn**\
   DegenFi allocates 3% of its total revenue for periodic buybacks and burns of $DGEN, further limiting circulating supply and supporting long-term token value.
4. **Scheduled Burns**\
   During the initial phase of token issuance and at regular intervals thereafter, large-scale burns will be conducted to enhance scarcity and reward holders.