Path to Net Deflation

Note: The numbers in this document are indicative and not final. They reflect the current framework discussed in Townhall 23 and may change based on community feedback and final launch parameters. We recommend reading this alongside the Townhall recording for full context.

The network becomes structurally deflationary when annual token burn exceeds annual emissions.

Deflation Condition

Net deflation occurs when:

$$Burn_t > E_t$$

Where:

• E_t = total annual emissions

• Burn_t = tokens purchased and burned from revenue

Burn is determined by:

$$Burn_t = \frac{0.75 \, R_t}{P_t}$$

Therefore, the deflation condition becomes:

$$\frac{0.75 \, R_t}{P_t} > E_t$$

Solving for required revenue:

$$R_t > \frac{E_t \, P_t}{0.75}$$

This defines the minimum revenue needed to achieve net supply contraction at a given token price.

Emission Schedule (600M Baseline)

Year 1:

$$E_1 = 540{,}000{,}000$$

Year 2:

$$E_2 = 486{,}000{,}000$$

Year 3:

$$E_3 = 437{,}400{,}000$$

Revenue Projections

• Year 1: $89.9M

• Year 2: $134.9M

• Year 3: $202.4M

Buyback budget each year:

$$0.75 \times R_t$$

Crossover Analysis at Different Token Prices

Case A : Token Price = $0.05

Required revenue for deflation (Year 1):

$$R > \frac{540{,}000{,}000 \times 0.05}{0.75}$$

$$R > 36{,}000{,}000$$

Actual projected revenue: $89.9M

Result: Deflation achieved in Year 1

Case B : Token Price = $0.10

Required revenue (Year 1):

$$R > 72{,}000{,}000$$

Projected revenue: $89.9M

Result: Deflation achieved in Year 1

Case C : Token Price = $0.20

Required revenue (Year 1):

$$R > 144{,}000{,}000$$

Projected revenue: $89.9M

Result: Not deflationary in Year 1

Year 2 requirement:

$$R > \frac{486{,}000{,}000 \times 0.20}{0.75}$$

$$R > 129{,}600{,}000$$

Projected Year 2 revenue: $134.9M

Result: Deflation achieved in Year 2

Case D — Token Price = $0.50

Year 1 requirement:

$$R > 360{,}000{,}000$$

Not achieved.

Year 2 requirement:

$$R > 324{,}000{,}000$$

Not achieved.

Year 3 requirement:

$$R > \frac{437{,}400{,}000 \times 0.50}{0.75}$$

$$R > 291{,}600{,}000$$

Projected Year 3 revenue: $202.4M

Result: Not yet deflationary at $0.50 by Year 3.

Summary Table

Token Price	Crossover Year
$0.05	Year 1
$0.10	Year 1
$0.20	Year 2
$0.50	Beyond Year 3

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Structural Insight

Because:

• Emissions decline 10% annually

• Revenue scales with network growth

The revenue threshold for deflation declines over time.

As broadband adoption increases, the system naturally transitions from:

Early-stage inflation → Neutral supply → Net deflation.

The crossover year is mathematically determined by revenue growth, token price, and emission decay, not speculation.

This creates a transparent and measurable path toward structural supply contraction.