# ICX Tokenomics

### **Purpose and Logic**

The ICX Protocol's tokenomics are meticulously designed to balance long-term rewards, liquidity sustainability, and deflationary mechanisms. By carefully allocating the total token supply and employing time-based inflation schedules, the protocol ensures sufficient token availability for yields and operations while driving scarcity through deflationary forces. This structure incentivizes long-term participation and aligns with the protocol's goal of sustainable value growth.

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**Total Supply and Allocation**

The total supply of ICX is **115 billion tokens**, distributed across key categories to support the ecosystem:

| **Category**                | **Allocation**  | **Details**                                                                          |
| --------------------------- | --------------- | ------------------------------------------------------------------------------------ |
| **Yield Allocation**        | 100 billion ICX | 90% of the supply is allocated for Reflection Yields (10%) and Auction Yields (90%). |
| **Liquidity Bootstrapping** | 5 billion ICX   | Allocated for the CLW to establish the ICX/ETH liquidity pool.                       |
| **Team Allocation**         | 5 billion ICX   | Subject to the same vesting schedule and interruption mechanisms as other tokens.    |
| **Marketing Allocation**    | 5 billion ICX   | Subject to the same vesting schedule and interruption mechanisms as other tokens.    |

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**Inflation and Disinflationary Yield Schedule**

The protocol incorporates a **disinflationary schedule** to distribute the 100 billion ICX tokens allocated for yields over several years. This ensures a steady supply of rewards while reducing inflation rates over time to enhance token scarcity.

| **Year** | **Inflation Rate** | **Reflection Yield** | **Auction Yield** |
| -------- | ------------------ | -------------------- | ----------------- |
| Y1       | 25%                | 2.5 billion ICX      | 22.5 billion ICX  |
| Y2       | 20%                | 2.0 billion ICX      | 18.0 billion ICX  |
| Y3       | 15%                | 1.5 billion ICX      | 13.5 billion ICX  |
| Y4       | 10%                | 1.0 billion ICX      | 9.0 billion ICX   |
| Y5       | 5%                 | 0.5 billion ICX      | 4.5 billion ICX   |

* **Year 6 Onward**: The inflation rate decreases annually by 10%, ensuring a consistent but diminishing reward structure.

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**Deflationary Mechanisms**

1. **Burning Mechanism**:
   * **55% of Interrupted Vesting Schedules**: Permanently burned, reducing the circulating supply.
   * **55% of ICX Spent in Auctions**: Permanently burned to reinforce scarcity.
   * **50% of ICX Deposits to Increase Multipliers**: Burned to enhance the protocol's deflationary nature.
2. **Redistribution of Interrupted Vesting Schedules**:
   * **5%** added to Reflection Yields, rewarding long-term ultraLP stakers.
   * **20%** swapped for DXN and compounded into the DXN Staking Vault.
   * **20%** swapped for ETH and added to the ICX/ETH liquidity pool, boosting liquidity.
3. **Auction Redistribution**:
   * **22.5% of Spent ICX Swapped for ETH**: Added as liquidity.
   * **22.5% Added as ICX Liquidity**: Directly strengthens the price floor.

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**Team and Marketing Allocations**

Team and marketing tokens are subject to the **same vesting schedules and interruption mechanisms** as user tokens. This ensures alignment between the protocol's operators and its participants:

* **Vesting Schedules**:
  * 5% liquid at the time of allocation.
  * 95% subject to a 12-month vesting period.
* **Redistribution Upon Interruptions**:
  * Burned (55%) and redistributed (45%) as outlined, benefiting the ecosystem and liquidity.

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**Price Floor and Liquidity Dynamics**

Through these mechanisms, ICX ensures:

1. **A Growing Price Floor**: ETH liquidity pools strengthen with every interaction, providing price stability.
2. **Token Scarcity**: Supply decreases continuously, creating upward price pressure.
3. **Sustainable Rewards**: Incentivizing long-term participation without over-saturating the market.

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The tokenomics section provides the foundation for understanding how ICX balances rewards and scarcity.
