> For the complete documentation index, see [llms.txt](https://nxd-protocol-docs.gitbook.io/nxd-protocol-dxn-hyperstructure-initiative/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://nxd-protocol-docs.gitbook.io/nxd-protocol-dxn-hyperstructure-initiative/nxd-protocol-ecosystem/nxd-economics-of-compounding/price-floor-technology/price-floor-increased-by-nxd-burns.md).

# Price Floor Increased by NXD Burns

**Deflation, Locked Liquidity and a Capped Supply Asset**

Through the strategic burn of a finite supply asset alongside the establishment of locked and immutable liquidity, each act of burning materially elevates the asset’s price floor, catalyzing a consistent and exponential growth in its minimum valuation.

Grasping this concept is pivotal, as the resulting price floor represents the baseline value of NXD relative to DXN, independent of market activity or transaction volume. Nonetheless, this guaranteed price floor in DXN terms does not insulate NXD from variances in its fiat valuation, given its linkage to DXN’s market worth. Therefore, while the price floor guarantees that NXD’s valuation in DXN terms remains above a specified benchmark, its fiat market value is susceptible to the fluctuating dynamics of DXN.

Fundamental to the NXD architecture is the immutability of liquidity through the renouncement of ownership of the Base Pair NXD/DXN UniV2 LP and that no more NXD will ever enter the supply after the Limited Mint Phase (LMP). Following the initiation of the NXD Protocol and the conclusion of the LMP, a systematic mechanism of NXD token burning is activated through various smart contracts, ensuring a perpetual rise of the NXD Price Floor.

<figure><img src="/files/AlWjBuawDllC6DWKkOBz" alt=""><figcaption><p>Schematic visualization of the Price Floor logic</p></figcaption></figure>


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