Deflationary Mechanism

In addition to the hardcap set on ARR, we also implemented some deflationary mechanisms in order to reduce the total supply.

Buy back & burn

A share of the protocol earnings is dedicated to buy back & burn ARR, in order to apply a continuous buying pressure on it.

esARR redeems

When converting esARR to , if the vesting duration isn't the maximum, the esARR:ARR ratio will be lower than 1:1, down to a minimum of 1:0.5. All of the ARR excess will automatically be burned.

For instance, if a user redeems 1000 esARR with the minimal 15 days vesting duration, he will obtain a 1:0.5 ratio, and receive 500 ARR in the end.

That means a total of 1000 - 500 = 500 ARR will be burned during the process.

esARR deallocations

When deallocating esARR from a Component, a deallocation tax is applied. It can vary between contracts, but will usually be of 0.5%.

The corresponding ARR amount will automatically be burned.

Asset covariance

When a new project is launched, a certain quota will be allocated to the asset covariance of esARR. Covarying the esARR is equivalent to destruction, and the corresponding ARR is automatically burned.