Inflation is a phenomenon that occurs when the supply of a token exceeds its demand, leading to a decrease in its value over time. To counteract inflation and promote a healthier token economy, WispSwap team has implemented deflationary mechanisms directly into the platform. This can potentially lead to increased demand for our token, as investors and users may see it as a store of value with limited supply, which could result in price appreciation over time.
A portion of the protocol earnings, which includes transaction fees from WispSwap DEX, fees from Wisp-Prediction, and revenues from future WispSwap products, is allocated towards buying back and burning WISP tokens. This creates a continuous buying pressure on the token.
By integrating a deflationary mechanism into veWISP, we aim to create a sustainable token economy that is less susceptible to inflationary pressures.
When converting veWISP to WISP, if the vesting duration isn't the maximum, the veWISP:WISP ratio will be lower than 1:1, down to a minimum of 1:0.5. All of the WISP excess will automatically be burned.
For instance, if a user redeems 1000 veWISP with the minimal 15 days vesting duration, he will obtain a 1:0.5 ratio, and receive 500 WISPin the end.
That means a total of 1000 - 500 = 500 WISP will be burned during the process.
When detaching veWISP from a Plug-in, a detachment tax is applied. It can vary between contracts, but will usually be of 0.5%.
The equivalent amount of WISP will be automatically burned as a result.