# Tokenomics

The $YieldX token follows a **reward-linked emission model** designed to be transparent, sustainable, and aligned with protocol growth. Token issuance is tied directly to vault activity, ensuring that new tokens are only created when users engage with the system.

#### Distribution

Each time new $YieldX tokens are issued through vault rewards:

* **75% Ecosystem Rewards** – Distributed directly to users who participate in vaults and staking.
* **25% Foundation Treasury** – Minted on top of user rewards and allocated to the YieldX Foundation Treasury.

This means that for every 75 tokens given to users, an additional 25 tokens are minted for the Foundation, making the total supply increase proportionally.\
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The $YieldX Token has an unlimited supply, but is only issued based on the protocol usage.

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#### Dual Reward Structure

Vault participants earn in two ways:

1. **Base Yield (X% APY)** – Yield generated by the vault strategy in the deposited asset.
2. **$YieldX Token Rewards (Y% APY)** – Distributed in $YieldX tokens, linked to vault performance.

The dual reward structure ensures that users receive sustainable yield from the vault plus additional incentives in $YieldX tokens.

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#### Treasury Allocation

The 25% allocated to the Foundation Treasury is used to strengthen the protocol’s long-term sustainability, including:

* Development and protocol upgrades.
* Smart contract audits and security.
* Grants, partnerships, and ecosystem growth.
* Liquidity provisioning and buyback mechanisms.

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#### Key Principles

* **Activity-Based Issuance** – Tokens are only minted when users deposit and earn.
* **Fair & Aligned** – Majority of rewards flow to users, with proportional treasury growth.
* **Automated** – Distribution is handled entirely by smart contracts, removing human control.

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