# Tokenomics

{% hint style="info" %}
Tokenomics in FOREST is built around one principle:\
**every token should be able to express its own economic behaviour.**
{% endhint %}

Instead of forcing tokens into a fixed template, FOREST allows creators to configure supply, fees, curves, buybacks, and distribution logic in a modular way. This section explains how each component works and how they interact to form a complete economic system.

## 1. Supply Model

{% hint style="warning" %}
FOREST does not enforce a fixed maximum supply.
{% endhint %}

Tokens use an elastic supply model shaped by user actions:

* Tokens mint when users buy
* Tokens burn or return to the pool when users sell
* Staking, rewards, and airdrops draw from the defined allocation pools

#### Circulating Supply updates in real time based on:

* tokens bought
* tokens sold
* tokens staked
* tokens burned
* tokens claimed from airdrops

{% hint style="info" %}
\[ Creator Configuration ] → \[ Allocation Pools ] → \[ Live Supply Behaviour ]
{% endhint %}

This gives creators flexibility while ensuring users can always track supply transparently.

## 2. Allocation Splits

Creators define how the token’s initial distribution is split across four main pools:

| Pool      | Purpose                                                                 |
| --------- | ----------------------------------------------------------------------- |
| Liquidity | Tokens paired with $FOREST to open trading and price discovery          |
| Reserve   | Project-owned supply for future use (team, marketing, ecosystem growth) |
| Staking   | Tokens rewarded to participants staking into the ecosystem              |
| Airdrop   | Tokens distributed to early users, campaigns, quests, referrals         |

These percentages always equal **100%**.

#### Example:

* Liquidity: 40%
* Reserve: 30%
* Staking: 20%
* Airdrop: 10%

#### How Splits Work in Practice

* Liquidity is locked into the pool at publish.
* Reserve tokens remain in the project’s control.
* Staking rewards release over time based on staking behaviour.
* Airdrop pools are consumed by claim modules or campaign events.

## 3. Fees

Fees create the economic engine that powers each token.

Creators configure:

* Buy Fee: 0–100%
* Sell Fee: 0–100%

Fees can be routed to:

* creator treasury
* protocol
* buybacks
* other configured destinations (depending on template)

#### Example Fee Routing

**Buy Fee (5%)**

* 2% → Creator Treasury
* 2% → Protocol
* 1% → Buybacks

**Sell Fee (7%)**

* 3% → Protocol
* 4% → Buybacks

Fees influence:

* sustainability
* token liquidity
* long-term incentives
* market behaviour

{% hint style="danger" %}
High buy fees can discourage rapid entry.\
High sell fees can discourage dumping.\
Balanced fees stabilise the ecosystem.
{% endhint %}

## 4. Buybacks

Buybacks convert a % of collected fees or app revenue into automatic purchases of the token.

Buyback % can be configured from 0–100%.

#### Buybacks can operate in two modes:

**A. Buy and Hold**

Purchased tokens move into a designated treasury or module.

**B. Buy and Burn**

Purchased tokens are permanently removed from supply.\
Burning reduces circulating supply and increases scarcity.

## 5. Bonding Curves (Price Discovery Stage)

New tokens in FOREST begin in a curve-based environment where price is determined by a bonding-curve function chosen by the creator:

{% tabs %}
{% tab title="Linear (Type A)" %}
Straight, predictable price progression.
{% endtab %}

{% tab title="Exponential (Type B)" %}
Price accelerates aggressively as supply expands.
{% endtab %}

{% tab title="Logarithmic (Type C)" %}
Price rises sharply early, then stabilises.
{% endtab %}
{% endtabs %}

#### What Curves Do

Curves handle early-stage price discovery.\
They allow tokens to:

* raise liquidity gradually
* react to demand
* build a market before entering continuous trading

<figure><img src="https://1941350333-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FPgUYyFDkuWTE2eCLqgVg%2Fuploads%2Fwrv7OfmaoBBiDyzJaLLZ%2Fcurves.png?alt=media&#x26;token=f6f1097f-a33a-4f29-9176-48ae00ee843e" alt=""><figcaption></figcaption></figure>

## 6. Graduation Threshold

{% hint style="info" %}
Each token defines a liquidity target. Once that target is reached, the token transitions from curve-based pricing into a constant-product liquidity pool.
{% endhint %}

### How the Threshold Works

The threshold is displayed in **$FOREST equivalent**, with a **progress bar** visible on the token page.

{% tabs %}
{% tab title="Example Display" %}
**Graduation Threshold:** 80,000 $FOREST\
**Current Liquidity:** 52,400 $FOREST\
**Progress:** 65%
{% endtab %}

{% tab title="Lifecycle Event" %}
Reaching the threshold triggers:

* migration from curve pricing
* activation of constant-product liquidity
* entry into open trading conditions
  {% endtab %}
  {% endtabs %}

### Why Thresholds Exist

{% hint style="warning" %}
Thresholds ensure tokens graduate only when structurally ready.
{% endhint %}

* They prevent premature migration
* They ensure price stability before entering open liquidity
* They help creators plan for distribution phases

{% hint style="success" %}
The Graduation Threshold acts as a safeguard: creators maintain control, markets remain stable, and the transition into open liquidity is predictable.
{% endhint %}

## 7. Post-Graduation Mechanics (AMM Mode)

{% hint style="info" %}
After crossing the threshold, the token enters AMM Mode where pricing follows a constant-product model.
{% endhint %}

### The Core Formula

Pricing uses a constant-product function:

```
x * y = k
```

## 8. Full Token Lifecycle Diagram

{% hint style="info" %}
This section outlines the complete lifecycle of a token created through FOREST, from initial configuration to long-term ecosystem mechanics.
{% endhint %}

### Lifecycle Overview

The token moves through a series of defined states. Each state activates new mechanics while preserving the logic set by the creator.

{% tabs %}
{% tab title="Conceptual Explanation" %}

* **Creator Config**\
  The creator defines all foundational mechanics.
* **Bonding Curve Launch**\
  Early trading builds liquidity and price discovery.
* **Graduation Threshold Hit**\
  A milestone that triggers progression into full liquidity.
* **AMM Liquidity Mode**\
  Advanced token features activate and market dynamics expand.
* **Long-term Ecosystem Mechanics**\
  The token reaches its mature phase and operates as part of a broader ecosystem.
  {% endtab %}

{% tab title="Lifecycle Flow" %}

#### 1. Creator Config

This is the starting point.\
All parameters, mechanics, curves, fees, and logic are defined here.

&#x20; ↓

#### 2. Bonding Curve Launch

The token begins trading on its bonding curve.\
Liquidity expands automatically as trading occurs.

&#x20; ↓

#### 3. Graduation Threshold Hit

Once the graduation threshold is reached, the system transitions from bonding curve mode into open liquidity.

&#x20; ↓

#### 4. AMM Liquidity Mode

The token now trades in AMM liquidity.\
Active systems begin operating:

* fees
* buybacks
* staking
* airdrops

&#x20; ↓

#### 5. Long-term Ecosystem Mechanics

Sustained behaviour, rewards, supply logic, and ongoing token utilities evolve here.
{% endtab %}
{% endtabs %}

{% hint style="success" %}
The lifecycle ensures that a FOREST token evolves from a creator-defined concept into a fully autonomous economy with ongoing mechanics.
{% endhint %}

## 9. Example Tokenomics Profile (Simple)

{% hint style="info" %}
A simple reference profile showing how a token’s structure can be organised inside FOREST.
{% endhint %}

### Core Parameters

{% tabs %}
{% tab title="Supply & Allocation" %}
**Supply:** Elastic

**Liquidity Split:** 40%\
**Reserve:** 30%\
**Staking Pool:** 20%\
**Airdrop Pool:** 10%
{% endtab %}

{% tab title="Fees & Buybacks" %}
**Buy Fee:** 3%\
**Sell Fee:** 5%\
**Buyback:** 40% of fees
{% endtab %}

{% tab title="Curve & Progression" %}
**Curve:** Linear\
**Graduation:** 75,000 $FOREST
{% endtab %}
{% endtabs %}

{% hint style="success" %}
This profile represents a straightforward, creator-friendly setup that balances liquidity, staking incentives, and long-term progression.
{% endhint %}

## 10. Example Tokenomics Profile (Advanced)

{% hint style="info" %}
This is an advanced tokenomics configuration showcasing how multiple mechanics can be combined into a single economic system.
{% endhint %}

### Core Structure

{% tabs %}
{% tab title="Supply & Allocation" %}
**Supply:** Elastic + burn-enabled

**Liquidity Split:** 55%\
**Reserve:** 20%\
**Staking:** 15%\
**Airdrop:** 10%
{% endtab %}

{% tab title="Fees & Revenue Flow" %}
**Buy Fee:** 4%\
**Sell Fee:** 6%

**Buyback:** 60% of all fees (burn)\
**App Revenue:** 10% routed into buybacks
{% endtab %}

{% tab title="Curve & Progression" %}
**Curve:** Exponential\
**Graduation:** 120,000 $FOREST
{% endtab %}
{% endtabs %}

### Incentive Systems

{% tabs %}
{% tab title="Staking" %}
**Staking:** dynamic emissions
{% endtab %}

{% tab title="Airdrops" %}
**Airdrops:** SEED-based claim system
{% endtab %}
{% endtabs %}

{% hint style="success" %}
This profile combines elastic supply, burn mechanics, exponential growth curves, and multi-channel incentives into a unified advanced economy.
{% endhint %}

## 11. How All Elements Interact

{% hint style="info" %}
This section explains how every action in the system triggers a chain reaction across the entire token economy.
{% endhint %}

### Core Flow

{% tabs %}
{% tab title="User Buys" %}
**User Buys →**

* Minting
* Curve price ↑
* Liquidity ↑
* Fees generated

**As a result:**

* Buybacks trigger
* Treasury increases
* Staking pools fill
* Progress bar moves toward graduation
  {% endtab %}

{% tab title="User Sells" %}
**User Sells →**

* Burning or pool return
* Curve price ↓
* Fees generated

**As a result:**

* Buybacks trigger
* Sell pressure absorbed
  {% endtab %}
  {% endtabs %}

### The Closed-Loop Effect

{% hint style="warning" %}
Every action reinforces the system. Nothing is isolated. Everything feeds back into the token's lifecycle.
{% endhint %}

#### This creates closed-loop economics where:

* trading activity funds rewards
* liquidity increases stability
* buybacks support the token
* fees sustain the ecosystem

{% hint style="success" %}
The more users interact, the stronger and more self-sustaining the token economy becomes.
{% endhint %}