> For the complete documentation index, see [llms.txt](https://aironetwork.gitbook.io/airo-network-whitepaper-v1.5/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://aironetwork.gitbook.io/airo-network-whitepaper-v1.5/economy/the-burn-mechanism.md).

# The Burn Mechanism

The Burn Mechanism is a critical component of the AIRO Network's tokenomics, designed to reduce the overall supply of $AIRO and increase its value over time. 

**Burn Mechanism Overview**

1. **Source of Tokens for Burning**:
   * **REGEN Fees**: A portion of the REGEN fees collected when miners regenerate their STEAM levels.
   * **Undistributed Rewards**: Remaining rewards that were not distributed to miners at the end of each distribution cycle.
2. **Burn Allocation**:
   * 50% of the undistributed rewards and REGEN fees collected are burned, decreasing the total supply of $AIRO.

#### How it Works

* **REGEN Fees**: When miners regenerate their STEAM levels, they pay REGEN fees. A portion of these fees is allocated to be burned, reducing the circulating supply.
* **Undistributed Rewards**: Any rewards that were not distributed due to miners not meeting performance criteria are allocated for burning.
* **Burn Process**: At the end of each reward distribution cycle (e.g., weekly), the designated tokens are sent to a burn address, effectively removing them from circulation.

#### Example

If the total undistributed rewards and REGEN fees for a week amount to 10,000 $AIRO, this means 5,000 $AIRO would be sent to the burn address, permanently reducing the total supply by this amount.

#### Benefits of the Burn Mechanism

* **Deflationary Pressure**: Regularly burning tokens reduces the total supply of $AIRO, potentially increasing its value over time.
* **Incentivizes Holding**: With a decreasing supply, the value of held tokens may increase, incentivizing miners and holders to retain their $AIRO tokens.
* **Sustainability**: Ensures the network remains balanced by aligning miner incentives with the long-term health of the tokenomics.

$$
f(x) = x \* e^{2 pi i \xi x}
$$