Deflationary token explained

4 min readMay 28, 2021 platform has launched a new deflationary token contract.

Create a deflationary token with MyWish. Fill in the form to apply

The interest towards deflationary token models keeps growing among the crypto community. This trend is backed by the beneficial token economy model that enables the increase of market demand through decreasing supply.

What is a deflationary token model?

Tokens are called deflationary when a continuous decrease of circulating supply is prescribed. Such a decrease of the token supply may be conducted in several ways: buyback and burn and burn-on-transaction. When it comes to burn-on-transaction deflationary tokens, the total supply decreases with every occurring transaction. This means that the prescribed percentage of the transferred funds will be burned when a transaction takes place.

How it works:

The burn-on-transaction function is integrated directly into the token contract. The contract charges a commission from every on-chain transaction and then sends it to the burning address. This way the circulating token supply is decreasing with every transfer. Such an approach to tokenomics depends on the trading volume: the more volume — the bigger number of tokens will be excluded from the circulating supply.

Along with the burn-per-transaction, other distribution functions may be added to the contract. Transaction commission can include automatic LP add-ons and distribution to holders. This way where with every on-chain transaction, a specified amount of funds will be transferred to LP and/or holders. This way the holders are getting incentives for holding as well as a stimulus to keep the trading volume high is also assured. team came up with the efficient solution of Deflationary token contract optimization that allows users to add any desired combination of the following functions: distribution to holders per transaction, automatic add to liquidity pool per transaction, and burn-on-transaction.

MyWish deflationary token

MyWish team has developed a contract, flexible to be customized for any deflation tokemonics model. The contract flexibility implies any desired combination of the following functions:

  1. Token Burn
  2. Distribution to holders
  3. Liquidity Pool transfers (Uniswap V3; PancakeSwap)
  4. Minting function

1. Token burn

A share of every transaction that occurred is sent to the burning address which decreases token supply. The function allows settling whether the tokens will be burned per transaction and what percent of tokens will be sent to the burning address

2. Distribution to holders

Holders earn passive rewards with every on-chain transaction in accordance with the amount of their holdings. The holders will get the share of each transaction depending on the number of tokens they hold — the bigger it is, the bigger share he/she gets. This function defines the percentage of each transaction that will be sent to the token holders. Additionally, in the contract creation process, it is possible to define different shares to be distributed to specific addresses.

Users can also add addresses to receive a share of transactions and define the amount to be sent. This is widely used for charity

3. Distribution to other addresses.

Users can also add specific addresses that will also receive a share of each transaction. The customer defines the value of the share from each transaction to which addresses should go. Such an option is often used for distribution to a charity wallet.

4. Automated LP

The option of automated LP can be added to the deflationary token contract. In this case, every trade contributes towards automatically generating liquidity that goes into the pool used by the exchange. The user can settle the amount of funds to be transferred to LP from each transaction. For Ethereum based contracts, the Uniswap V3 liquidity pool can be added per each transaction.

MyWish deflationary token contract allows users to choose any combination of the four mentioned above functions including and excluding the desired ones to fit the tokenomics structure.

We have developed contract templates that contain the following improvements:

  • gas optimization
  • automatic LP Uniswap v3
  • customization of contract parameters for specific tokenomics
  • combining the functionality of the deflation token and the token with Automatic LP

Fill in the form to create a deflationary token:

(Disclaimer: none of the mentioned above should be used as a ground for financial and investment decisions. The article does not provide any financial advice. Be aware that crypto trading involves risks)