Economic Mechanics

overview the thissofire protocol is powered by a closed loop economic model that converts all activity — deposits, withdrawals, and trades — into value accretive events for both investors and the ecosystems of the indexed tokens at its core, the design ensures that capital inflow (bnb deposits) directly fuels purchases of underlying assets capital outflow (redemptions) returns bnb proportionally without destabilizing liquidity trading activity continuously strengthens the fund through automatic buybacks and burns this transforms thissofire from a static fund model into a self sustaining flywheel , where every participant — investor, trader, and token community — contributes to long term growth core economic loop thissofire’s economy consists of three simultaneous value flows flow type trigger effect stakeholders benefiting deposit flow user deposits bnb buys index constituents, mints fundshares investor, constituent token communities redemption flow user redeems fundshares sells assets, returns bnb investor (liquidity) trading flow fundshares traded on dexs generates buyback & burn through tax all fundshare holders + token communities these three loops interact to form a perpetual reinforcement system more deposits → bigger fund → more trading → more burns → higher backing → more demand → more deposits this is thissofire’s “etf flywheel ” the fee ecosystem each thissofire vault has multiple revenue and redistribution channels, designed to align incentives and fund sustainable growth a minting fee (deposit fee) charged when users deposit bnb and mint new fundshares typical range 0 2–0 5% (configurable per vault) fee destination vault’s fee pool (in bnb) purpose covers swap costs, gas, and treasury funding b redemption fee (withdrawal fee) charged when users redeem fundshares for bnb typical range 0 2–0 5% (configurable per vault) fee destination vault’s fee pool purpose discourages short term churn and protects liquidity c dex transaction fee (trading tax) applied automatically when fundshares are traded on pancakeswap or other bnb dexs example 1% transaction tax per trade distribution 80% → auto buyback & burn (deflationary loop) 20% → treasury allocation purpose transforms secondary market activity into fund growth the deflationary buyback mechanism the deflationary loop is thissofire’s most innovative feature it ensures that every trade of an index token contributes to both increasing the backing of the fund , and reducing total token supply process fundshare is traded on pancakeswap smart contract applies a transaction tax (e g , 1–5% , per vault setting) 80% of collected tax is automatically deposited to the corresponding vault in exchange for newly minted fundshares the received fundshares are sent to the burn address (0xdead) and permanently destroyed this reduces circulating supply and indirectly increases each remaining token’s share of the underlying basket each burn event reduces supply and increases the backing ratio/nav per share for holders nav and market price dynamics the fundshare token can trade at a premium or discount to nav , similar to etfs premium (price > nav) arbitrageurs mint new shares (deposit bnb) and sell on pancakeswap, increasing fund size and realigning price discount (price < nav) arbitrageurs buy fundshares on dexs and redeem for bnb at nav , removing supply and lifting the market price this mint redeem arbitrage keeps fundshare prices anchored to true underlying value , maintaining liquidity and fairness buy pressure for constituent tokens every thissofire vault holds a basket of underlying assets (e g , bnb chain memecoins like floki , baby doge , pit ) whenever users deposit bnb , or fundshares are traded (triggering the fee loop), or vaults rebalance to restore weights, …the protocol buys these underlying tokens on chain that means deposits create direct buy pressure for constituents trading creates secondary buy pressure via fee recycling rebalances reallocate liquidity among the ecosystem tokens for token communities, inclusion in a thissofire index is not just exposure — it’s sustained organic demand the treasury & fee routing each vault maintains a small bnb denominated fee pool , which accumulates deposit fees redemption fees 20% of dex tax allocations optional management fees funds in this pool can be used by vault governance for liquidity seeding ( pancakeswap lp provisioning ) operational maintenance and audits marketing and community incentives emergency insurance reserves all flows are on chain and visible in the feecollector contract, ensuring full transparency example — memecoin index fund economics token $ofire underlying assets floki (40%) , baby doge (30%) , pit (30%) initial composition 10,000 bnb tvl allocations across floki/baby doge/pit per target weights fees 0 3% deposit, 0 3% redemption, 1% trading tax scenario (simplified) daily trading volume on pancakeswap = 2,000 bnb tax = 1% = 20 bnb total 80% (16 bnb) → buyback fundshares suppose fundshare price = 0 01 bnb → 1,600 fundshares are burned daily → over 30 days, supply shrinks by 48,000 tokens ( 1 5% of total) this continuous deflation rewards long term holders and drives constant constituent purchases — compounding both scarcity and ecosystem growth rebalancing and weight drift each vault defines target asset weights ( wᵢ ) over time, market movements create weight drift ( δwᵢ = wᵢᵃᶜᵗᵘᵃˡ − wᵢᵗᵃʳᵍᵉᵗ ) to maintain stability the rebalancer module periodically adjusts positions rebalances are executed using twap orders to avoid slippage thresholds trigger when drift exceeds 5–10% costs covered by vault fees all rebalances are logged via the rebalanced event for transparent tracking economic safety mechanisms fee caps deposit/redeem fees cannot exceed 5% circuit breakers if liquidity or oracle data becomes unstable, vaults can pause mint/redeem temporarily impact guards prevents execution of swaps that exceed a price impact cap (default 5% ) drift caps vaults cannot hold >2× target weight of any single asset these constraints keep the system fair, manipulation resistant, and liquid sustainability model unlike yield farming protocols that inflate supply, thissofire grows organically through volume and user activity revenue drivers mint/redemption fees → treasury dex tax → deflationary buybacks + treasury inflow management fee (optional) → operational budget value drivers burns reduce supply buybacks increase underlying tvl new users and integrations expand liquidity this combination of organic revenue and mechanical scarcity makes the protocol self sustaining without inflationary incentives the thissofire flywheel deflationary value loop \[dex trade] → apply trading tax (1%) → 80% to auto buy fundshares → buy underlying tokens in vault → burn fundshares → 20% to treasury (liquidity & ops) result ↓ supply + ↑ backing + ↑ demand the system rewards everyone traders get liquid markets holders gain from supply contraction token communities receive constant buy pressure vault governance collects sustainable fees summary table — economic parameters parameter default range description deposit fee 0 3% 0–5% fee on bnb deposits redemption fee 0 3% 0–5% fee on withdrawals trading tax 1% 0 1–3% applied to pancakeswap trades buyback allocation 80% fixed portion of trading tax used for burns treasury allocation 20% configurable remaining tax allocation rebalance drift ±5% 3–10% triggers portfolio reweighting oracle freshness 2 hours — max time before price data invalid price impact cap 5% — max slippage per trade closing summary thissofire’s economic model combines the predictability of index funds with the reflexivity of defi every transaction fuels the ecosystem trading volume converts into asset accumulation and scarcity holders, traders, and communities all benefit symbiotically by making liquidity productive and self reinforcing , thissofire redefines how decentralized finance grows — not by minting more tokens, but by doing more with the ones that exist