> For the complete documentation index, see [llms.txt](https://docs.kim.exchange/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.kim.exchange/tokenomics/deflationary-mechanics.md).

# Deflationary Mechanics

In addition to the hardcap set on KIM, we also implemented some deflationary mechanics in order to reduce the total supply.

## Buy back & Burn

A share of the protocol earnings is dedicated to buy back & burn KIM, in order to apply a continuous buying pressure on it.

## xKIM redeems

When converting xKIM to KIM, if the vesting duration isn't the maximum, the xKIM:KIM ratio will be lower than 1:1, down to a minimum of 1:0.5. All of the excess KIM will automatically be burned.

{% hint style="info" %}
For instance, if a user redeems 1000 xKIM with the minimal 15 days vesting duration, she will obtain a 1:0.5 ratio, and receive 500 KIM in the end.

That means a total of 1000 - 500 = 500 KIM will be burned during the process.
{% endhint %}

## xKIM deallocations

When deallocating xKIM from a Plugin, a deallocation tax is applied. It can vary between contracts, but will usually be of 0.5%.

The corresponding KIM amount will automatically be burned.