> For the complete documentation index, see [llms.txt](https://docs.sweep.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.sweep.finance/system-architecture/value-flow/deflationary-mechanism.md). # Deflationary Mechanism Sweep operates a built-in deflationary mechanism that continuously reduces the circulating supply of the SWEEP token. This mechanism is directly linked to real user activity and is executed automatically through smart contracts. *** ### **How the burn mechanism works** Every transaction within the Sweep ecosystem contributes to token supply reduction. From each transaction: * **2.5% of the total volume is permanently burned in SWEEP** This process removes tokens from circulation in real time and does not rely on manual intervention. *** ### **Continuous supply reduction** Unlike fixed or scheduled burn models, Sweep’s deflationary system is activity-driven. As platform usage increases: * More transactions are generated * More tokens are burned * The circulating supply decreases continuously This creates a direct relationship between ecosystem growth and supply reduction. *** ### **Mathematical impact on supply** The burn mechanism ensures that supply reduction scales with usage. For example: * If the ecosystem generates **$1,000,000 in transaction volume** * **2.5% is allocated to burn = $25,000 equivalent in SWEEP removed from circulation** As volume increases, the total amount of tokens burned increases proportionally. This creates a predictable and transparent deflationary process. *** ### **Long-term structural effect** The continuous reduction in circulating supply introduces structural pressure within the token economy. As supply decreases over time: * Scarcity increases * The relative share of remaining tokens becomes more significant * The system becomes more sensitive to growth in demand This mechanism is designed to strengthen the overall economic structure of the ecosystem. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.sweep.finance/system-architecture/value-flow/deflationary-mechanism.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.