# $BREAD Rises

There are various actions that users can undertake in the protocol. Each of them has an associated fee. 70% of baking, burning, loan, and leverage fees increase the liquid backing of each circulating `$BREAD`.

* Every time someone bakes or burns `$BREAD`, the fee is added to the `$BERA` backing
* Every time someone opens a loan, the loan interest fee is added to the `$BERA` backing
  * Loans are time based, and if someone defaults on a loan, their `$BREAD` is burned
* If `$BREAD` is burned - decreasing the supply and reducing the backing - the fees from doing so are added to the backing which still increase the ratio of `$BERA` backing each circulating `$BREAD`
* Even when the supply increases, more `$BREAD` cannot come into circulation without fees being added to the backing that further improve the exchange rate of `$BREAD` to `$BERA`
* Please note that `$BREAD` is up-only against `$BERA`, not `$USD`

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The source of yield is sustainable because it stems from: new participants minting, burning, initiating loans, and defaulting. LP incentives come from protocol revenue, as well as other incentives from Kodiak, Yeet, and Olympus.
{% endhint %}