Baking and Burning
The bread and butter
Baking
Mechanism: Users can bake $BREAD
by depositing $BERA
into the protocol's smart contract.
Fee: A 2.69%
fee is applied to each baking transaction. Fees are added to the protocol, increasing the $BERA
backing per circulating unit of $BREAD.
Dynamic Baking Cap: a baking cap is determined each week. If the cap was reached in the previous week, the baking cap increases by 50%
, allowing for new $BREAD
baking. If the cap was not reached, then it remains unchanged. The initial supply cap is 6.9 million
$BREAD
.
Master Baker: The controller of the dynamic baking cap, and can impose whitelists on baking in order to benefit the protocol. This is an ongoing administrative function.
Burning
Mechanism: Users can redeem $BERA
by burning $BREAD.
Fee: A 2.69%
fee is applied to each redemption.

*2.69%
baking and burning fee incurred on each Bake and Burn. 65%
of fee increases $BERA
backing, 35%
is directed to Protocol Treasury for bribes and OpEx.
Example
Let's assume there are
100
$BREAD
tokens in existence, and there is100
$BERA
tokens backing them in the contract. That means the exchange rate between them is 1:1, giving a price of1
$BERA
per$BREAD
There is a
2.69%
bakng fee, so to bake the next$BREAD
token a user must pay1.0269
$BERA
. Of the fee collected,65%
or0.017485
$BERA
, is added to the backingThere is now
101
$BREAD
in circulation and101.017485
$BERA
in the backing. The new exchange ratio is now approximately1.0001731188
$BERA
per$BREAD
This exchange rate still increases in
$BREAD
's favor if there is a burn. Let's assume a user burns3
$BREAD
to redeem$BERA
. There is a2.69%
burning fee. Of the fee collected,65%
or0.052455
$BERA
, is added to the backingThere is now
98
$BREAD
in circulation and98.06994
$BERA
in the backing. The new exchange ratio is now approximately1.0007136735
$BERA
per$BREAD
.The backing always increases, regardless of a Bake or Burn occurring.
[User Deposits 1.0269 BERA]
|
v
+---------------------------+
| BREAD Token Smart Contract |
+---------------------------+
|
|---> Adds to Contract Backing:
| - 1.00 BERA (Base Amount)
| - 0.017485 BERA (65% of Fee)
|
|---> Distributes Fees:
| - 0.004035 BERA (15% of fee) to PoL Bribes
| - 0.00538 BERA (20% of fee) to Treasury
|
|---> Bakes 1 BREAD Token
v
[User Receives 1 BREAD Token]
Last updated