# Tokenomics

## KRK Token

- **Standard**: ERC20 on Base (Ethereum L2)
- **Supply**: Dynamic (minted on buys, burned on sells)
- **Backing**: Every KRK token is backed by ETH in the trading vault

## ETH Reserve & Floor Price

The protocol maintains an ETH reserve in a Uniswap V3 concentrated liquidity position. This creates a floor price:

```
floor_price = ETH_reserve / total_KRK_supply
```

**Key property**: The floor price can only go up (in ETH terms) because:
- Buys add ETH to the reserve and mint KRK at market price (above floor)
- Sells remove KRK from supply and return ETH at market price
- Trading fees from the pool add to the reserve without minting new tokens

## Supply Mechanics

### Minting (on buy)
When someone buys KRK on Uniswap:
1. ETH enters the pool
2. KRK is minted at market price
3. 20% of new tokens go to the staking pool (for stakers)
4. 80% goes to the buyer

### Burning (on sell)
When someone sells KRK:
1. KRK is burned
2. ETH leaves the pool at market price
3. The staking pool burns proportionally

## Liquidity Management

The LiquidityManager positions liquidity in a concentrated range around the current price:

### Modes
- **Scarcity** (bearish signal): Wide range, conservative positioning
- **Abundance** (bullish signal): Narrow range, aggressive fee capture

### Signals
The optimizer reads staking activity as a sentiment indicator:
- High staking ratio + low tax rates = genuine confidence → Bull mode
- Dropping staking or rising tax rates = uncertainty → Bear mode

### VWAP Tracking
The system tracks a volume-weighted average price (VWAP) to set liquidity ranges. This creates a "mirror floor" — a second price support level based on recent trading history.

## Fee Generation

Trading activity generates fees from the Uniswap V3 position. These fees accrue to the ETH reserve, increasing the floor price for all holders.

The fee rate depends on:
- Trading volume
- Liquidity concentration (narrower range = more fees per trade)
- Pool fee tier (1% on the KRK/WETH pair)