Algorithmic Burn

The algorithmic burn is applied to the 60% staker reward pool each epoch. It is not a fixed reduction. The burn rate is calculated dynamically based on the relationship between the total circulating supply and the proportion of that supply that is actively staked across the node network.

The Formula

The calculation works as follows. The proportion of circulating MNTx that is unstaked is identified. That figure is halved. The result is the percentage by which the 60% staker pool is reduced before distribution.

Burn rate = Unstaked % ÷ 2

Example 1:

If 87.9% of circulating MNTx is staked, then 12.1% is unstaked. Half of 12.1% is 6.05%. The 60% staker pool is reduced by 6.05% before distribution, meaning 93.95% of that pool reaches stakers.

Example 2:

If staking participation fell to 50%, then 50% would be unstaked. Half of 50% is 25%. The staker pool would be reduced by 25% before distribution, a significantly larger burn.

The direction of the mechanic is clear: lower staking participation means a higher burn rate and fewer tokens reaching stakers. Higher participation means a lower burn rate and more of the pool distributed. This creates a structural incentive to stake and maintain positions across epochs. Gamification of the process, the stakers have a direct influence on the percentage of tokens that will be burnt each epoch.

What Counts as Circulating Supply

For the purposes of the burn calculation, the total circulating supply excludes tokens released to the Network Expansion Pool that remain unallocated, and all unclaimed user rewards. Both are excluded until they are allocated or claimed. Tokens delegated to the public Validation Node are included in the total MNTx staked figure.

Smart Contract Execution

There are no manual or orchestrated burn interventions. The calculation is performed and executed algorithmically via smart contracts each epoch. No discretionary decisions determine how much is burned. The outcome is entirely determined by the staking behaviour of participants across the network that month.