> For the complete documentation index, see [llms.txt](https://liquidx-3.gitbook.io/liquidx-whitepaper/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://liquidx-3.gitbook.io/liquidx-whitepaper/6.-tokenomics/6.3-the-burn-mechanism-value-creation-over-time.md).

# 6.3  The Burn Mechanism - Value Creation Over Time

Every time a borrower pays interest or a fee is charged for a protocol action, 5% of that fee is sent to a 'burn address' - a wallet from which tokens can never be retrieved. This permanently reduces the total supply of LQX, creating deflationary pressure. As protocol volume increases, more LQX is burned. Less supply with equal or growing demand means higher value per token.

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