# Supply Contraction {% hint style="info" %} This page involves detailed calculations designed to manage and control supply reduction in a manner that upholds principles of fairness and operational efficiency. {% endhint %} ## Taxation formula $$ \displaystyle TaxValue = \[Transfer Value \times Deflation Rate] \times \[\frac {BlockIn^3}{VWAB^3}] \times \[\frac{TaxAccumulation\_{individual}}{TaxAccumulation\_{total}}] \times 1.69 $$ The formula can be broken down into three main components for clarity: the base value, discounts (based on time and tax accumulation), and a magic number. Additionally, there is a hidden element known as the maximum tax. ### 1 Base Value $$ \[TransferValue \times Deflation Rate] $$ * *Transfer Value* = initial or intended amount of OWY tokens to be transferred. * *Deflation Rate* = the current rate of supply contraction, which varies according to different supply stages as outlined in the [Deflation Schedule](#deflation-schedule) below. #### Deflation Schedule Applying the [stepping approach with maturity stages](https://docs.owy.wtf/read-me/scalability#id-2-measurement), the current deflation rate correlates to the stage of OWY total supply.
StageTotal Current SupplyDeflation Rate
1<= 69,000,000.006.900%
2<= 47,610,000.004.761%
3<= 32,850,900.003.285%
4<= 22,667,121.002.267%
5<= 15,640,313.491.564%
6<= 10,791,816.311.079%
7<= 7,446,353.250.745%
8<= 5,137,983.740.514%
9<= 3,545,208.780.355%
10<= 2,446,194.060.245%
11<= 1,687,873.900.169%
12<= 1,164,632.990.116%
13<= 803,596.760.080%
14<=554,481.770.069%
15<= 690.000%
{% hint style="info" %} The deflation rate starts at 6.9% and gradually decreases to 69% of the previous rate as the total supply moves to the next stage, which is also 69% of the previous stage's supply. {% endhint %} *** ### 2 Discounts #### 2.1 Time Accumulation Discount $$ \[\frac {BlockIn^3}{VWAB^3}] $$ * *BlockIn* = the average Ethereum block number at which the transaction owner originally acquired their OWY tokens. * *VWAB (Volume-Weighted Average Block)* = the average *BlockIn* of all OWY holders. #### 2.2 Tax Accumulation Discount $$ \[\frac {Tax Accumulation\_{individual}}{TaxAccumulation\_{total}}] $$ * *TaxAccumulation\_individual* = The total amount of tax that the owner of the transaction has accumulated through their payments. * *TaxAccumulation\_total* =The total amount of tax paid by all OWY holders since the inception of the system. *** ### 3 Magic Number To intensify supply contraction, OWY applies a 69% tax increase exclusively to senders who's *BlockIn* exceeds *VWAB*. $$ 1.69 $$ > If no discount value existsβ€”indicating that the OWY tokens are newly received and immediately transferred to another accountβ€”then no discounts will be applied, and the magic number will be enforced. *** ### 4 Maximum Tax When an individual makes a short-term spending decision without any accumulated saving value in their tokens, the formula shown in [2.1 Time Accumulation Discount](#id-2.1-time-accumulation-discount) multiplied by the magic number could result in an excessively high tax amount. To address this, we impose a maximum tax limit: $$ π‘€π‘Žπ‘₯π‘–π‘šπ‘’π‘š π‘‡π‘Žπ‘₯ = π‘‡π‘Ÿπ‘Žπ‘›π‘ π‘“π‘’π‘Ÿπ‘‰π‘Žπ‘™π‘’π‘’ Γ— π·π‘’π‘“π‘™π‘Žπ‘‘π‘–π‘œπ‘› π‘…π‘Žπ‘‘π‘’ Γ— 1. 69 $$ Regardless of the tax amount calculated using the main formula, if it exceeds this ceiling value, the user will only be charged up to this maximum amount. *** ## End of deflation Once the [Final Phase ](https://docs.owy.wtf/tokenomics/..#id-3-final-phase)begins and the deflation mechanism ends, the OWY token will transition to a regular ERC-20 token with no tax. Users who wish to permanently burn additional OWY can still send their tokens to the zero address. This manual burn process has no limit. ***