Deflationary Mechanisms

Last Update: 3/27/2025

Hydra Swap incorporates a built-in deflationary strategy that aligns long-term token value with platform usage and staking activity. Through structured buybacks and token burns, the $HYDRA supply is gradually reduced—driving scarcity and enhancing reward value for long-term participants. Token Supply Reduction To manage supply and support the value of $HYDRA, Hydra Swap executes weekly burns sourced from two primary mechanisms:

- Staking Program Penalty Tolls: Inactive, prematurely unstaked, or misaligned staking behaviors in Staking Program v2 trigger penalty tolls, which are then diverted for burning.

- Legacy Supply Allocations: A portion of remaining tokens from Staking Program v1’s allocation is systematically retired through ongoing token burns.

This predictable supply management framework ensures that the protocol continues reducing available token supply as platform participation grows. Buyback + Burn Synergy Hydra’s buyback-and-burn model reinforces this deflationary pressure. Tokens purchased on the open market using fee revenue from partner exchanges may be directed to either: - Reward active stakers (via redistribution), or - Be permanently removed from circulation through smart contract-based burns This dual approach makes the entire staking ecosystem net-deflationary over time, benefiting active participants while preserving long-term token value. Economic Impact Reducing the circulating supply of $HYDRA introduces natural upward pressure on token price, assuming steady or increasing demand. This dynamic directly benefits:

• Long-term stakers through increased token scarcity

• Platform sustainability by discouraging inflationary emissions

• Investor confidence through transparent supply management. By tying deflationary mechanics directly to platform utility and staking behavior, Hydra Swap establishes a self-regulating, value-enhancing ecosystem for all stakeholders