# Deflationary Model

Knocnoc's $KNOC token economic model adopts a deflationary mechanism designed to create a sustainable and healthy incentive system.

**Reward Mechanism**

Knocnoc rewards users based on the actual value they contribute to the application, moving away from traditional "play-to-earn" models. Users earn $KNOC tokens only when they generate real revenue for the platform through their activities. This contribution-based incentive model ensures that all user actions incur costs, effectively preventing system abuse by bots or malicious actors.

Notably, the deflationary model transforms Sybil attacks into token purchase behavior, providing a natural safeguard for the system.

**Core of the Deflationary Mechanism**

* **Offsetting Reward Issuance**:\
  Unlike traditional reward systems that increase token supply and lead to inflation, Knocnoc's deflationary model neutralizes this effect through **buyback and burn** mechanisms.
  * Whenever users receive $KNOC rewards, the platform uses generated revenue to buy back an equivalent amount of tokens from the public DEX and burns them.
  * This ensures that as users earn rewards, the net circulating supply of tokens decreases, creating a sustainable deflationary model over the long term.

**Reward Pool Allocation**

All revenue generated by the platform is used to repurchase $KNOC tokens from the market and allocate them across three pools:

1. **Player Reward Pool**: Rewards active players through leaderboards and other in-app activities.
2. **Project Reward Pool**: Incentivizes high-quality projects and partners.
3. **Burn Pool**: Reduces circulating supply through token burning, supporting the deflationary economy.

**Revenue-Driven Rewards**

Knocnoc rewards are issued **only when the platform generates real revenue**, such as:

* Users making in-app purchases or watching ads that generate income for the platform.
* If users bypass ads or avoid making in-app purchases, they can still use the application but won’t receive rewards.

This mechanism is straightforward and eliminates unnecessary loopholes in the incentive system.

**Addressing Problems with Traditional Models**

Early "play-to-earn" models faced criticism for being overly reliant on user growth. Token demand was driven primarily by the influx of new players rather than retention of existing users. This led to unsustainable growth, and when user acquisition slowed, token prices would plummet, resulting in false prosperity.

Knocnoc's deflationary model takes a different approach:

* **Token demand is driven by active users**: Rewards are distributed based on user activity rather than the number of new users.
* **Buyback and burn mechanism**: Tied directly to user engagement, avoiding dependence on upfront investments or speculative growth, creating a more stable and healthy token economy.

With this deflationary economic model, Knocnoc ensures the sustainability of its tokens while providing a solid foundation for the long-term growth of both its users and the platform.


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