# Tokenomics

The tokenomics of the Kawa Protocol revolves around its native governance token, $KAWA. The overall structure aims to support the growth and sustainability of the Kawa Protocol while providing incentives for users and investors. Here's a general overview of the tokenomics and the utility of the Kawa token:

* **Token Distribution**: The Kawa token will be distributed through various channels, such as liquidity mining, staking rewards, and other community incentives. This distribution model aims to encourage users to actively contribute to the Kawa Protocol ecosystem and foster adoption.
* **Governance**: $KAWA serves as a governance token, allowing holders to make formal proposals for changes in the protocol and vote on them. Examples of decisions token holders might vote on include proposals to alter collateral and borrow factors, price oracle parameters, reactive interest rate model parameters, reserve factors, and whitelist XCM protocols and modify quorum.
* **Inflation and Deflation**: The Kawa token will have a controlled inflation rate to support long-term growth and incentivize users to participate in the ecosystem. On the other hand, deflationary measures, such as token burning, will be implemented to maintain a healthy balance between supply and demand.
* **Token Vesting**: To ensure the long-term success of the Kawa Protocol, token vesting schedules will be implemented for team members, advisors, and early investors. This approach aligns the interests of stakeholders and promotes the protocol's stability.
* **Liquidity**: To foster a healthy trading environment and provide sufficient liquidity for users, the Kawa token will be listed on popular decentralized and centralized exchanges, as well as integrated with liquidity pools and automated market makers.
* **Revenue Capture**: $KAWA captures the fee revenue generated by the system and incentivizes holders. This creates a strong value proposition for users and investors looking to participate in the Kawa Protocol.

Once the exact details are finalized, a more in-depth analysis of the tokenomics and token utility can be provided. This will help users and potential investors better understand the value proposition of the Kawa token and its role in the growth and sustainability of the Kawa Protocol.
