> For the complete documentation index, see [llms.txt](https://lo-fi.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://lo-fi.gitbook.io/docs/lo-fi/tokenomics.md).
# Tokenomics
## LOW (Lo-fi Token)
LOW token is designed to be used as a **medium of exchange**. The **built-in stability mechanism** in the protocol deterministically **expands and contracts** the LOW supply to **maintain LOW's peg to 1 CRO in the long run**.
{% hint style="warning" %}
**LOW** is an algorithmic token with a peg **actively maintained by a smart contract.** It **does not mean** it will be valued at 1 CRO at all times as it is not collateralized and will be subject to certain level of volatility.
{% endhint %}
### LOW Distribution (Boardroom)
Distribution of LOW during **Epoch Expansion** is as follows:
1. **65%** as Reward for SLOW Stakers in Boardroom
2. **30%** goes to DAO Treasury
3. **5%** goes to Dev Allocation
{% hint style="info" %}
If there are **bonds** to be redeemed, **65%** of minted LOW goes to Treasury until it's sufficiently full to **meet bond redemption**. If there is **no debt (BLOW)**, it will follow **maximum** capped **expansion** %.
{% endhint %}
### **How the Algorithmic Peg works?**
#### **When LOW is below peg**
When LOW price is **below CRO's Current Market Price** (peg), Token Holders can **purchase Lo-fi Bond (BLOW)** and **LOW** will be **burnt** to **reduce** the total circulating **supply** when Bond Holders redeem LOW token with a 1:1 ratio.
#### **When LOW is above peg**
When LOW price is **above CRO’s Current Market Price** (peg), the token **supply** will have to **expand** to push it back down to peg and the contract will **allow the redemption of the Lo-fi Bond (BLOW)**.
When the price of LOW continues trading above the CRO’s Current Market Price (peg) **after bond redemption**, the contract **mints** an appropriate amount of **new LOW** and this will be **distributed** to the **SLOW Stakeholders in Boardroom**.
## **S**LOW (Lo-fi Shares)
SLOW is one of the ways to measure the **value of the LOW Protocol** and **Shareholder Trust** in its ability to maintain LOW **close to peg**. During **epoch expansions** the protocol **mints SLOW** and **distributes** it proportionally to all **SLOW stakers** in the **Boardroom**.
SLOW Holders have **voting rights** (governance) on **proposals** to **improve** the **protocol** and future **use cases** within the **LOW finance ecosystem**.
### **SLOW Distribution (Farms)**
SLOW has a **maximum total supply of 70,00****1** tokens distributed as follows:
Allocation (3-month Vesting Period)
Distribution %
SLOW
ℹ️ LP Farm Rewards
85
59,500
✅DAO Treasury
15
10,500
Dev Allocation
5
3,500
Initial Mint (Upon Contract Creation)
0
1
| Pool | LP Farm Reward Ratio (SLOW) |
| ----------- | :-------------------------: |
| LOW-CRO LP | 1,000 |
| SLOW-CRO LP | 500 |
{% hint style="info" %}
The LP Farm Reward Ratio will be revised after launch as we will be introducing other SLOW Reward Pools in the future.
{% endhint %}
{% hint style="success" %}
**DAO Treasury (Lo-fi Reserve)** acts as the **second line of defense** on top of the Bond Mechanism controlled by Lo-fi Core Team to conduct the following actions:
* Investment (Growing Treasury)
* Strategic Buybacks (Stabilize Protocol)
* Marketing
* Building Protocol Utility
* Protocol Expansion
**In a later stage, DAO Treasury will move to a governance system to vote on using funds in certain areas of the project including investment, marketing etc.**
{% endhint %}
## BLOW (Lo-fi Bond)
BLOW's main job is to help **incentivize** the changes in LOW supply during an **epoch contraction period**. When the TWAP (Time Weighted Average Price) of **LOW falls below 1 CRO**, **BLOW** will be **issued** and can be **bought with current LOW price**.
### **Purpose of buying BLOW (exchanging LOW for BLOW):**
1. Burns LOW tokens
2. Takes LOW out of circulation (deflation)
3. Helps to get the LOW price back up to the peg (above 1 CRO).
{% hint style="info" %}
**Rationale:**
Buying BLOW addresses LOW inflation issue and LOW sell pressure to help to push LOW back above the peg.
{% endhint %}
These **BLOW can be redeemed** for LOW when the **price is above peg** in the future. Investors who are here for **long-term** and are **bullish on LOW and CRO** can choose to **hold BLOW longer** as the **premium** gets **higher** when **LOW's TWAP increases** over time.
{% hint style="warning" %}
Contrary to early algorithmic protocols, BLOW **does not** have expiration dates on redemption LOW.
{% endhint %}
All **BLOW Holders** are able to **redeem** their BLOW for **LOW** as long as the **Treasury** has a **positive LOW balance** which typically happens when the protocol is in **epoch expansion periods**.
---
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