幽玄

Most tokens need buying pressure to rise. Yūgen rises because it burns.

In traditional markets, a token's price is a function of demand against supply. Yūgen inverts this by making supply the active variable. Every hour, a percentage of all unstaked tokens are permanently destroyed — starting at 0.4% and halving over time. No buybacks, no manual burns, no governance votes — the contraction is automatic, relentless, and baked into the protocol itself.

The result is counterintuitive: your balance goes down, but the value of each remaining token goes up. For any given level of demand, a shrinking denominator means a rising price. The token doesn't need new buyers to appreciate — it needs only to continue existing.

This isn't a novel theory. It's the mechanic behind every stock buyback, every deflationary currency, every commodity with a declining extraction rate. Yūgen simply removes the human decision-maker from the loop. The burn happens on schedule, every hour, whether the market is paying attention or not.

The negative rebase creates a self-reinforcing cycle. Each burn event reduces supply, which increases per-token price, which rewards stakers who avoided the burn, which incentivizes more staking, which concentrates the burn on a smaller pool of liquid tokens — accelerating the cycle.

Deflationary tokens aren't new. What's new is the rate, the cadence, and the decay curve. Most burn mechanisms destroy fractions of a percent per transaction — a rounding error. Yūgen launches at 0.4% per hour (~9.2% daily), creating immediate, visceral pressure. But the rate doesn't stay there forever.

Every 2,500 rebases (~104 days), the decay rate halves: 0.4% → 0.2% → 0.1% → 0.05% → 0.02% → 0.01% (floor). Early eras are aggressive — rewarding conviction and punishing indecision. Later eras settle into a gentle, sustainable deflation that keeps the token alive indefinitely. Supply asymptotically approaches 1 YGN but never reaches zero.

The hourly cadence is equally deliberate. 24 rebase events per day means 24 moments of visible change, 24 countdown timers reaching zero, 24 opportunities for the community to engage. The token doesn't just have a mechanic — it has a rhythm.

Two users buy 10,000 YGN on the same day. One stakes immediately. One doesn't. After 30 days, the math is stark:

The decay rate halves every 2,500 epochs (~104 days), following a schedule of 0.4% → 0.2% → 0.1% → 0.05% → 0.02% → 0.01%. The floor at 0.01% ensures the token never dies but continues a gentle, permanent deflation. Hourly cadence means constant engagement, constant content, constant pressure to decide.

Every token at any moment exists in one of three states:

Only staked tokens are safe. Everything else melts.

There is a fourth path — one that transcends these states entirely. Become a Witness.

• —No warmup. No entry friction. Stake anytime.
• —Staked tokens are excluded from the rebase.
• —Your underlying balance is recorded and preserved regardless of scaling factor changes.

Unstaking doesn't return tokens immediately. Tokens drip back linearly over 7 days. During the drip, tokens continue to rebase — this is the exit cost.

A flat drip for everyone keeps the design clean. The drip is the entire exit cost — no separate fees, no other penalties.

Pools rebase like everything else. No exemptions at the token level. This keeps the contract simple and kills any “LP right before rebase” exploit.

Yūgen trades through a custom Uniswap V4 hook that implements an x*y=k AMM directly in the hook's beforeSwapcallback. The hook holds liquidity and executes swaps itself, giving the protocol full control over how the rebase token interacts with the pool. As supply contracts, per-token price rises proportionally within the hook's reserves.

Yügen has a third path beyond holding or staking: becoming a Witness. Burn your YGN permanently — the tokens are destroyed at the underlying layer, reducing total supply forever — and receive an NFT that entitles you to a perpetual share of the rebase compensation stream.

The Witness NFT's claim weight is denominated in underlying units, not display balance. This means early Witnesses (when the scaling factor is high) get more weight per YGN burned than later ones. Early conviction is rewarded.

Each rebase, the compensation that would otherwise go entirely to stakers is split proportionally between stakers and Witness holders based on their respective weights. Witnesses earn yield without staking — their position is permanent and maintenance-free.

Beyond burning tokens directly, liquidity providers have a second path to becoming a Witness: burning LP shares. When you burn LP shares, the underlying liquidity (both YGN and ETH) stays locked in the pool permanently — the shares are destroyed but the reserves remain, making every remaining LP share more valuable.

LP-burned Witnesses receive a 15% weight bonus on the YGN-equivalent value of their burned shares. This reflects the dual sacrifice: you're not just burning tokens, you're permanently locking ETH liquidity that can never be withdrawn.

Every Witness NFT is a unique 64×64 pixel cosmos, generated entirely on-chain from the burn parameters. Deterministic — same inputs, same starfield forever. Higher claim weights produce denser starfields with rarer visual traits. The art is stored in the contract, not on IPFS — it exists as long as the chain does.

Every mechanic pushes toward one behavior: stake and sit still.

Short-term players pay heavily through drip + rebase. Long-term holders are safe as long as they stay staked. Witnesses transcend both — burning tokens for perpetual yield that breaks even in ~10 days and compounds from there.

The halving schedule means early eras are aggressive — rewarding early adopters and creating immediate engagement — while later eras settle into sustainable equilibrium. The token is designed to live forever, not burn out.

Three mechanics. A halving decay curve. One drip duration. No tiers, no bonds, no extra layers. The simplicity is the pitch. Ownership is renounceable — once the protocol is configured, the admin can permanently lock all parameters.