> For the complete documentation index, see [llms.txt](https://paidnetwork.gitbook.io/paid/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://paidnetwork.gitbook.io/paid/about-paid/the-flywheel-economy.md).

# The Flywheel Economy

The PAID economy is designed to be self-sustaining, deflationary, and rewarding for long-term participants. Through protocol fee reinvestment, staking incentives, and a dynamic tier system, PAID ensures that every token raise strengthens the ecosystem.

### Protocol fee collection: how it works

Each token raise on PAID collects a percentage of allocation from backers as protocol fee, which is then reinvested into the ecosystem.

**Protocol Fee by Tier:**

* **Diamond -** 0%
* **Platinum -** 2.5%
* **Gold -** 5%
* **Silver -** 10%
* **Bronze -** 15%
* **Normal -** 20%

{% hint style="info" %}
The higher the staking tier, the lower the fees, rewarding long-term staking.
{% endhint %}

## A self-sustaining system

<figure><img src="/files/C4Tiyf19wHX73FqlOSc9" alt=""><figcaption></figcaption></figure>

All collected protocol fees are used to buy back $PAID from the market, creating continuous demand for the token regardless of market conditions.

* **50% token burn -** Permanently removed from circulation, increasing scarcity
* **25% staking rewards -** Distributed as rewards to stakers, rewarding long-term commitment
* **20% liquidity provisioning -** Deepening markets and ensuring price stability
* **5% marketing & growth -** Fueling ecosystem expansion and user adoption

### Staking rewards distribution

Staking rewards from the flywheel are distributed proportionally to all $PAID stakers based on their staked amount. The more $PAID you stake, the larger your share of the 25% staking rewards allocation.

These rewards are automatically distributed and compound over time, meaning your staking position grows without additional action required.