# Protocol Earnings

<figure><img src="https://315769805-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fdb4AkTGYSPDJg9CD8RWL%2Fuploads%2FZQscXJ6IUfwLAGdtZW1j%2Fhive2nd.png?alt=media&#x26;token=5c4ec888-9e9d-436b-8147-57380795adf4" alt=""><figcaption></figcaption></figure>

The protocol transaction fees will be distributed as follows:

* 55% for Liquidity Providers in LP tokens
* 30% in dividends redistributed to xHIVE holders
* 15% to the Core Contributors funds

### **Deflationary Mechanisms:**

In addition to the hardcap set on HIVE, we also implemented some deflationary mechanisms in order to reduce the total supply.

### **xHIVE redeems:**

When converting xHIVE to HIVE, if the vesting duration isn't the maximum, the xHIVE : HIVE ratio will be lower than 1:1, down to a minimum of 1:0.5. All of the HIVE excess will automatically be burned.

Example: If a user redeems 1000 xHIVE with the minimal 15 days vesting duration, he will obtain a 1:0.5 ratio, and receive 500 HIVE in the end

That means a total of 1000 - 500 = 500 HIVE  will be burned during the process.

### xHIVE deallocations:

When deallocating xHIVE Plugin, a deallocation tax is applied. It can vary between contracts, but will usually be 0.5%.

The corresponding HIVE amount will automatically be burned.

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