# Flywheel

The earlier chapters named the parts. This chapter is how they feed each other.

Long-term flywheel: **more Treasury assets → more POL → more routing utility and HOLI sell burns → stronger network participation.** That is a **goal**, not a guarantee.

Baskets: [asset buckets](/treasury-mgmt/buckets). Inflation pause: [quiet period](/launch/quiet-period). Premium gate and tax: [Seigniorage Tax](/supply/seigniorage-tax).

## Treasury Growth

**sHOLI seigniorage tax**
→ **undeployed basket**

After the quiet period, sHOLI emission may run while the automatic 45% premium gate is open. Emission raises the HOLI-per-sHOLI ratio. When a staker withdraws, deposited principal is separated from newly minted HOLI by the account's weighted entry ratio <Md expr="R_0" />. USDG tax on that newly minted portion goes into Treasury **undeployed reserves**, in full. Identities: [Seigniorage Tax](/supply/seigniorage-tax). Staking ratio and cooldown: [sHOLI Staking](/staking).

At the gate, the tax price is approximately current NAV per released HOLI. Well above the gate, the tax can add more than current NAV per released HOLI. Either way, the house is larger in asset terms when emission is released.

Genesis fills the opening Treasury once. SHYT tax is not launch-only: [SHYT Tokenomics](/shyt). Seigniorage tax is the standing USDG inflow attached to released sHOLI emission after HOLI is live. The SHYT [green channel](/launch/green-channel) is a parallel path: pool price, paid in **SHYT**.

## Liquidity Growth

**Undeployed basket**
→ **POL**

A larger Treasury is not the product. Depth is. Seigniorage-tax USDG sits undeployed. When undeployed is again above the cap, <Md expr="w" /> votes to allocate idle funds into **already-approved** pools, toward the [bucket](/treasury-mgmt/buckets) targets. Protocol-owned pools: SHYT/HOLI, USDG/HOLI, Stock/HOLI. The Stock path: [Asset Admission & POL Deployment](/treasury-mgmt/admission).

The same dollars do three jobs once they are in a pool: reserve, exit, and routing. That is [Protocol-Owned Liquidity](/pol).

HOLI minted to pair the Treasury's side of a pool stays inside that LP. It is inventory to quote the spoke, not a sale onto the tape. Circulating supply does not jump just because the house put on more depth.

## Exit burn

**POL**
→ **HOLI sell burns**
→ **lower HOLI supply**

Depth is only useful if people trade through it. Deeper POL may bring more trading. Fee design: [Fee Structure](/treasury-mgmt/amm-fees).

The 1% HOLI sell amount is burned in the transaction. It is not an LP fee, not a skim to a team wallet, and not a second mint; it does not count as a protocol asset.

The burn can accompany exit activity, but it does not fund the next Treasury deployment. Treasury growth comes from its defined external inflows, including Genesis and seigniorage tax.

## Network Effect

**More HOLI markets**
→ **better routing**
→ **more HOLI utility**
→ **deeper liquidity**

Each new spoke is not a separate island. The house does not pair StockA with StockB. Every admitted name meets the others through HOLI. One more Stock/HOLI pool makes every existing pool a better route: SHYT to a stock, USDG to a stock, stock to stock, all via the hub.

Better routing makes HOLI more useful as the common pair — the thing you hold or cross if you want the house's markets. More utility may bring more flow onto those books. More flow may create more HOLI sell burns, while Treasury deployment remains funded by defined external inflows. Depth and usage are meant to pull on each other.

A larger Treasury can, after an idle-fund <Md expr="w" /> vote, deploy protocol-owned LP for more admitted tokenized RWAs. Deeper POL may bring more trading and HOLI sell burns; those burns do not themselves deepen pools or add Treasury assets.

The routing-utility thesis belongs to [Protocol-Owned Liquidity](/pol). This page only traces its feedback loop. sHOLI emission remains subject to the premium gate and [Seigniorage Tax](/supply/seigniorage-tax).

In compact form: **more Treasury assets → more POL → more routing utility and HOLI sell burns.**

The flywheel is meant to **align community growth, Treasury capitalization, liquidity utility, and long-term governance into one incentive set**. That is a design goal. It does not guarantee trading volume, yield, or token price.