# Tokenomics

**LION** token is designed to be used as a medium of exchange. The built-in stability mechanism in the protocol aims to maintain **LION** peg to 1 **DAI** in the long run. This is achieved by having algorithmically determined **contraction** and **expansion** phases to adjust the supply of **LION** to bring it closer to peg. 

### **Expansion Phase**

When **LION** time weighted price average (TWAP) is above 1.01 DAI the protocol is in expansion phase. This means the total supply of **LION** will expand every EPOCH \*TIME to bring price closer to peg. This expansion is distributed to **LSHARE/DAI LP** stakers every epoch that we are in expansion phase.

### **Contraction Phase**

Tokens will not be minted at epochs when **twap** is below **DAI** Current Market Price (Peg).

In Epochs the protocol is below peg token holders will burn **LION** to purchase **LBOND**. This will lower the supply and help bring **LION** back up to peg. **LBOND**s can be redeemed for **LION** at a premium once we are back in expansion phase. 

{% hint style="warning" %}
Note that **LION actively pegs via the algorithm**, it **does not mean** it will be valued at 1 **DAI** all times as it is not collateralized . **LION** is not to be confused for a crypto or fiat-backed stablecoin.
{% endhint %}

## **LSHARE** - Roaring Lion Shares

**LSHARE** are one of the ways to measure the value of the **Roaring Lion** Protocol and shareholder trust in its ability to maintain **LION** close to peg. During epoch in expansion periods the protocol mints **LION** and distributes it proportionally to all **LSHARE/DAI LP** holders who have staked their tokens in the Boardroom.

**LSHARE** holders have voting rights (governance) on proposals to improve the protocol and future use cases within the **Roaring Lion** finance ecosystem.

**LSHARE** has a maximum total supply of 83,000 tokens distributed  as follows over X time:

1. 40% - 33,000 **LSHARE** will be allocated to DAO Fund
2. 60% - The remaining 50,000 **LSHARE** will be allocated to incentivize Liquidity Providers

## LBOND - Roaring Lion Bonds

Roaring Lion Bonds (**LBOND**) main job is to help incentivize changes in **LION** supply during an epoch contraction period. When the TWAP (Time Weighted Average Price) of **LION** falls below 1 **DAI**,  **LBONDs** are issued and can be bought with **LION** at the current price. Exchanging **LION** for **LBOND** burns **LION** tokens, taking them out of circulation (deflation) and helping to get the price back up to 1 **USDC**. These **LBOND** can be redeemed for **LION** when the price is above peg in the future, plus an extra incentive for the longer they are held above peg. This amounts to inflation and sell pressure for **LION** when it is above peg, helping to push it back toward 1 **DAI**.

**LBOND** will be able to be redeemed after an expansionary epoch. Every epoch expansion period a % of the **LION**s to be minted for **LSHARE** stakers will be claimable by bond holders instead. This is know as the **debt phase.** After all bonds are redeemed **LSHARE** stakers will receive full share of expansion again.