> For the complete documentation index, see [llms.txt](https://hwikcircle.gitbook.io/whitepaper/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://hwikcircle.gitbook.io/whitepaper/tokenomics/hwik-management-inflation-hdr.md).

# HWIK Management Inflation: HDR

<figure><img src="/files/Daz3TIk3kLBZ2frpKh1u" alt=""><figcaption></figcaption></figure>

The valuation method of cryptocurrency-based projects follows a completely different method from the traditional corporate valuation method. In general, the initial token's market capitalization and FDV valuation are often calculated based on on on-chain data, project categories, market size and share, and community size rather than evaluating the value of project operating companies. And at this time, the utility token of the dual token model is not included in the valuation (because there is no separate capital raising).

However, unless utility tokens were only issued for the purpose of Seigniorage for rewards, utility tokens have a similar nature to 'Protocol Debt' in a strict sense and it is needed to strictly manage the distribution (inflation – deflation) of utility tokens for the long-term success of the project what both governance token holders and utility token holders expect.&#x20;

<figure><img src="/files/K9tIdrx378lg0d9oH8F8" alt=""><figcaption></figcaption></figure>

In the Hwik Circle Layer token economy, the HWIK token is a tightly managed utility token that has similar characteristics to convertible bonds (CB) in that ecosystem participants can participate in governance through token conversion (convert) at any time they want.

<table><thead><tr><th width="110.33333333333331">Token</th><th width="204">Total Supply Limit</th><th>Details</th></tr></thead><tbody><tr><td>HCL</td><td>2,500,000,000</td><td>Distribution increases according to HCL Tokenomics' vesting schedule described below, and up to 2.5 billion can be issued.</td></tr><tr><td>HWIK</td><td>≤ 20% of HDR</td><td></td></tr></tbody></table>

| Initial Circulation | Issuing till 1% of HDR                                                                                                                                                                                                                                                        |
| ------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Max Circulation     | Max Circulation cannot exceed 20% of HDR                                                                                                                                                                                                                                      |
| Converting          | 1 HWIK = HCL tokens that are equivalent to the value of consensus algorithm for the sustainable ecosystem can be converted after burning the corresponding HWIK token. And the base price is based on the weighted average price of the HCL token over a fourteen-days period |

The HWIK token is an ecosystem utility token based on the governance coin, HCL, and is used as a means of transaction and compensation for the growth of the ecosystem community by supplementing the relatively volatile HCL. HWIK Token operates solidly through Treasury that store HCL, which converges to 20% of the HDR, Pool that rewards and burns are made, and the Hwik Health Rate Protocol to stabilize token prices to maintain the ecosystem.

The above mechanism manages the inflation rate of the HWIK token and matches the interests of the HCL and HWIK token holders. For the stable operation of this mechanism, the following parameters are used in the HwikCircleLayer.

<table data-header-hidden><thead><tr><th width="206.33333333333331">Parameter</th><th width="180">Parameter</th><th>Details</th></tr></thead><tbody><tr><td>current_supply</td><td>HCL</td><td>the number of HCL tokens (both liquid and staked) that are in existence</td></tr><tr><td>current_supply_hwik</td><td>HWIK</td><td>the number of HWIK tokens that are in existence</td></tr><tr><td>interest_supply_hwik</td><td>HWIK</td><td>Interest is paid to HWIK holders if HDR is below 15%</td></tr><tr><td>initial_supply_hwik</td><td>HCL, HWIK</td><td>HWIK tokens will only be issued through HCL token staking until HDR reaches 5%</td></tr><tr><td>virtual_supply</td><td>HCL</td><td>represents what the [current_supply] of HCL tokens would be if the entire supply of HWIK tokens were instantly coverted into HCL at the current market price and added to the [current_supply]</td></tr><tr><td><p>HWIK Debt Ratio</p><p>(HDR)</p></td><td>HCL, HWIK</td><td>the number of HWIK tokens in existence divided by the marketcap of HCL. The marketcap of HCL is calculated by taking the virtual supply of HCL and multiplying it by the current HCL price.</td></tr><tr><td>HWIK Deth Ration</td><td>d88f4ee179194136aea396ef2bffb6fc</td><td>b827bdcdba5043c1841f649d5c49f405</td></tr></tbody></table>

| 100% HWIK / 0% HCL (All rewards will be issued in HWIK tokens only) |
| ------------------------------------------------------------------- |
| linearly changes from 100% HWIK, 0% HCL to 0% HWIK, 100% HCL        |
| 0% HWIK / 100% HCL (All rewards will be issued in HCL tokens only)  |

| HDR<15%   |
| --------- |
| 15≤HDR<20 |
| 20%≤HDR   |


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