The Deflationary Native Token VCM captures value for the AVAX token by mandating its use for transaction fee payments and critical operations across the Avalanche Primary Network, directly linking its demand to network activity. When a user spends AVAX to execute transactions on the X-Chain, P-Chain, or C-Chain, or optionally on subnets where AVAX is designated as the gas token, the token’s utility grows with increased transactional volume:
transaction_volume = ƒ(tx_x_chain, tx_p_chain, tx_c_chain, ∑avax_subnets tx_subneti)
tx_x_chain
— the number of transactions processed on the X-Chain, handling asset transfers within the Avalanche Primary Network, in a given period.tx_p_chain
— the number of transactions processed on the P-Chain, managing staking and subnet coordination, in a given period.tx_c_chain
— the number of transactions processed on the C-Chain, supporting EVM-compatible smart contracts, in a given period.- — describes the total number of transactions across all subnets that use AVAX as the gas token, in a given period.
All transaction fees paid in AVAX are burned, reducing the circulating supply and enhancing value capture through increased deflationary pressure proportional to transaction activity:
change_in_circulating_supply = transaction_volume × average_gas_fee × burn_proportion
transaction_volume
— the total number of transactions processed across the Avalanche Primary Network, and subnets within a given period.average_gas_fee
— the average AVAX fee paid per transaction.burn_proportion
— the fraction of each transaction fee burned, set to 1.0 as all AVAX fees are removed from circulation.