Father of Satoshi Nakamoto. DeflationCoin
Edward Serousov

© Edward Serousov, 2025

ISBN 978-5-0068-1138-6

Created with Ridero smart publishing system

DeflationCoin:

A cryptocurrency with reverse inflation.

“This cryptocurrency will surpass Bitcoin and make history.”

– Father of Satoshi Nakamoto

DeflationCoin is a utility token, a governance token, and a memecoin —

but under no circumstances is it a security.

0. Legal Disclaimer & Risk Notice.

DeflationCoin is not a security, investment instrument, or financial product. It does not grant any ownership rights, profit shares, or entitlement to dividends. All functions of the token are designed exclusively for use within the DeflationCoin ecosystem, including access to products and services, trading fee discounts, participation in governance, and other utility-related features.

By purchasing, holding, or using this token, you acknowledge and agree that you are acting entirely at your own risk, based on your own analysis and understanding of the project. No guarantees are provided or implied regarding profitability, preservation of value, liquidity, or the future usefulness of the token. The founders, team members, and affiliated entities assume no responsibility for any financial losses, damages, or legal consequences related to the acquisition, storage, or use of the token. You are solely responsible for ensuring compliance with the laws and regulations of your own jurisdiction, especially in light of potential changes in digital asset regulation.

This document, as well as any materials describing the DeflationCoin token, do not constitute an offer to sell, a solicitation to invest, or a public offering in any jurisdiction. The project does not conduct fundraising, does not offer equity participation, and does not guarantee any profits.

Some statements in project materials may be forward-looking and reflect the team’s expectations regarding the future development of the ecosystem. These statements are not promises and do not guarantee specific outcomes. Users should not rely on them when making financial decisions.

The DeflationCoin project and its creators maintain a strictly apolitical and neutral stance with respect to governments and countries. We do not represent the interests of any state, authority, or ideology. Our goal is to build a decentralized ecosystem accessible to people in all countries, regardless of political or economic systems. We stand for peaceful coexistence, digital sovereignty, and the free development of technologies that unite people rather than divide them. Technology should serve humanity, not politics.

1. Introduction

This crypto project serves as a catalyst for a global financial revolution, poised to permanently reshape the monetary system and monetary policy worldwide. Those who fail to adapt to the coming changes will face financial hardship, wealth erosion, and the risk of being left behind in the new financial reality. However, those who recognize the shift in time will not only have the opportunity to preserve their assets but also significantly multiply them by leveraging the unique advantages of the emerging financial order.

This document provides a comprehensive overview of the concept, technology, and mission of the most deflationary cryptocurrency in human history – DeflationCoin. The name originates from the term “deflation”, the opposite of inflation, and reflects its unique mechanism designed to reduce the total supply of coins in circulation.

Inflation is an unspoken and hidden tax through which central banks and governments redistribute wealth from citizens to themselves. Governments artificially expand the money supply by printing money to cover budget deficits, pay off debts, and serve their own interests. Inflation devalues people’s savings and reduces their real income without requiring an official taxation mechanism. This system is beneficial to the state, as it allows it to quietly take away part of the purchasing power of citizens to solve their financial problems.

The Socio-Economic Consequences of Inflation and Its Impact on Society:

1. Decline in the Standard of Living.

Unanticipated Inflation declines income and it leads to a slump in living standards. People are forced to cut back on even the most basic necessities: food, household goods, and utility services.

The situation becomes even worse when people must save on healthcare. Medicines that were previously affordable without thinking become a luxury. Medical conditions, left untreated due to financial constraints, develop into serious health conditions, while chronic illnesses go unmanaged.

Health issues, in turn, fuel family conflicts. Constant stress, fatigue, and the inability to properly care for one another lead to frequent arguments. When financial struggles are compounded by health problems, even the strongest relationships begin to break down.

Divorce statistics are growing, and the reason is often precisely the deterioration of the financial situation and the general decline in the quality of life. Ultimately, inflation just destroys wealth and families, leaving behind devastation on every level of society.

2. Depreciation of Savings and Postponement of Major Purchases.

Inflation declines the purchasing power of savings, making it significantly harder to plan for major financial investments such as buying a home or a car. Money that has been saved for months loses its value over the course of a year or two due to inflation.

Even funds placed in a bank fail to keep pace with the rising costs of real estate and vehicles. As a result, people are forced to settle for rented housing or aging cars, with the prospect of improving their quality of life becoming nothing more than an unattainable dream.

3. Debt Becomes an Inescapable Trap.

Many people are forced to take out loans to cover daily expenses or finance major purchases. However, with inflation and rising interest rates, servicing these debts becomes increasingly burdensome. Loan payments start consuming a significant portion of household budgets, leaving less money for essential needs.

This creates a vicious cycle that is difficult to escape, increasing the risk of bankruptcy and further deteriorating household finances. Over time, debt transforms into a constant source of stress and uncertainty, undermining financial stability and putting families under relentless economic pressure.

The Global Risks of Dependence on Government Bonds.

Rising inflation, declining purchasing power, and increasing living costs are direct consequences of the modern economic model, which relies on debt-driven stimulus and fiat money issuance. In such a system, a portion of inflationary risks is systematically shifted from one group of countries and social classes to another.

Government bonds are often perceived as a “safe” way to store capital. However, historical returns do not guarantee future stability in an environment of growing global volatility and structural debt imbalances.

According to a number of independent economic experts, U.S. government bonds may represent a growing economic bubble with characteristics reminiscent of a financial pyramid, which, under certain conditions, could face a structural collapse due to the following factors:

1. The Enormous U.S. National Debt: A Sign of Potential Bankruptcy.

The U.S. national debt has surpassed $35 trillion and continues to grow. The U.S. relies on a refinancing strategy, meaning it borrows new funds to pay interest on existing debt, without reducing the principal. Instead, the total debt keeps expanding.

This mirrors a Ponzi-like scheme, where the system’s survival depends on attracting new investments to service old obligations. The debt becomes problematic when its servicing costs exceed the government’s ability to generate revenue through taxation and economic growth. Given the rapid pace of debt accumulation and the constant need to raise the debt ceiling, the risk of a future U.S. default is steadily increasing.

2. The Threat of the U.S. Dollar Losing Its Status as the Global Reserve Currency.

Since 1944, following the Bretton Woods Conference, the U.S. dollar has held the position of the world’s primary reserve currency. However, history shows that reserve currencies have a limited lifespan. In previous centuries, other currencies held this role:

– The Dutch guilder (17th-18th centuries)

– The French franc (early 19th century)

– The British pound sterling (late 19th – early 20th century)

Historically, global reserve currencies change approximately every 100 years, as the dominant economies decline, taking their currencies’ credibility with them. Today, the U.S. dollar faces multiple challenges that threaten its status:

– Rising national debt

– Excessive money supply expansion

– Geopolitical tensions

Since the collapse of the Bretton Woods system in 1971, when the U.S. united the dollar from gold, its value has been based on public trust in the U.S. economy which was increasingly built on deception and manipulation. With no tangible backing, the dollar has effectively become a paper asset subject to unlimited issuance.

3. Risk of Hyperinflation.

Investors holding U.S. government bonds face serious losses due to inflation. Since U.S. debt is denominated in dollars, the only way for the U.S. to repay its obligations is by printing more money.

An increase in the money supply declines the dollar’s purchasing power and fuels inflation. For countries that hold a significant portion of their reserves in U.S. bonds, this could mean a devaluation of their assets. As the dollar weakens and inflation rises, the real returns on these bonds decline, making them a far less attractive investment.

4. The Rise of the Cryptocurrency Industry

Cryptocurrencies can operate independently of government institutions and national borders, making them truly global assets. Built on decentralized networks, they facilitate direct transactions between users without relying on centralized intermediaries such as banks or financial institutions.

Due to their technological advantages, cryptocurrencies have emerged as an alternative store of value and medium of exchange, challenging the traditional dominance of the U.S. dollar. As this trend gains, demand for dollar-denominated assets, including U.S. government bonds, will continue to decline.

According to several independent economic experts, U.S. government bonds can be viewed as one of the largest financial bubbles in modern history. Their perceived stability is largely based on confidence in the U.S. economy – a confidence that is gradually eroding due to the actions of the Federal Reserve, ever-increasing national debt, and persistent inflation. The U.S. economy can be compared to the phrase “tall poppy syndrome”: the higher the flower grows, the more likely it is to be cut down. It is difficult to consider an investment reliable when it is based on the endless issuance of paper dollars, which are constantly losing value due to inflation.

If central banks allocated their reserves into a deflationary crypto asset, their global standing would be significantly stronger and more stable. Countries that realize this shift ahead of others will gain a substantial competitive advantage, strengthen their financial positions, and protect their reserves from the risk of devaluation. This would be a crucial step toward economic independence, allowing them not only to safeguard their assets against inflation but also to capitalize on the immense growth potential of such an asset in the future.

Investing in deflationary cryptocurrency may prove to be the most forward-thinking decision, especially in an era of global uncertainty and instability in traditional financial markets.

Bitcoin, the first cryptocurrency, has radically transformed the perception of finance. It emerged in 2009, in the wake of the 2008 mortgage crisis, as a response to the failures of the traditional financial system. The crisis, caused by the greed and irresponsibility of big banks, resulted in the American elite not only escaping responsibility, but also enriching themselves through government bailouts programs.

Once again, the entire cost of rescuing the US economy fell on the shoulders of honest taxpayers.

While most large banks seek security by investing in low-yield bonds, earning just a few percentage points, innovators and venture capitalists who believed in Bitcoin’s vision have seen returns measured in tens of thousands of percent. Those who recognized Bitcoin’s potential in its early stages were able to generate significant wealth.

Key Factors Behind Bitcoin’s Popularity:

– Decentralization: The system operates without a central governing authority, ensuring its resilience and independence.

– Cryptographic Security: Advanced encryption methods significantly enhance network security, making it resistant to attacks.

– Transaction Transparency and Anonymity: All operations on the blockchain are publicly verifiable, while users maintain their anonymity.

– Limited Supply: A fixed total supply of 21 million coins creates scarcity, which contributes to the asset’s increasing value.

Bitcoin’s original mission was to establish a decentralized payment system with the possibility of anonymous transactions. However, over time, Bitcoin has been increasingly recognized as a “store of value”.

Bitcoin’s Limitations as a Store of Value:

– Lack of an Internal Economy.

Bitcoin does not have an internal economy that generates real revenue or stimulates demand for its coins. It has also failed to establish itself as a widely used payment method due to high transaction fees and usability issues. Its value is entirely speculative, based on the expectation that future buyers will pay a higher price – a concept known as the “greater fool theory.”

Unlike national currencies, which derive demand from economic activity such as the production of goods and services, Bitcoin is not backed by any intrinsic value-generating processes. This makes it entirely dependent on speculative interest, leaving it structurally vulnerable.

– Major Price Crashes Undermine Bitcoin’s Role as a Store of Value.

Bitcoin has repeatedly suffered 80—90% crashes from its peak price, which undermines its positioning as a safe asset for wealth preservation. Investors can see a significant portion of their holdings vanish overnight, creating an atmosphere of fear and uncertainty. This volatility makes Bitcoin more of a speculative trading instrument rather than a reliable long-term store of value.

– Bitcoin Mining Causes Severe Environmental Damage.

The Bitcoin network consumes approximately 150 TWh of electricity annually, which is greater than the energy consumption of an entire country like Argentina (population 45 million).

Generating this amount of energy results in approximately 65 megatons of CO₂ emissions per year, equivalent to the total emissions of a country like Greece. This raises concerns about Bitcoin’s long-term sustainability, as mining exacerbates the global climate crisis.

– Bitcoin Lacks a True Deflationary Model – It Is Merely Supply-Capped

While Bitcoin’s supply is capped at 21 million coins, this does not constitute a true deflationary mechanism. Some coins are lost due to users losing access to their wallets, reducing the circulating supply, but this occurs randomly rather than as part of a deliberate economic model.

Fundamentally, Bitcoin is no different from company stocks with no additional issuance, as their supply is also fixed. Labeling Bitcoin as a deflationary asset is therefore misleading.

Due to scalability issues and high transaction fees, Bitcoin has failed to achieve its original goal of becoming a fully functional payment method.

While “limited supply” was initially just a secondary feature of Bitcoin, even these minor deflationary aspects allowed it to gain recognition primarily as a store of value and capital preservation asset. Despite lacking a deflationary model or internal economy, Bitcoin still managed to reach a market capitalization exceeding $1 trillion.

It is difficult to imagine the scale Bitcoin’s market capitalization could have reached if its design had originally included a deflationary model and an internal economy – both of which could have increased demand for its coins while simultaneously reducing their circulating supply.

Deflation is an economic process characterized by an increase in the purchasing power of money due to a reduction in the total money supply in circulation. Deflation is marked by a sustained decrease in the overall price level of goods and services. Unlike inflation, where prices rise, deflation leads to falling prices.

Deflation is the core principle of DeflationCoin. However, during the cryptocurrency’s design, the negative effects typically associated with classical deflation have been eliminated, ensuring a sustainable and efficient economic model.

Various market participants worldwide will be interested in investing in DeflationCoin for the following reasons:

– Central Banks.

Central banks are determined not to lose their leadership in the new digital economy. Public confidence in national currencies is largely influenced by the diversification of the central bank’s portfolio. If a central bank’s reserves consist solely of fiat currencies, which are prone to inflation and have demonstrated their vulnerabilities for centuries, this will not only weaken public trust in the national currency but also undermine confidence in the stability of the government itself.

Integrating a deflationary crypto asset into central bank reserves would be a strategic step to strengthen its position on the global stage. In the context of increasing economic instability and growing inflation risks, a cryptocurrency with a deflationary model is a reliable store of value.

– Institutional Investors.

Investment funds, hedge funds, venture funds, pension funds, banks, and insurance companies are constantly seeking ways to optimize their portfolios, balancing risk reduction with high returns. A deflationary cryptocurrency presents an attractive asset due to its resilience against inflation and significant long-term growth potential.

With a fixed supply of coins and an increasing scarcity factor, delaying investments could result in missed opportunities. The longer institutions postpone entering the market, the fewer coins they will be able to acquire for the same amount of capital. Meanwhile, their more decisive competitors will secure a larger share of the asset.

– Retail Investors.

In a world where inflation declines savings faster than they can be accumulated, a deflationary cryptocurrency becomes an ideal opportunity for retail investors.

Life-changing financial opportunities are rare. Investment assets with exponential growth potential, like DeflationCoin, appear only a few times per generation. History has shown that early investors in revolutionary assets like Bitcoin were able to not only preserve their savings but also increase it significantly.

Smart and forward-thinking investors recognize this and will not want to miss out on the next major opportunity.

The world is on the verge of a global financial transformation. In the context of a growing debt market and the depreciation of fiat currencies, deflationary cryptocurrency is a reliable alternative to traditional investment and accumulation tools.

This document outlines the unique properties of the DeflationCoin and its ability to not only preserve capital, but also to increase it in the context of the annual increase in the money supply of fiat currencies around the world.

The following sections will reveal the architecture, technological features, and operational principles of DeflationCoin, demonstrating that it is not just a financial instrument but a foundational element of the future global economic system.

Central banks, institutional investors, and individuals who recognize its potential and thoroughly analyze the chapters ahead will gain a significant competitive advantage in the new digital economy.

2. Mission and Objectives

DeflationCoin is a cryptocurrency designed to systematically increase demand for its coins while continuously reducing supply through deflationary halving, smart fees, and buybacks funded by the revenues of a diversified ecosystem. This concept ensures an inevitable dominance of demand over supply, leading to a consistent and systematic increase in the coin’s value.

The mission of this crypto project is to ensure the highest level of security for investors through innovative mechanisms that prevent sharp price drops and to create a “Digital State’ based on DeflationCoin, with a diversified ecosystem that unlocks unlimited potential for investment growth.

The debt market poses significant risks and limits individual control over personal wealth. While short-term loans can help address temporary financial difficulties, large-scale debt obligations create an unstable and high-risk financial system.

When a country, corporation, or individual becomes heavily reliant on debt, even minor economic shocks or slight declines in income can lead to severe financial consequences, including bankruptcy or full-scale financial crises.

Rather than attempting to stabilize the system by expanding debt and increasing credit issuance, a far more strategic approach is to invest in a deflationary crypto ecosystem. Such an ecosystem thrives during global crises and appreciates in value as global inflation and debt levels continue to rise.

The Goals of DeflationCoin Developers:

– To create a cryptocurrency with an economic model that will surpass Bitcoin by times and become an asset that central banks worldwide will include in their strategic reserves.

– To provide all market participants with the opportunity to protect their capital from inflationary devaluation and the instability of the fiat monetary system.

– To create a diversified digital ecosystem with different directions, where the priority will be user orientation.

DeflationCoin is built on 18 principles that encompass both technical design and the systematic promotion of the cryptocurrency. Each principle is discussed in detail in the following chapter.

3. Principles of Operation and Design

The price movement of any asset occurs as a result of imbalances between supply and demand. When demand exceeds supply, the asset’s price inevitably increases.

All subsequent operating principles of DeflationCoin have been designed to ensure that demand consistently exceeds supply and the price of the asset inevitably rises in the long term.

3.1. Limited Supply with Zero Inflation

A limited supply is a fundamental element in creating a deflationary economic system. It is precisely the restricted availability of Bitcoin that earned it the status of a store of value, leading to its nickname: “digital gold.” While a limited supply alone does not make an asset fully deflationary, it remains a critical parameter in constructing a deflationary system.

For this reason, the total supply of DeflationCoin is limited to 20,999,999 coins, with no additional issuance possible. The smaller supply compared to Bitcoin makes each coin inherently more valuable.

Most crypto projects with a market capitalization exceeding tens of billions of dollars lack limited emission. Their creators, due to a lack of foresight, made the mistake of developing assets within an inflationary economic system. Ethereum, Solana, Tron, Doge – do not limit supply of their tokens, and, in fact, are not much different from fiat currencies in terms of the inflation parameter. Ethereum, Solana, and Tron include minor deflationary mechanisms embedded in transaction fees. However, against the backdrop of unlimited issuance required to pay validators, these mechanisms lose practical significance and become ineffective.

While these projects position their technologies as foundational, their real-world application in the daily lives of ordinary citizens remains rare. The “technological” branding of such projects is often nothing more than a marketing ploy aimed at attracting capital from naïve investors. In practice, these projects lack a true deflationary model, limited supply, and fail to orient their products toward mass adoption beyond the crypto industry, which diminishes their real value and limits growth potential.

This critique applies partially to Bitcoin as well. While Bitcoin does have a limited supply and a minor deflationary aspect caused by the loss of wallet access by some users, this deflation is a random occurrence rather than the result of a deliberate economic model. Moreover, Bitcoin lacks an internal economy capable of driving sustainable demand for its coins. For this reason, it cannot be considered the leader among cryptocurrencies in terms of coin value or a reliable tool for long-term capital preservation.

Inflation negatively impacts government bonds worldwide, reducing their real returns and diminishing their appeal to investors. Considering that the global government bond market exceeds $130 trillion, the devaluation of these assets due to inflation creates significant pressure on the global economy.

Unlike bonds, Bitcoin benefits from inflation, which has contributed to its continued value growth. However, if Bitcoin had been designed from the outset with a well-thought-out deflationary model and an internal economy, its market capitalization could have reached far more impressive heights.

3.2. Daily Smart-Burning of Coins

One of the mechanisms that reduces the circulating supply of DeflationCoin is the Daily Smart-Burning of Coins.

Mechanism Functionality:

– Once Wallet A transfers coins to Wallet B, 1% of the received amount is automatically deducted from Wallet B after 24 hours.

The only way for Wallet B to avoid this deduction is to transfer the coins into Smart-Staking within 24 hours (details provided in Section 3.4).

In Smart-Staking, tokens are protected from being burned and can increase in quantity through the “Staking Rewards Program” (see Section 3.5).

Coin Deduction Process:

– 50% of the deducted coins are sent to a wallet where they are permanently removed from circulation.

– 50% are sent to a wallet for redistribution as rewards for stakers (details provided in Sections 3.4 and 3.5).

3.3. Deflationary Halving – Unlike Bitcoin

One of the key mechanisms controlling Bitcoin’s inflation is halving. Halving is the process by which the reward miners receive for creating new blocks is reduced by half every 210,000 blocks (approximately every 4 years). This mechanism limits Bitcoin’s total supply to 21 million coins, creating scarcity and helping control inflation.

However, halving does not make Bitcoin a truly deflationary asset – it only slows down the rate at which new coins are created, rather than reducing the number of coins in circulation. In this regard, Bitcoin is not unique, as many stocks on the financial market, which do not issue additional shares, also have a fixed supply in circulation, making them similar to Bitcoin in terms of their supply model.

DeflationCoin implements the “Deflationary Halving” mechanism.

After Wallet A transfers coins to Wallet B, 1% of the received amount is deducted from Wallet B after 24 hours (this occurs if Wallet B does not transfer the coins to “Smart-Staking” within 24 hours).

With each subsequent day, the deduction percentage doubles. This means that at the beginning of each new day, an updated deduction percentage is applied to the remaining balance, as outlined in the table below.

Table №1: Deflationary Halving.

Therefore, if Wallet B does not transfer its coins to “Smart-Staking” within 8 days, its balance will be completely depleted.

Thanks to the “Deflationary Halving” mechanism, the economic model of DeflationCoin not only ensures a limited supply but also continuously reduces the number of coins in circulation. This mechanism incentivizes participants to transfer their coins into “Smart-Staking.”

3.4. Smart-Staking

Emotions have a significant impact on market traders. Fear, greed, euphoria, or panic can distort the perception of market situations, leading to deviations from pre-planned trading strategies and impulsive decision-making. As a result, traders often experience behavioral biases, such as the “herd effect” or “confirmation bias”, which significantly reduce their effectiveness in the market.

Due to the destructive influence of emotions on decision-making, many institutional market participants, including hedge funds, prefer algorithmic trading. Automating trading operations increases the accuracy of trade execution and reduces the likelihood of errors caused by psycho-emotional reactions, making trading more predictable and systematic.

Automating trading operations improves execution accuracy and reduces the likelihood of errors caused by emotional reactions, making trading more predictable and systematic.

During the early stages of Bitcoin’s promotion, it was extremely difficult to assess its potential. Many investors bought the asset at $10 and sold it at $20, satisfied with doubling their profit. However, only a few managed to hold the asset long-term and achieve returns in the hundreds of thousands of percent. For most, emotions played a decisive role: fear of losses and the desire to lock in quick profits led them to sell too early, missing out on enormous growth opportunities. Looking back, many became victims of a cognitive bias known as hindsight bias: Bitcoin’s rapid growth seems obvious only in retrospect, though predicting its potential at the time was highly challenging.

Smart-Staking is an advanced version of traditional staking, designed to eliminate emotional factors. The core idea of staking is to lock funds to support blockchain operations, where users assist in verifying transactions and creating new blocks. The longer funds remain locked, the higher the reward. Unlike mining, which requires significant computational power, staking is a more energy-efficient process.

The key difference between smart-staking and traditional staking lies in removing the human factor. It operates as an “emotionless mechanism”, encouraging long-term holding. Additionally, smart-staking serves as a reliable source of passive income, ensuring the growth of coins.

Transferring funds to smart-staking locks, the possibility of selling them until the process is completed, which prevents premature sell-offs under the influence of emotions. This safeguards against premature sales driven by emotions. Unlike bonds that offer only minimal returns, smart-staking provides stable income with the potential for substantial asset appreciation. This makes it possible to increase profits tens or even hundreds of times, ahead of those who prematurely exit positions under the influence of emotions.

Warren Buffett once remarked, “The Stock Market is Designed to Transfer Money from the Active to the Patient”.

Empirical data supports this statement. Research conducted by financial firms such as Fidelity revealed that the most profitable accounts in the long term were those where investors made no changes to their portfolios or had no ability to interfere – including accounts belonging to deceased clients. The statistical pattern here is clear: active asset management and the pursuit of short-term market gains often lead to errors and losses, whereas a passive approach and long-term strategy allow for maximizing profits through the natural growth in market asset values.

This is why the investment lock-in periods in Smart-Staking are designed for long-term intervals: ranging from 1 year to 12 years. Compared to the average human lifespan, these durations may seem relatively short but are optimal for building significant wealth. Through long-term staking, DeflationCoin can compete with pension funds worldwide, whose efficiency and transparency have increasingly been called into question over the past decades.

Details of the Smart-Staking parameters are presented in the following table.

Table №2: Smart-Staking Parameters.

The “Staking Rewards Program” with monthly payouts is activated when tokens are staked for a period of 2 years or more. When Wallet A stakes coins for 2 years, its initial multiplier is x2. After one year, this multiplier decreases to x1 and continues to decline annually. The same principle applies to the PoD decision-making mechanism, but with different multipliers.

Important!

– Participants in Smart-Staking can increase the multiplier (X) for coins already staked at any time by extending the staking duration.

Since the inception of the S&P 500 index in 1957, economic crises have occurred, on average, every 8.5 years. For this reason, access to the PoD (Proof of Decision) mechanism is granted only to participants who have staked their coins for a minimum of 8 years.

A participant making decisions about the project’s development must recognize that, during their staking period, they are highly likely to encounter an economic crisis. This is crucial because macroeconomic shocks often lead to the collapse of many companies. As the famous market saying goes, “Only when the tide goes out do you discover who’s been swimming naked.”

The longer a participant’s funds remain locked in staking, the greater the weight of their tokens in decision-making. Participants who take greater risks have greater influence.

Historically, all economic crises have ultimately been accompanied by increased money supply and rising inflation. This is because governments and central banks frequently implement monetary and fiscal stimuli to stabilize economies. These measures, ranging from lowering interest rates to large-scale quantitative easing programs and direct payments to the population, inject additional money into the economy.

As a result, any crises in different countries of the world will only become a catalyst for the growth of “DeflationCoin”. These events should be considered as opportunities for further development.

Therefore, Smart-Staking offers the following advantages:

– Minimization of Emotional Influence.

Smart-Staking helps participants avoid impulsive decisions caused by short-term emotional reactions. By locking their funds for a specified period, investors lose the ability to sell assets during moments of panic or euphoria. This allows them to stay committed to the project for the long term, significantly increasing their chances of achieving multifold returns (10x, 100x, 1000x). Moreover, stabilization of the behavior of individual participants has a positive effect on the overall success of the project, ensuring sustainable growth and reducing the risk of sudden price drops.

– Opportunity to Receive Monthly Rewards.

(Details provided in Section 3.5)

– Positive Impact on Marketing Strategy.

The longer an investor holds their assets in staking, the more engaged they become with the project, which contributes to its further promotion. Investors naturally become active participants in spreading information, enhancing the word-of-mouth effect. An important aspect is habit formation: according to neuroscientific research, forming a lasting habit takes anywhere from 18 to 254 days.

Accordingly, long staking periods facilitate deeper integration of the project into participants’ lives, positively influencing its promotion.

– Positive Impact on the Project’s Technical Development.

Long-term investors become more interested in the development of the project, since their investments are linked to its future success. This strengthens their connection with the project and also stimulates their active participation in key decisions whether it’s voting on project changes, developing marketing strategies, or selecting new growth directions. Such involvement enhances the project’s technical support and strategic planning.

– Formation of a Low-Correlation Asset Independent of Global Markets.

One of the key issues for most exchange-traded assets is their high correlation, particularly during economic crises. Under global market stress, most assets tend to move in the same direction, making capital protection through diversification nearly impossible. With its Smart-Staking, DeflationCoin provides a solution to this problem: the long-term locking of assets minimizes the impact of short-term speculation and reduces correlation with global markets. As a result, DeflationCoin remains stable even during periods of economic instability, when traditional assets decline simultaneously.

The story of Laszlo Hanyecz, who bought two pizzas for 10,000 bitcoinsin 2010, serves as a vivid example of how impulsive decisions can lead to missing out on huge opportunities. At the time, those bitcoins were worth just $41, but years later, their value could have reached hundreds of millions of dollars.

If Laszlo had used the Smart-Staking mechanism, his bitcoins would have been locked for a long period, preventing premature sale and allowing him to realize multifold profits.

Smart-Staking addresses one of the primary challenges investors face: the impact of emotions on decision-making. This mechanism not only prevents impulsive actions but also creates conditions for long-term sustainable growth, maximizing profits by locking assets and minimizing speculative risks.

For investors focused on stable outcomes, Smart-Staking is a reliable tool for achieving long-term financial goals.

3.5. Staking Rewards Program

In many modern blockchains such as Ethereum and Solana, staking rewards are paid out through new token issuance. Essentially, this model resembles inflationary fiat currencies, where “rewards” come at the cost of value dilution. The direct opposite of this approach is Bitcoin, which earned its status as “digital gold” due to its strictly limited supply. However, Bitcoin offers no holder incentives – the token simply sits idle in wallets.

In contrast, DeflationCoin combines the best of both worlds: rewards are available to holders, but they are not tied to inflation or the creation of new tokens. All payouts are generated from a predefined limited pool, with no increase in total supply. This allows participants to benefit from long-term engagement without undermining the scarcity of the asset.

Users who commit their tokens to a smart-staking program for 2 years or more are eligible for monthly reward payouts, which include two components:

– A partial release of tokens from the personal wallet;

– A reward distributed from the common pool with consideration of the X-multiplier.

Payouts are made monthly based on the following formula:

Formula Parameters:

– W – monthly payout;

– S – total number of coins in staking;

– M – originally specified staking duration in months;

– D – reward paid from the global pool with the X-multiplier applied.

Before the reward is paid out, a global pool is formed each month from the following income sources:

– Coin deductions according to the “Smart-Burning” mechanism.

– Smart fees.

– “Deflationary Ecosystem Pool” (details in section 5).

The final distribution of the reward share, adjusted with the X-multiplier, is calculated using the following formula:

Formula Parameters:

– D – Reward paid to the smart-staking participant. The base calculation formula is:

– P – Pool income, the total amount of reward distributed among participants;

– — Final ownership share, adjusted for the X-multiplier and expressed as a percentage. The calculation formula is:

– — Total -score of all wallets.

– — Intermediate ownership share for a specific wallet, adjusted for the X-multiplier. The calculation formula is:

– — X-multiplier for a specific wallet.

– — Ownership share of coins, expressed as a percentage. The calculation formula is:

– — Number of coins in a specific wallet.

– S – Total number of coins from all wallets participating in smart-staking.

A distribution example is presented in the next table. For demonstration purposes:

– Pool income (P) is set to 130.

– Random values are used for the X-multiplier and number of coins in smart-staking.

Table №3: Example Calculation of “Staking Rewards”

Important!

– Reward payouts are not guaranteed or mandatory. If a staker prefers to accumulate capital in the long term by leveraging compound interest and the law of exponents, they can opt out of the monthly payout function and continue accumulating coins until the funds are unlocked.

– According to the formula, the reward payout is limited to the amount accumulated in the pool during the month. Stakers with higher X-multipliers receive a larger share of the pool, with no additional coin issuance involved.

If a Smart-Staking participant did not activate the “Reward Payout” mechanism every month – or did not activate it at all – the remaining tokens will be unlocked upon completion of the Smart-Staking period in accordance with the “Gradual Unlock” principle (see Section 3.6).

3.6. Gradual Unlocking

The price of any asset is determined by the actions of one decisive and highly motivated participant, not by the consensus of many. If such a participant can emerge only among buyers, not sellers, the asset’s price will inevitably rise.

The “Gradual Unlocking” mechanism is a key element in DeflationCoin’s pricing model. By gradually releasing coins from Smart-Staking, strong selling pressure is eliminated, while strong buying potential is maintained.

Coin unlocking after the completion of Smart-Staking occurs daily and is calculated using the following formula:

Formula Parameters:

– — Number of coins unlocked per day.

– — Total number of coins in Smart-Staking at the start of the unlocking period.

– — Accumulated unpaid rewards over the staking period.

– — Number of years the coins were locked in Smart-Staking.

Bitcoin has repeatedly experienced price declines of over 80%, making it difficult to position it as a reliable storing value. At any moment, investors may face significant capital losses.

Sudden price drops on cryptocurrency exchanges often occur in a domino effect:

– A stop-loss order from one participant triggers a price drop.

– This activates stop-loss orders from others, causing a chain reaction.

– High leverage amplifies this process: liquidations of highly leveraged positions lead to further sales, accelerating the asset’s collapse.

– Panic among some participants provokes panic among others, resulting in substantial price declines.

The “Gradual Unlocking” mechanism minimizes the risk of mass sell-offs, reducing the influence of human factors and negative emotions. As a result, DeflationCoin is a more reliable storing value compared to Bitcoin, which has repeatedly suffered severe price crashes.

Such events can have a significant impact on systems, companies, markets, and even entire economies. Without proper protection against them, any risk management becomes merely an illusion of control. It is precisely low-probability risks that can lead to the most severe consequences, and neglecting them means lacking real control over risks as a whole.

In the case of Bitcoin, the risk of a sudden price drop: such as during the COVID-19 pandemic when major holders sold en masse and the price declined by more than 50%. With the “Gradual Unlocking” mechanism, such scenarios are effectively prevented in DeflationCoin.

3.7. Basket and Pump (BaP)

The “Gradual Unlocking” mechanism, described in the previous section, offers numerous advantages but also has certain disadvantages:

– Daily Selling of Unlocked Coins. Investors are required to sell unlocked coins daily, turning routine operations into repetitive tasks that could otherwise be automated.

– Challenges with Limit Orders for Coin Purchases. For investors seeking to build large positions, the process may take more than a day. Due to the “daily burning mechanism”, this would necessitate splitting the position into multiple smaller parts and entering them into Smart-Staking over several days.

To address these issues, the “Basket and Pump” (BaP) mechanism was developed. It works similarly to a tennis ball launcher: the “basket” accumulates balls (in this case, coins), while the “launcher” distributes them. The basket collects unlocked or acquired coins, and the launcher directs them either to Smart-Staking or to the exchange for automated selling. This mechanism simplifies and automates routine processes for investors.

The BaP mechanism is integrated into the Online Node (Section 3.15) and automates the following:

1. Selling DeflationCoin. During daily unlocking from Smart-Staking, coins can be partially or fully sold on the exchange at the investor’s discretion. The entire process is automated and can be activated with a single button, eliminating the need for investors to manually renew or sell their coins every day.

2. Buying DeflationCoin. For professional market participants who use limit orders, BaP simplifies the process of building positions by allowing accumulation over several days. These accumulated coins can be entered into Smart-Staking as a single position, avoiding the need to split them into smaller daily transactions. Conditions for this process:

– Coins can remain in the “basket” for no more than 30 days. After this period, they are automatically transferred to Smart-Staking.

– Coins in the basket cannot be withdrawn for external transactions; they can only be entered into Smart-Staking.

– While the tokens are in the basket, no rewards are accrued on them.

The BaP mechanism serves as an enhancement to the Smart-Staking and Gradual Unlocking systems, simplifying routine processes and making them fully automated. This ensures a more seamless and efficient experience for investors.

3.8. Attention Capture Mechanism

One of the fundamental challenges in modern investing is the inability of most investors to hold positions over extended periods. This behavioral phenomenon prevents the full realization of the potential of compound interest, which could drive significant capital growth and lead to substantial financial benefits. In practice, however, long-term holding often remains a theoretical ideal, unattainable for the majority.

Compound interest, also known as the “eighth wonder of the world,” manifests through exponential capital growth, but it operates only over long-time horizons. As many empirical studies show, compound interest does not have a noticeable effect over short periods of time. For example, in the stock market, assets held for decades not only grow in value but also create a snowball effect, where each additional profit forms the foundation for further growth. However, this effect is achievable only under one critical condition as a long-term holding. To address this, the Attention Capture Mechanism was developed.

How the Attention Capture Mechanism Works:

When coins are deposited into Smart-Staking, 1% of the total amount is automatically locked for a 12-year period, securing the highest X-multiplier. This mechanism fosters a culture of long-term investing among all DeflationCoin investors.

According to Pareto’s Principle, resources and results are rarely evenly distributed. For instance, 1% of the world’s population controls wealth comparable to that of the remaining 99%. This imbalance underscores the power of concentration: key actions or disciplined decisions, taken at the right time, can lead to disproportionately large outcomes. A similar principle applies to investments. It’s possible that 1% of capital, locked in Smart-Staking for 12 years, will generate greater returns than all other investments combined.

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