# Tokenomics

The Societal network will have an inflation rate on the $SCTL token. The purpose of the inflation rate is to pay for the block production and uptime of the network. The two items the inflation will pay for are: incentivizing collators to provide block production services and to reward$SCTL token holders for staking their tokens with collators.
The inflation rate (I) of the Societal network can be calculated by the following formula:
$I = I npos - I slashing - I burn$
Where:
• I = yearly inflation rate
• I NPoS = inflation caused by token creation to reward collators and delegators
• I slashing = deflation from the burning of tokens due to misconduct by a collator
• I burn = The purchase and burning of $SCTL tokens in the secondary market In the above formula, I NPoS has a maximum value of 5% and will vary based on the staking rate of the network. Therefore the maximum annual inflation of the$SCTL token is 5%, however this does not mean that the network will always be in inflation. In order to reduce the overall inflation of the $SCTL token, Societal will use part of its revenue source for purchasing the$SCTL token in the secondary market and burning the token. When the Societal network is prosperous enough, the purchasing of the tokens in the secondary market and burning them will act as a deflationary force and will accrue value to the $SCTL holders. Once this point is reached, there will be enough utilization on the network to potentially allow for$SCTL to become deflationary.