## The Relationship Between DAM and FLUX The Datamine Network addresses one of decentralized finance's most persistent challenges: supply inflation. By establishing a direct, smart-contract-driven relationship between its foundation token, DAM, and its utility token, FLUX, the system matches token emissions directly with market demand. DAM serves as the base layer on the Ethereum blockchain, featuring an absolute capped supply of 16,876,779 tokens. When users lock DAM, they mint FLUX. This mechanism ensures that the creation of utility tokens is bound to locked collateral, preventing arbitrary supply expansion. ## Adaptive Inflation and Supply Stabilization What makes the ecosystem unique is its dynamic monetary policy. When market demand for FLUX decreases, the protocol naturally scales back inflation. For example, FLUX yearly supply inflation has adjusted downward to 10.33% during periods of lower market activity. This adaptive system is driven by a proof-of-burn model. Validators and users can burn FLUX to boost minting rewards and actively reduce the circulating supply. Because token burn rates directly influence issuance rates, the Datamine smart contracts act as an autonomous, decentralized monetary system. The result is a highly resilient mechanism that balances inflation and deflation without requiring administrative intervention or centralized oversight.