> For the complete documentation index, see [llms.txt](https://knights.gitbook.io/knightswap/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://knights.gitbook.io/knightswap/the-armory/usdknight-token/how-usdknight-supply-is-managed.md).

# How $KNIGHT Supply Is Managed

## <mark style="color:orange;">**Why doesn't $KNIGHT have a hard cap?**</mark>

There's currently no hard cap on the supply of KNIGHT token, making it an inflationary token.

This is often a source of concern from our community members and one that comes from wanting token price to skyrocket (from a hard capped or deflationary supply). Those tokenomics would not fit what this project is aiming to accomplish.&#x20;

**The primary function of the $KNIGHT token is to incentivize providing liquidity to the exchange. Without block rewards, there would be much less of an incentive to provide liquidity. This would mean higher slippage with trading due to insufficient liquidity, less overall partnerships, & less TVL. Overall this would result in less confidence for investors & when that happens less capital coming into the ecosystem, which of course you can figure out what would happen then...**

## <mark style="color:orange;">**How is the KNIGHT supply reduced without a hard cap?**</mark>

Currently as our DEX is new we are incentivizing token emissions in order to attract more users and TVL to our platform. There are at this time no deflationary measures being taken&#x20;

### <mark style="color:orange;">**Reducing block emissions**</mark>

By reducing the amount of $KNIGHT made per block, we slow inflation. But we don't want to do this too frequently, too early, for the same reason we don't want a hard cap: we still need to incentivize people to provide liquidity.

### <mark style="color:orange;">$KNIGHT BURNS</mark>

When it is appropriate to control the supply we will be able to burn $KNIGHT. This may happen for specific milestones ($1 billion TVL, for example). Make sure you keep up with our [Twitter](https://twitter.com/KnightEcosystem?s=20) to catch all the latest burn announcements!


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