> ## Documentation Index
> Fetch the complete documentation index at: https://docs.cowboy.lat/llms.txt
> Use this file to discover all available pages before exploring further.

# Tokenomics

> Economic model and token mechanics of the Cowboy protocol

## Introduction

**CBY** is the native token of the Cowboy protocol, serving as the fundamental unit of value for transaction fees, validator stakes, and governance. The tokenomics are designed to balance **security**, **utility**, and **long-term sustainability**.

<Tip>
  CBY participates in dual EIP‑1559 fee burn for both Cycles and Cells (CIP‑3); off‑chain compute payments are market‑priced in CBY (CIP‑2/3).
</Tip>

***

## Token Utility

### 1. Transaction Fees (Gas)

**Primary utility**: Pay for on-chain execution

**How it works**:

```text theme={null}
# CIP‑3 (dual meters), per resource x ∈ [Cycles, Cells]
basefee_component_x = usage_x × basefee_x

effective_tip_rate_x = min(tip_per_x, max_fee_per_x − basefee_x)
tip_component_x = usage_x × effective_tip_rate_x

Total fee = Σ_x (basefee_component_x + tip_component_x)
# Basefee components are burned; tip components go to the validator
```

### 2. Validator Participation (Scope Note)

* Validators participate in HotStuff-style PoS consensus. Economic details (minimum stake, reward rates, slashing parameters) are governed and out of scope for this document.

### 3. Runner Payments (CIP‑2 / CIP‑3)

* Off‑chain compute fees are market‑priced in CBY per runner; the protocol does not meter off‑chain work as gas. (CIP‑3)
* Developers specify `payment_per_runner` and required proofs; Runners accept or skip based on economics. (CIP‑2)

### 4. Governance (Scope Note)

* Governance and treasury processes are outside the normative scope of the whitepaper/CIPs referenced here and may be specified via future proposals.

***

## Supply and Fees (Normative Elements)

* Basefee burn: For each included transaction, the basefee portion of fees (Cycles and Cells) is 100% burned. (CIP‑3)
* Tips: The tip portion is paid to the validator (block proposer). (CIP‑3)
* Total supply, distributions, and issuance schedules are governance‑defined and not specified in the referenced whitepaper/CIPs.

***

## Economic Flows (Informative)

* Users pay transaction fees in CBY; basefee burn links token value to network usage. (CIP‑3)
* Off‑chain compute payments are denominated in CBY on a market basis; not part of gas. (CIP‑2 / CIP‑3)

### Distribution (Scope Note)

* The exact shares to proposers/treasury are implementation/governance choices. Only the basefee burn is normative per CIP‑3.

***

## Staking (Scope Note)

* Staking economics (minimums, APY, slashing) are outside the normative scope of CIP‑1/2/3; specific parameters are governance‑defined.

***

## Governance (Scope Note)

* Governance processes (voting power, parameters, procedures) are subject to separate proposals and are not normatively defined here.

***

## Security (Scope Note)

* Security economics (attack costs, slashing schedules) are out of scope for this document and will be specified via governance and security CIPs.

***

## Sustainability (Informative)

* Dual basefee burn ties token value to network usage; long‑term sustainability depends on adoption and governance‑defined issuance.

***

## Comparative Notes (Non‑Normative)

* Cowboy adopts a dual‑meter, dual‑basefee burn model (CIP‑3). Direct numerical comparisons to other protocols’ tokenomics are out of scope here.

***

## Further Reading

* [Fee Model Overview](/architecture/fees/overview)
* [Value Flows](/economics/flows)
* [Off-Chain Lifecycle](/architecture/offchain/lifecycle)
* [CIP-2](/cips/cip-2)
* [CIP-3](/cips/cip-3)