# Tokenomics

LIQ’s value is driven by one simple mechanic: every token launched on the platform will be bid for with LIQ.

This increases the value of LIQ for the following reasons:

1. Users must trade for LIQ to be able to bid on new projects
2. When a project launches, some amount of LIQ will be locked in its liquidity pool

Initial Liquidity Swaps take LIQ out of supply, making it deflationary. That supply can return to circulation if projects decrease in value, but the expectation is that a strong portfolio of InstaLiq projects will lead to LIQ scarcity and drive up the price. This will of course also lead to plentiful and diverse liquidity for the LIQ token.

Other fair launch tokens are typically supported by collecting fees from launches. We feel InstaLiq's approach is more symbiotic with the ecosystem. The success of LIQ’s projects will support the success of LIQ and the success of LIQ will increase the value of projects being launched.
