Many people think that FLOKI's deflation is simply automatic burning, but that's not correct. Its deflation logic is much more complex, mainly following four paths: transaction tax recirculation, active buyback and burn, ecosystem consumption, and governance proposal burns.

Let's start with the transaction tax. FLOKI has buy and sell taxes on both Ethereum and BNB Chain, with specific rates determined by community governance, generally maintained around 3%. This tax does not disappear directly; instead, it flows into several directions: part of it is used for marketing promotion, part is invested in product and ecosystem development, another portion is used for buybacks and token burns, and the remaining supports liquidity building.

One important point to note — the transaction tax itself does not burn tokens. Its true function is to accumulate funds. With this money, the project team can buy back FLOKI from the market, and then burn the purchased tokens completely. This is the real mechanism behind deflation.

So rather than saying deflation is automatic, it’s better to say it is planned and paced. The transaction tax acts like "fuel" injected into the entire deflation system, and the subsequent buyback and burn are the actual ignition actions. Compared to a simple automatic burn, this design gives the project team more flexibility and control.