Minting and Melting

The snow and ice of the protocol.

🧊 Minting

Mechanism: Users can mint $SNOW by depositing $AVAX into the protocol's smart contract.

Fee: A 2.5% minting fee is applied to each minting transaction. Fees increase backing of $SNOW.

Result: Each new mint increases the $AVAX treasury, and backing per $SNOW always increases — no matter the user’s intent.

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🌊 Redeeming (Melting)

Mechanism: Users can redeem $AVAX by burning $SNOW.

Fee: A 2.5% burn fee applies to every redemption.

Effect: Redeeming reduces circulating supply while still growing backing — which increases the $AVAX-per-$SNOW ratio.

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🧮 Example

Imagine there are 100 $SNOW in existence, backed by 100 $AVAX. That gives a 1:1 backing ratio.

A user mints 1 $SNOW and deposits 1.025 $AVAX:

• 1 $AVAX → backing

• 2.5% fee = 0.025 $AVAX. 0.01625 $AVAX (65%) → $AVAX backing

• Remaining fee split between Treasury and Bribes.

New state:

• Supply = 101 $SNOW. Backing = 101.01625 $AVAX

• Backing per $SNOW = ~1.00016 $AVAX

If another user burns 5 $SNOW:

• Burn fee = 0.125 $AVAX (2.5% of 5 $AVAX)

• 65% of fee = 0.08125 $AVAX → added to backing

• 35% of fee = ~0.044 $AVAX → sent to treasury & bribes

• New supply = 96 $SNOW. New backing = 96.0975 $AVAX

• New backing per $SNOW ≈ 1.00102 $AVAX

Whether Minting or Redeeming, backing per $SNOW always goes up.

[User Deposits 1.025 AVAX]
         |
         v
+-----------------------------+
|     SNOW Smart Contract    |
+-----------------------------+
         |
         |---> Adds to Contract Backing:
         |        - 1.00 AVAX
         |        - 0.01626 AVAX (65% of Fee)
         |
         |---> Distributes Fees:
         |        - 0.00625 AVAX (25% of Fee) to Treasury
         |        - 0.0025 AVAX (10% of Fee) to Bribes
         |
         |---> Mints 1 $SNOW
         v
[User Receives 1 $SNOW Token]