# Protocol Sustainability

**The Problem: Uncontrolled Emissions**

Many DEXes struggle in their early stages due to low trading volume, which pushes them to use token incentives to attract liquidity. This can lead to a cycle of inflation, crashing prices, and destroying community trust. We wanted to break that cycle.

**Our Solution: The Dual-Token Model**

Taking inspiration from GMX’s escrowed-token system, we introduced a dual-token approach to balance liquidity and sustainable growth:

* [**AQUA**](/aqua.md)**:** The primary utility and governance token, tradable and powering all protocol interactions.
* [**xAQUA**](/xaqua.md)**:** An escrowed, non-transferable version earned through farming and staking. It’s not instantly tradable, helping control inflation.

**Why This Model Works**

To maintain stability, 80% of farming rewards are distributed as xAQUA, while 20% are liquid AQUA. Converting xAQUA to AQUA requires a vesting period of 15 days to 3 months. This discourages immediate sell-offs and aligns long-term holders with the protocol’s growth.

By spreading out liquidity over time, we minimize sudden dumps and promote a healthier, more predictable incentives flow. This results in less volatility and a more resilient ecosystem.


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