> For the complete documentation index, see [llms.txt](https://limited-supply-tokenization.gitbook.io/lst/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://limited-supply-tokenization.gitbook.io/lst/introduction/blst-token-and-price-market-cap-dynamics.md).

# bLST Token & Price-Market Cap Dynamics

#### What is bLST?

bLST is the utility token of the LST ecosystem, fueling deflationary buybacks and rewarding stakers. It transforms transaction fees into an automated buyback system that reduces circulating $LST supply, supporting price growth.

#### How bLST Works

* **Staking Rewards:** Earn bLST by staking $LST, incentivizing holders to lock tokens and participate actively.
* **Buyback Mechanism:** A 0.75% fee on every $LST transaction is converted into bLST, which is used to buy back $LST tokens from the market.
* **Supply Reduction:** Bought-back $LST tokens are burned or locked, shrinking circulating supply and increasing scarcity.

#### Price and Market Cap Relationship

* **Market Cap Formula:**

  Market Cap=Price×Circulating Supply
* **Deflationary Effect:** Continuous buybacks reduce circulating supply, meaning price increases don’t proportionally inflate market cap. This leads to more sustainable growth.

#### Example Scenario

Initial conditions:

* Circulating Supply: 1,000,000 $LST
* Price per Token: $5.00
* **Initial Market Cap:** $5,000,000

After buybacks and staking incentives, circulating supply drops by 20% to 800,000 tokens, while price climbs to $12 due to scarcity and buyback support.

* **New Market Cap:**\
  800,000 × $12 = $9,600,000

Despite a 20% drop in supply, market cap nearly doubles thanks to strong price appreciation supported by deflationary mechanics.

***

#### Summary

bLST powers a deflationary loop that tightens supply and supports price increases, helping $LST achieve higher valuations without excessive inflation. This sustainable mechanism benefits holders by aligning incentives with real ecosystem activity.