> For the complete documentation index, see [llms.txt](https://docs.arbera.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.arbera.io/arbera-overview/arbera-flywheel.md).

# Arbera Flywheel

<figure><img src="/files/8L5kO2FtvC3DtGerGkl6" alt=""><figcaption></figcaption></figure>

The **Arbera Flywheel** is designed to generate numerous arbitrage opportunities, collecting fees along the way. These fees are converted into **ARBERA** via buybacks on the open market and distributed back to **LP stakers,** **Den holders,** and **Berachain validators**, creating continuous buy pressure on the **ARBERA** token.

### 1. Dens

Everything begins with the creation of **Dens**. Each Den has a corresponding liquidity pool on a DEX (e.g., Kodiak). Users wrap (deposit) their tokens into the Den and can provide liquidity into the Den LP, establishing an arbitrage market for the Den.

### 2. Protocol Fees

Every time `TOKENs` are wrapped, unwrapped, bought, or sold, fees are generated in `brTOKEN`. These fees are allocated as follows:

<table data-full-width="false"><thead><tr><th>Fee</th><th>Description</th></tr></thead><tbody><tr><td>Wrap</td><td>Fee on wrapping <code>TOKEN</code> into the Den (<code>brTOKEN</code>).</td></tr><tr><td>Unwrap</td><td>Fee on unwrapping Den (<code>brTOKEN</code>) into the <code>TOKEN</code>.</td></tr><tr><td>Buy AMM</td><td>Fee on buying Den (<code>brTOKEN</code>) tokens from LP.</td></tr><tr><td>Sell AMM</td><td>Fee on selling Den (<code>brTOKEN</code>) tokens to LP.</td></tr><tr><td>Burn</td><td>Fee on all above actions, which burns <code>brTOKENS</code>.</td></tr><tr><td>Partner</td><td>The fee, on top of other fees, was collected after the burn fee and paid out to the <strong>Den LP Creator</strong>.</td></tr><tr><td>Protocol Fee</td><td>The fee, on top of other fees, was collected after the burn fee and paid out to the <strong>Arbera Treasury</strong>.</td></tr></tbody></table>

### 3. Burns and ARBERA Buybacks

After fees are distributed, a portion of `brTOKEN` is burned to **IMPROVE** the collateral backing ratio, increasing it beyond 1:1 (`brTOKEN` > `1 TOKEN`), thereby enhancing the value of the underlying `TOKEN` in the Den.

**ARBERA** buybacks occur after accounting for the Burn, Protocol, and Partner fees:

* **90%** of the `brTOKEN` fees are swapped for **ARBERA** and distributed to Den LP stakers.
* **10%** of the `brTOKEN` fees are reserved for future validator vote gauging to increase LP yields with **BGT** and other token rewards.&#x20;

### Summary

* The more **volatile** the asset, the more arbitrage opportunities arise, which leads to more fees.
* The more **Den LP liquidity**, the more arbitrage can be executed, generating even more fees.
* The more fees generated, the stronger the **buying pressure** on ARBERA.&#x20;
* More Dens = More buyback pressure for **ARBERA** Token.
* The more fees generated, the more the underlying `TOKEN` grows, benefiting `brTOKEN` holders.
* More Dens and more Den liquidity lead to more arbitrage, which means more fees, more satisfied holders, and happy LP stakers, creating even more arbitrage opportunities.