# 5. Token Utility

### Usage Scenarios

**Internal scenarios**

* **STON Staking — governance rights and derivatives.** When STON is staked, an equal number of **ARKENSTON** and **GEMSTON** are minted. The issuance volume scales linearly with the lock-up term. This links the token to governance and incentivizes long-term staking.
* **Fee Capture.** All protocol fees are automatically converted into STON and then routed through the **Fee Distributor contract** (for burns, staking rewards, liquidity mining). This creates direct market demand for STON.
* **Buyback & Burn (deflationary model).** Part of the fees converted into STON are burned, reducing circulating supply and creating a “price sink” for the token.

**User scenarios (ecosystem/market)**

* **DAO governance participation.** Holders stake STON and receive ARKENSTON, enabling them to initiate and vote on protocol parameters (fee models, new features, network expansions, fee distribution).
* **Farming/liquidity incentives.** By DAO decision, flows converted into STON may be directed toward LP/staking rewards (liquidity mining, staking incentives), enhancing strategy yields and anchoring capital in the protocol.

**Optional scenarios (enabled via DAO governance)**

* **Fee discounts for STON holders.** The whitepaper outlines the option of reduced fees for STON holders/stakers — enabled and calibrated through governance.
* **Incentive indexing to ARKENSTON weight.** Contracts may distribute rewards proportionally to ARKENSTON holdings, acting as a “boost” mechanism for long-term stakers.
* **Staking parameters (term ranges).** Practically applied lock-up terms (e.g., 3–24 months) are defined by the interface and DAO decisions, influencing ARKENSTON/GEMSTON issuance and supply dynamics.

**Impact on token economy**

* Staking and governance participation remove part of the supply from circulation and increase the value of participation (voting weight, rewards).
* Simultaneous conversion of protocol fees into STON and periodic burning form steady demand and a deflationary effect.
* As a result, DEX performance (fee volume) directly translates into STON market dynamics, while holders gain utility that extends beyond speculation.