> For the complete documentation index, see [llms.txt](https://docs.aboutcircles.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.aboutcircles.com/user-guides/circles-features/daily-burn-demurrage.md).

# Daily Burn (Demurrage)

This guide will help you understand what the “burn” events mean, how they work, and why they exist

{% embed url="<https://www.loom.com/embed/af3cf8c16d324ecca5aed7d5a7f78954>" %}

In Circles-enabled apps (for example, the [Gnosis app](https://app.gnosis.io/)), you can spot CRC burn events in your Activity feed. These appear regularly and reduce your displayed CRC balance over time.

***

### What is Daily Burn?

Daily Burn is Circles’ built-in demurrage: a small, automatic reduction of the CRC balance you hold.

* Roughly \~0.02% of your current balance per day is removed (“burned”).
* Over a year, that adds up to 7% annual demurrage.&#x20;
* This is not a fee and is not paid to anyone—the burned CRC simply cease to exist.&#x20;

### Why Circles has Daily Burn?

Daily Burn is one half of Circles’ monetary design:

1. Creation force: each user can create 1 CRC per hour.&#x20;
2. Destruction force: existing CRC depreciate at 7% per year via demurrage.&#x20;

{% hint style="info" %}
The Circles whitepaper explains that these two forces are tuned to support intergenerational fairness so the system stays attractive to new joiners even decades later.&#x20;
{% endhint %}

#### The “fair access” idea&#x20;

Circles aims for a property like:

* People who join later shouldn’t be permanently “too late.”
* Over long time horizons, the gap between early joiners and new joiners shrinks, because early-created money gradually loses weight relative to ongoing creation.&#x20;

### What does “demurrage” mean?

“Demurrage” is a monetary concept often associated with the economist [Silvio Gesell](https://en.wikipedia.org/wiki/Silvio_Gesell), historically discussed as a way to discourage hoarding and encourage circulation (sometimes via “stamp scrip” systems).&#x20;

Circles uses demurrage a bit differently: it’s paired with universal, ongoing issuance (everyone creates), which changes the goal from “just circulation” to a blend that supports long-term fairness and accessibility.&#x20;

### What Daily Burn implies for you?

* Holding CRC long-term has a carrying cost (like a gentle “melting”).
* Spending/using CRC sooner avoids some future burn (because you’re not holding it as long).
* Burn is automatic and time based, you don’t need to claim, approve, or trigger it.

### How the “maximum created” amount works?

Over a lifetime-scale horizon, demurrage plus 1 CRC/hour issuance creates a saturation effect:

* The [Circles whitepaper](https://whitepaper.aboutcircles.com/) notes that accounts approximately reach a maximum level of \~120,804 CRC after creating for about 80 years (life-expectancy scale).&#x20;
* After creation stops, the remaining nominal amount trends downward with an exponential “half-life” on the order of \~10 years.&#x20;

{% hint style="info" %}
Important nuance: this “maximum” framing is about what you can create in your own name over time, not a hard cap on what you can hold (you can still hold more via transfers).&#x20;
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***

### FAQ

#### Is Daily Burn the same as a transaction fee?

No. It’s not paid to validators, app developers, or any treasury. It’s a protocol-level removal of value from existing balances.&#x20;

#### Does burn apply to “my CRC” only or all CRC I hold?

It applies to the CRC balance you hold (regardless of whose CRC they originated from), because it’s defined as depreciation of existing CRC holdings.&#x20;