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

# $e-IOU

More trade volume requires more guarantee capital value. As real-world trade activity grows on the Bitcredit Network, demand for $e-IOU grows with it: more trade finance leads to more eBill minting, which requires more $e-IOU as backing. Supply tightens as network demand expands.

#### Key Functions <a href="#key-functions" id="key-functions"></a>

* Acts as guarantee capital over and above the 100% backing of bitcredit issuance. In risk events, $e-IOU is sold to ensure full Bitcoin reserve backing for eCash holders, then repurchased after recourse is recovered through the eBill's liability chain.
* Governs the Bitcredit DAO, for policy and strategic decisions
* Rewards contributors for protocol development and involvement

#### Emissions <a href="#tokenomics" id="tokenomics"></a>

New $e-IOU tokens are generated quarterly (approximately every 13,500 Bitcoin blocks), with the supply halving every 4 years, mirroring Bitcoin's issue policy.\
The total supply is capped at **1 billion tokens**.

#### Lock Cycle <a href="#burn-cycle" id="burn-cycle"></a>

Wildcats **lock** away $e-IOU tokens when issuing eCash.

Instead of being permanently burned, these tokens are placed in long-term lockup, with the duration determined by a governance vote (potentially spanning several years). This mechanism supports the ecosystem's long-term sustainability. A small percentage of $e-IOU is locked for every bitcredit minted. This replacement demand from wildcats helps stabilize value while tying Bitcredit's monetary dynamics to real economic activity on the network and continued development efforts.

#### Auctions <a href="#auctions" id="auctions"></a>

At the end of each epoch, once tokens unlock and the distribution process is complete, auctions will be held as an open marketplace for $e-IOU. During these auctions, mints and external participants can purchase tokens from holders (whether obtained in the epoch's distribution or acquired earlier) at prices established through open bidding. This mechanism establishes decentralized price discovery, enhances liquidity, and provides a transparent entry point for broader participation in the network.

#### Standard <a href="#standard" id="standard"></a>

$e-IOU is currently being developed and launched as a Bitcoin-native token using the BRC-20 standard. This choice reflects the current level of tooling, liquidity, and market activity available on Bitcoin today. That said, up until the official token launch, Bitcredit remains open to evaluating alternative Bitcoin standards if clear advantages emerge. This includes improvements in token wallet UX, DEX and DeFi infrastructure, deeper liquidity, higher transaction activity, or stronger alignment with potential token protocol partners. Any such consideration would be driven by concrete ecosystem progress and practical benefits for users and Mints, while remaining fully anchored to Bitcoin settlement and security