You’ve heard about Ethereum’s Donuts – but do you know how they really work?

DONUT's economy is a balancing act, it was designed to keep the ecosystem working while staying sustainable. After many years of experiments, mistakes, and adjustments, the community created a method that keeps things fair and functional.

Here's how everything works!

Fixed minting schedule

Every year, the Donut DAO mints 20.88 million Donuts, but only when or if the treasury runs out of tokens. Once the new tokens are minted and deposited into the treasury, the system locks minting for 52 weeks. This cap keeps inflation under control, making sure DONUT doesn't flood the market.

Monthly allocation

The treasury distributes Donuts every month to support the community and its projects.

In total, 1,740,000 Donuts are distributed and allocated every month:

• Content creation (subreddit rewards): 850,000 DONUT
  • Posts: 510,000 DONUT
  • Comments: 340,000 DONUT
• Liquidity incentives: 400,000 DONUT
  • Uniswap (ETH/DONUT V2 on Ethereum): 200,000 DONUT
  • Sushi.com (ETH/DONUT V3 on Arbitrum One): 200,000 DONUT
• Community contests: 25,000 DONUT
• Donut DAO treasury: 465,000 DONUT
  • Developers (each): 30,000 DONUT/month + grants
  • Moderators (each): 15,000 DONUT/month
  • Community contributors (each): 5,000 DONUT/month
  • Artists: Grants

Community treasury

The Donut DAO treasury is guarded by different multisig members. Any transaction requires 5 guardians to sign off, thus making Donut DAO's funds and operations secure.

Revenue

The Donut DAO acquires revenue through partnerships, strategic investments, and, primarily, LP positions (fees, yield farming, etc). These earnings reintegrate the tokens back into the system, giving the Donut DAO a steady income to finance the functioning of the economy.

Deflationary mechanisms

To prevent DONUT's supply from increasing uncontrollably, the community developed methods that burn tokens efficiently.

Special Memberships are seasonal subscriptions, represented by NFTs, that give different perks to subscribers on r/EthTrader. By subscribing, users actively contribute to DONUT tokenomics. Donuts used for membership subscriptions are burned, reducing the circulating supply and supporting the value of DONUT.

In April 2025, the community voted for ETIP – 122 Burn undistributed DONUT from monthly allocations (the "distribution"). As such, any undistributed DONUT in a round (month) gets burned. If subreddit activity drops, less tokens are distributed, which in return increases the burn rate. Less participation means higher rewards per user and also a higher burn rate. This way, the economy remains sustainable even in times of less activity.

Third parties can buy and burn DONUT in exchange for a pinned post slot on the Donut DAO's platforms to advertise their products / services.

This content is based on information from the official Donut DAO website – visit it to learn more about Donuts.