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

# BurnDividend Vault

The BurnDividend Vault combines two mechanisms in a single lifecycle: it starts with automatic buyback & burn (like SnowBall), then transitions into a dividend model where holders can burn their tokens to earn a proportional share of future tax revenue.

***

## Two-Phase Lifecycle

### Phase 1: Buyback Mode (Automatic)

```
Tax Revenue (ETH) → Vault → Auto Buyback & Burn
```

When the Vault is first created, it operates in **Buyback mode**:

* Tax revenue flows into the Vault.
* When the balance reaches the threshold (0.1 ETH), the Vault automatically executes a buyback — purchasing and burning tokens.
* Buybacks are triggered automatically as ETH arrives, with no Keeper Bot intervention needed.
* If a buyback fails, the funds stay in the Vault and the next incoming deposit will retry.

This phase reduces the token's circulating supply, similar to the SnowBall Vault.

### Phase Transition

The transition from Buyback to Dividend mode is triggered by the **first user burn**:

1. Any holder calls the burn function for the first time.
2. The Vault automatically uses all remaining ETH for one final buyback & burn.
3. The Vault switches to Dividend mode. **This transition is irreversible.**

### Phase 2: Dividend Mode

```
Tax Revenue (ETH) → Vault → Distributed proportionally to all burners
```

Once in Dividend mode:

* **Burning tokens** — Holders voluntarily burn their tokens to earn a share of future tax revenue. Burned tokens are permanently destroyed.
* **Earning dividends** — All subsequent tax revenue flowing into the Vault is distributed proportionally based on each holder's share of the total burned amount.
* **Claiming rewards** — Holders can claim their accumulated ETH dividends at any time.

***

## How Dividends Are Calculated

Your dividend share is determined by how many tokens you've burned relative to the total amount burned by all participants:

```
Your Share = Your Burned Amount ÷ Total Burned Amount
```

The more tokens you burn, the larger your share of ongoing tax revenue. Dividends accumulate continuously as new tax revenue enters the Vault and can be claimed at any time.

***

## Key Characteristics

* **Dual benefit** — Early buybacks reduce supply (benefiting all holders), then dividends reward active participants who burn tokens.
* **Irreversible transition** — Once Dividend mode activates, the Vault never returns to Buyback mode.
* **Safe claiming** — If a dividend transfer fails, the funds are queued and can be claimed again later. No funds are lost.
* **No minimum burn** — Any amount of tokens can be burned to start earning dividends.

***

## When to Use BurnDividend

BurnDividend is ideal for tokens where:

* The creator wants both deflation and holder rewards.
* The community is incentivized to actively participate in tokenomics by burning.
* A two-phase model (early growth via deflation → long-term rewards) fits the project's narrative.