# Token Economics

<figure><img src="/files/6sHO7OCcMfAI4YlFkerK" alt=""><figcaption></figcaption></figure>

The token economy is a central component of a DEX and a key factor in its long-term success or failure. MaigcSea has developed an innovative dual token system.

{% content-ref url="/pages/2bPqhlNJ7WEMI3MU5DrK" %}
[LUM Token](/tokenomics/lum-token.md)
{% endcontent-ref %}

{% content-ref url="/pages/WeRJYh84pTw89lLEG66S" %}
[Magic LUM Token](/tokenomics/magic-lum-token.md)
{% endcontent-ref %}

MagicSea's two tokens, LUM and Magic LUM, each have different, important features that provide value to both the DEX and its holders. LUM can be upgraded to Magic LUM through the specially developed smart contract, which we call "Booster". This unique upgrading process creates a link between LUM and Magic LUM, giving the DEX more stability and resilience.

The following graphic is a simplified illustration of the concept:

<figure><img src="/files/59ipTiZ1UVmmMvbELyu5" alt=""><figcaption></figcaption></figure>

Both the properties (utilities) of LUM and Magic LUM, as well as the unique functionality of the booster, are critical to the token economy of MagicSea.

<figure><img src="/files/4EY7YfB7emE9paLLYoz7" alt=""><figcaption><p>MagicSea Value Flow</p></figcaption></figure>

{% hint style="info" %}
**Key Facts**

Token economics are one of the most important components of a DEX. MagicSea has developed an innovative dynamic of setting up the DEX for long-term success and not losing sight of the most important KPIs (Key Performance Indicator) of a DEX:

* Constant LUM minting rate (no soft cap) as an incentive for liquidity providers enables the offering of competitive APRs.
* Innovative refining process from LUM to Magic LUM that continuously takes LUM off the market and burns it.&#x20;
* Constant positive price pressure on LUM through the use of platform fees for buyback & burn strategies for LUM.
* Limited Magic LUM governance token with access to protocol earnings staking pools.
  {% endhint %}


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