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

# Fund Inflation

Three (3) inflation parameters must be set during the creation of a DAO. These inflation parameters help reward members who make valuable contributions to their DAOs. The total inflation (summation of all 3) is calculated when the DAO sign-ups close and appended in arrears linearly over the life of the DAO.

**Base Inflation:** Inflation awarded linear over the lifetime of the DAO to the council members. Inflation is updated via a function that is called when a new council is chosen. Can also be called at any time to update shares.

**Bonus Inflation:** A pool of redeemable inflation shares that can be awarded to an array of individual members via a proposal. The pool increases linearly over the life of the DAO using the same function that is used for base inflation shares. If a proposal to end the DAO early is enacted, any future bonus inflation shares are burnt.

**Operation Inflation:** Any time funds are added back to the returns vault from funding opportunities or during member commits, a percentage is split into the operations vault based on the operations inflation. A proposal made by council members can be enacted to pay for operational costs from the operations vault.

*Example Scenario:*

***Setup***

*All parameters are set at 5%, totalling 15% inflation \~ 10% to members, 5% to operations*

*DAO commitments: $100,000*

* *Capital Vault: $95,000*
* *Operations Vault: $5,000*

*Initial Member Shares: 100,000*

***At DAO End***

*Total DAO return: $1,000,000*

* *Total Returns Vault Inflow: $950,000*
* *Total Operations Vault Inflow: $55,000*
* *Capital Vault: $0 (Theoretically all used up on opportunities)* 

*Final Member Shares: 110,000 (Bonus and Base split across different members)*