# 4. Mechanics and utility of the HOC token

The Hoc Foundation aspires for the governance of the Hoc Protocol, in particular decision-making regarding the acceptance of new RWA, to be decentralised and community-led via the utility of the HOC token. This Section sets out at a high-level of the HoC Foundation’s current plans for the HOC token and Hoc Protocol governance.

The initial token supply of the Hoc protocol will be **10,000,000,000 HOC**. Tokens will be released into circulation via five fundamental mechanisms that are designed to encourage the sustainable growth of the ecosystem and giving the core stakeholders a voice on the future direction of this protocol.

## 4.1 Lending rewards

Users who deposit their tokenised and approved real estate into the HoC protocol will be rewarded with HOC tokens, that initially will be distributed at the same amount as the stability rate charged, under the assumption that 1 HGBP = 1 HOC. Therefore, if the yearly stability fee is 3% HGBP, then the corresponding rewards received would equate to 3% HOC.  The lending rewards are constructed this way to encourage participation and governance by the core stakeholders the protocol is meant to serve. 

## 4.2 Staking rewards

In order to manage the supply and demand of HGBP, the protocol will offer staking rewards in the form of both HGBP and HOC. These are initially set at 3% HGBP and 3% HOC. 

## 4.3 Foundation rewards

To ensure the foundation is working for the benefit of the advancement of the protocol, it will be rewarded with governance tokens proportional to the TVL it is able to attract. For every £1 of real estate value that is locked in to the protocol, the foundation will receive 0.01 HOC.

## 4.4 Governance rewards

The HOC token will also have utility; enabling holders to propose and vote on certain governance decisions pertaining to the Hoc Protocol ecosystem. Proposing and Voting represent the two key components of the Hoc Protocol’s governance. As examples, such mechanisms will apply to decisions by the Hoc Protocol to 1) accept new RWA and 2) decide the HBR/HSR, to be made from time to time. Active voter participation will be encouraged through governance rewards. Successful proposals as well as a minimum threshold of active voter participation will be rewarded in HOC.

## 4.5 Community governed distribution

Any additional HOC the foundation would like to access and utilise must be requested and granted via community governance. 

No HOC tokens will be offered on the open market by the HOC foundation, as it is are focused on building a long term sustainable ecosystem enabled through healthy token economic incentives. 

<figure><img src="/files/1iKSA8dYe3BwNreXDnNF" alt=""><figcaption><p>Figure 6: Hoc Distribution</p></figcaption></figure>


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