# An example

### Example of how gKimbo works:

This example will use the concept of "backing tokens" to simplify the explanation. gKimbo is actually backed by $Kimbo.

Let's say there are 10 gKimbo tokens in circulation and they are backed by 1000 $Kimbo tokens.  This means each gKimbo is​ backed by 1000/10 = 100 $Kimbo tokens per gKimbo.

You want to mint gKimbo and you have 100 $Kimbo tokens to mint with. You deposit your 100 $Kimbo tokens into the gKimbo backing pool to mint the gKimbo. One percent (1%) of your $Kimbo tokens are used as a tax and distributed as seen in [Fees](https://docs.kimbocollege.com/graduated-kimbo/minting-redeeming-transfers-and-fees). From your remaining 99 $Kimbo tokens, 0.99 gKimbo is minted and given to you, based on the current pool ratio of 100 $Kimbo tokens per gKimbo.  

After you have minted there is now 1100 $Kimbo tokens in the pool and 10.99 gKimbo in circulation.  This means each gKimbo is now backed by 1100/10.99 = 100.09 $Kimbo tokens. The backing of gKimbo has gone up!

Now let's say you want to redeem your 0.99 gKimbo. At this point, your 0.99 gKimbo is worth 0.99 \* 100.09 = 99.0891 $Kimbo tokens. To withdraw, there is another 1% tax that is left in the $Kimbo token pool. Now, your withdrawal is actually 99.089 \* 0.99 = 98.098 $Kimbo tokens. After this, there are 1100- 98.098 = 1001.9 $Kimbo tokens left in the pool and 10 gKimbo in circulation. This means each gKimbo is now worth 1001.9/10 = 100.19 $Kimbo tokens.  

If you transfer your gKimbo into a contract, via a dex, or to another wallet a small transfer fee is applied. This fee will burn 0.25% of your gKimbo also increasing the value of the remaining shares.

This shows how the backing of gKimbo goes up with minting, redeeming, buys, sells and transfers.