# Protocol Owned Liquidity

One distinctive feature of Cadabra's tokenomics is its concept of protocol-owned liquidity, which works as follows:

* **Initial ABRA Supply**: All of the initial ABRA supply was allocated through Uniswap V3 pools and is under the ownership of the Cadabra protocol.
* **Liquidity is retained**: Because there are no emissions or other sources of ABRA, every subsequent purchase of ABRA tokens, whether through strategy profits or regular purchases, increases liquidity that backs ABRA’s price. Basically buyers buy ABRA from the protocol and this liquidity remains owned by the protocol.
* **Immutable Liquidity**: It's important to note that the protocol is unable to remove this liquidity. This is ensured by our smart contracts
* **Liquidity Reallocation**: The protocol retains the ability to occasionally reallocate liquidity between different pools.

The important part is that when ABRA is purchased from a pool, the opposite liquidity remains within the same pool. This remaining liquidity acts as a backstop in case the purchased ABRA tokens are sold back into the same pool, thereby providing stability and support to the ABRA token's price.

