# The Flywheel

The True Freeze Ecosystem has multiple counteracting effects for changes in the market price of ETH and frETH. There are 7 core principles to the flywheel starting with frETH price **falling**:

1\. **Lower frETH prices** (in ETH terms) means lower early withdrawal costs to access locked ETH.

2\. When early withdrawals cost less, more of them happen, leading to revenue to FRZ stakers.\
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3\. More revenue to FRZ stakers improves its price against frETH, so frETH is burned to earn FRZ.

4\. 1 frETH burned = 1 ETH confirmed locked for 1 year, reducing the circulation of ETH.

5\. As ETH's price is volatile, more early withdrawals happen when it is relatively high (to sell ETH high and rebuy it low).

6\. To withdraw ETH early requires frETH, so the price of frETH rises.

7\. When frETH rises, the benefits of locking ETH rises, so more people lock ETH and sell frETH; restarting the flywheel when frETH prices fall.

![The vision of the flywheel is that lower frETH prices incentivize the key revenue behavior: withdrawing early. This kickstarts the flywheel as revenue flows to FRZ stakers, increasing its value, which inspires people to burn frETH. Burnt frETH is ETH forced to be patient. As ETH price rises, there is additional pressure to withdraw early to sell it high and rebuy it low. Ultimately, frETH acts as the time preference rate for ETH and absorbs its volatility. All in addition to the benefits of the Freezer NFT eliminating price impact and slippage for traders.](https://3375053316-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FCuoWrqUivgdEBM9CMKny%2Fuploads%2FKfRZYinohFebr6qMQT1y%2FfrETH_ETH_tokenomics.png?alt=media\&token=56461ed8-6a60-41d7-8b51-fd5f85e12c76)