Token Bucket Algorithm:

• Host is connected to the network by an interface. This interface is actually a bucket. A token is generated in the bucket every ∆T seconds.

• The host sends an unregulated flow to the bucket. For a packet to be transmitted to the network, it must capture and destroy a token present in the bucket.

• If the lost is not sending packets to the bucket the tokens keep getting accumulated in the bucket. Generally there is a maximum amount of tokens that can be accumulated in the bucket.

• Due to this feature of tokens getting accumulated, bursts can be handled better. Therefore in this case the rate increases if tokens are saved in the bucket, whereas in leaky bucket the rate will always be constant (1 packet per clock tic).