Token Burn
The platform will dedicate a percentage of all fees (Favrr Portion) collected to a burn program, as follows*: 10.0% of Total Revenue.
The platform will dedicate a percentage of all fees collected to a burn program, as follows*: 10.0% of Total Revenue.
This means that the Favrr token ($Favrr) will have a constantly decreasing supply, with the rate of decrease being proportional to the fees as described above. This has been an approach that has shown tremendous positive effects on the token price. For example:
YFI price jumped 46% within 4 days of their first buyback and burn
Binance’s regular buyback and burns
The beauty of the token burn approach based on FIAT revenue is the inverse correlation between the Favrr’s success and the amount of tokens burned, essentially creating a self-regulating mechanism for the total number of tokens in circulation.
If the token price is underperforming (0.010 USD for example), a fixed amount of revenue (100,000 for example) would buy a larger number of tokens (10,000,000) to burn.
In the same example, if the price was higher (0.050 USD), the same amount of revenue would buy substantially smaller number of tokens (2,000,000).
Let’s illustrate how the above works in practice:
A user comes to the platform and spends 100 tokens.
Out of those, 10.0% (10tokens) are used for Token burn, thus reducing the token circulation. The burn is performed by sending the tokens to an unspendable address.
The remaining 90 tokens are used to fund the platform’s operations
Since the above operations can be costly, the platform will batch the buyback and burn operations (rather than execute them with each transaction) in order to keep them economically feasible.
Disclaimner: The Token burn will be carried out only as long as the token price is below a certain success threshold number. This number will be determined by the project on an ad-hoc basis and will be based on current market conditions. For example: if the threshold is set to 3x token price increase,Token burn will happen only while the token is below 3x, otherwise the funds would be stored in treasury until the token price is below the set target or until they are needed by the project. The threshold amount will vary from year to year.
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