🔥Burn Mechanism
An explanation on the burn mechanism in the contract
A quick recap, thanks to ChatGPT, about what burning is within crypto,
Burn Mechanism in Cryptocurrencies
The burn mechanism is a strategy employed by some cryptocurrency projects to reduce the available supply of tokens in the market. This process involves sending a certain amount of tokens to a designated wallet that has no private key. Without a private key, these tokens are inaccessible and essentially removed from circulation, mimicking the process of burning physical currency.
How Does Burning Work?
1. A predefined number of tokens are sent to a 'burn address'.
2. This address is a public address on the blockchain, but it is a one-way mechanism without any possibility of retrieval.
3. The transaction is recorded on the blockchain, which ensures transparency and allows everyone to verify that the tokens are indeed out of circulation.Reasons for Token Burns
Deflationary Pressure: By reducing the total supply, the value of the remaining tokens may increase due to the principles of supply and demand.
Incentivize Holders: Token holders might be more inclined to hold onto their assets if they believe scarcity will drive up the price.
It's important to note that a burn mechanism is not inherent to all cryptocurrencies and is a policy decision made by the project's developers or community.
Potential Impact on the Ecosystem
The strategic use of a burn mechanism can potentially lead to increased investor confidence if it aligns with a project's long-term goals and is handled transparently. However, it should be analyzed on a case-by-case basis, as the impacts can vary based on the specific economics of each cryptocurrency.
How do we burn within XLW?
The XLW contract has a fairly aggressive tax structure that given enough volume will drive a very interesting price increase per token. These #squeezenomics work in the following way.
Burning on Buying
When buying the XLW project 5% of the amount bought is held back as a tax. This tax is then split the following way. 40% of that tax will be sent to the DEAD wallet and forever burned (View all transactions) and the remaining 60% is held back by the contract for use later in the swapback functionality.
How can i view what the contract is currently holding
If you want to see how many tokens the contract currently holds go to this page: https://snowtrace.io/address/0x7c0ab71Ef0bEC595dB0e3E3cc046Ac06ce1E121b and then click the drop down and look for the XLW tokens. This number is what is held back.
Note: On this page you might see a "stuck" balance held into the contract. These are swap back funds that were not sent to the marketing wallet or the LP. These are usually lost when renouncing a contract, but we have a mechanism to pull this and will be doing fairly regularly. We will use these funds either as buy backs, or community give aways in one way or another. We will let the community decide through a vote.
Burning on selling
In the same way that we have a burn mechanism when we buy a token, we also do the exact same mechanism when selling the token. That is to say, for each time you sell any XLW the contract will take 5% of the amount you're selling and then do the same split as above. (Please not, this tax takes tokens, not AVAX)
See the example above for a deeper understanding with real numbers.
Burning on transfers
There are no burns when transferring tokens to another wallet
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