CZodiac Litepaper
Search…
⌃K
🔥

Rewards: BurnPay

BurnPay creates a rising price floor with reward
CZODIAC's BurnPay provides higher efficiency than traditional taxes. It generates new rewards without creating sells, reducing LP, or adding fees unlike every other reward token technology. Instead it makes the token deflationary, raising the price floor with every trade.
BurnPay has three components: (1) a burn, (2) locked CZUSD LP, (3) rewards smart contract.

How Does BurnPay Generate Rewards?

Unlike a standard tax, Burnpay allows a token to pay rewards with CZUSD instead of the token. This is because burns increase the floor price of the token and thus the minimum value of the token's LP. This LP is locked by CZodiac and is used as an asset to back new CZUSD. This CZUSD can then be used to purchase rewards without ever selling the fair tribe token. For example, imagine a token ABC. ABC token launches at $1 with 100% of 10,000 supply in liquidity with 10,000 CZUSD. Since 100% of the ABC supply is in liquidity, it is never possible for there to be less than 10,000 CZUSD in the liquidity. Now, lets say there is a 10% burn and traders trade the coin for some time until there is now only 5000 supply of ABC token. Now, consider the AMM forumla I=X*Y where I is an Invariant that does not change, X would be ABC token, and Y would be CZUSD token. We know that initially, I = 10,000 ABC * 10,000 CZUSD = 100000000. Now lets take the new supply of ABC after the burns of 5000. So using I = X*Y again, 100000000 = 5000 ABC * X CZUSD and solve for amount of CZUSD that is the minumum. X = 100000000 / 5000 = 20,000 CZUSD. Since initially there was 10,000 CZUSD locked, and now there is 20,000 CZUSD locked, it means there is 10,000 CZUSD that is available to mint to purchase rewards for the project and its developers without risking CZUSD depeg as it is fully backed even if every single ABC token is sold.

What Tokens Can Use BurnPay?

Only tokens launched with FairTribe can use Burnpay.

What Rewards Can BurnPay Distribute?

BurnPay can be customized to purchase any token or be distributed to any address or smart contract. Currently, Burnpay has been used for (1) NFT lottery, where burnpay buys NFTs and sends them to random holders (2) AutoRewardPool, where burnpay sends a reward coin to holders and (3) Team wallet for building new products and marketing. Also, it can be used for a combination of these plus traditional taxes. Generally, burnpay is preferred to taxes because the burning creates constant deflationary pressure while the rewards incentivize volume.