This guide explain the question of what is coin burn and the reasons behind burning coins in BambooDeFi protocol.
But first…What is Coin Burning?
Coin burning is a process of intentionally eliminating the coins by rendering it unusable. Usually this is done by sending a portion of the coins to an ‘eater address’, which is often referred to as a ‘black hole’ since the private keys to that address are not obtainable by anyone.
In the case of BambooDefi, it does not work like that, each user has a function in their wallet with which they can burn only the bamboo they possess in the amount they want as long as it is above zero.
This burning function has been implemented to give sense and real utility to the BBYP (Bamboo Burn Yearly Party) a token-based lottery system, in which you get participations according to the Bamboo that every user has burned.
These Bamboos are effectively taken out of circulation and is publicly recorded and verifiable on the blockchain.
Reasons for Bamboo Burn
Why would anyone be willing to burn Bamboo?So… in addition to the BBYP, there are many interesting reasons why Bamboo burning is a good idea.
1) Increase Value of Coins
In order to understand this, we need to understand the basic economic laws of demand and supply.
Scarcity is a central economic concept that gives value to a particular asset, because Bamboo don`t have a fixed Total Supply, the systematic burning of part of the generated Bamboo is important.
Coin burning reduces the total supply in circulation.
It has been demonstrated that is an effective method of increasing and stabilizing the valuation of tokens.
2) Distribute value back to Bamboo holders
Destruction of Unsold IEO Tokens
If BambooDeFi does not reach his hardcap and are therefore left with unsold tokens we are going to destroy them. Instead of keeping the tokens for future use, Bamboo DEVS chooses to voluntarily burn the excess BAMBOO so as to distribute value back to their token holders.
Usually the projects that engage in this receive a positively favourable image in the community as it highlights the commitment of the team in ensuring long-term success for the project.
In short, the Bamboo burns represents a viable tool in preserving wealth for all participants in BambooDeFi Ecosystem.
Nexxyo Labs Web: https://nexxyolabs.com
Official : https://t.me/BambooDeFi