[CZero] Token burning model that supports the value of Token (Coin)

What is token burning?

Token burning refers to the process of permanently destroying a portion of a cryptocurrency or digital asset. This is when an issuer reduces the supply of tokens by burning a certain amount of tokens to remove them from the market.

Why and how to burn tokens

1. Driving up the price: One of the main purposes of coin burning is to drive up the price. After burning, the supply of coins is reduced, which creates scarcity and increases the price of the coin. This benefits existing coin holders, and there are instances of exchanges like Binance rewarding customers with intentional burns.
2. Increased demand: When a digital asset becomes scarce, demand can also increase. This is because investors may want to buy the digital asset because of its scarcity.
3. Issuing new coins: In some cases, new coins are issued by burning existing coins. This is known as the Proof-of-Burn method, and is used to improve branding or fix problems with existing coins. This is utilized as a strategy to improve the image of the coin or improve its functionality.
4. Demonstrate project maturity: It can be used to demonstrate the maturity and sustainability of a project to the market.
5. Price stabilization through liquidity management: By controlling the supply of tokens, price volatility can be managed and the impact of rising and falling values can be mitigated, which can help stabilize prices and strengthen investor confidence. However, some investors may miss out on expected increases in token value, and some market volatility control may be unsuccessful.

Pros and cons of coin burning

1. Issuer benefits: Token burning allows issuers to effectively manage liquidity and demonstrate to market participants the success of the project and the increase in value.
2. Coin holder benefits: The increase in token value allows coin holders to capitalize on their investment, while the project’s success also increases their credibility.
3. Cons: As the supply of tokens decreases due to token burning, the proportion of tokens held increases relatively, and the greater the expectation of value increase, the less dilution effect after burning. If the price increase is not maintained, the value of the coins held will decrease, resulting in a loss of investment.

CZero Token Burn Model — Value Support and Appreciation

1. Currently (before listing C-Zero Token on CEX exchange)

• Since it takes time for tokens to be listed on CEX exchanges, and it can be difficult to provide rewards and secure the credibility of the project, we designed a reward payment model using DEX exchanges.
• We opened a liquidity pool (CZERO PAY-USDC) using the stable swap function of DEX exchanges and provided a 1:1 exchange (SWAP) function for the zero mileage (CZERO PAY token) provided as a reward for CERO Dao’s project.
• Then, when CZERO PAY token holders put CZERO PAY tokens into the liquidity pool and take USDC tokens, CZERO PROTOCOL will put USDC into the liquidity pool and take CZERO PAY tokens to maintain the 1:1 value, in which case CZERO PROTOCOL will burn the imported CZERO PAY tokens.The CZERO PAY tokens are burned through the project’s revenues, and this burning completes the payment of the CZERO PAY tokens.

2. after (after CZERO token is listed on CEX exchange)

• When the CZero token is listed on the exchange, the liquidity of the token will be secured, eliminating the DEX exchange liquidity pool and introducing the DeFi model on the CZero DApp.
• CZero Token obtained through NFT splitting can be traded through CEX exchange, while participating in Defi products on CZero DApp can earn staking rewards (e.g. 8%/6month) according to the staking (lockup) product.
• The inflation caused by these interest payments will be eliminated through the CZero burn mechanism.
• While the old model directly rewards the project’s profits through DEX exchanges, the new model takes the project’s profits and burns them by buying CZero Tokens on the market (CEX) at set intervals.
• The new model will pay out rewards in CZero Tokens, so you can expect a greater increase in value.

The burning model is important in the Token Economy!

The CZero Token Economy is designed to maintain and increase the value of the token through a deflationary model through burning and an issuance (supply) limit (the capacity of renewable energy power plants to be built).

We realize that good intentions alone can only take a project so far. In the old DeFi 2.0 model, there were projects that attracted a lot of funding through exorbitant interest payments, but the end of that model was bankruptcy.The CZero Project will continue to build a model that is sustainable and grows while maintaining both of these values: reducing carbon and rewarding participants (web 3.0).