April 1, 2018 max

Planned decrease in supply (PCL) #Tokenburn

TL,DR:

Why do we burn tokens?

Each token has its purpose in Peculium project. If the token remains unutilized at the end of the task, it must be burned.

So what is the final tally of the total supply after burning?

Current estimates are between 2.4368 – 14.8368 Billion tokens

Why should I care? 

Because Token burn will result in higher evaluation! More tokens burned means, higher chance of price increase.

Can I help to burn more? to increase the value of my tokens  !!

HOLD!! your tokens, don’t sell them cheap.

When the price increases, the majority of the tokens will be burned automatically


 

Dear Peculium community,

Today we disclose the details of our plan to “burn” tokens.

We will discuss it in few steps –

what is a token burn?

The blockchain technology has many interesting terminologies in a digital context i.e. “a block”, “a chain of blocks”, “a token”. These are just words used to describe a similarity in a real-life physical object and a similar digital object.

When someone wants to get rid of some tokens, they can “Burn” them.

Burning means rendering the token inaccessible to everyone (including the owner, contract creator and the user).

In case of ETH,

you can send ETH to the address 0x0000000000000000000000000000000000000000

The ETH that has been sent to such address is lost forever (burned)

In case of PCL tokens, we have a “burn function” inside the smart contract so we can simply use this function to literally destroy forever a predefined amount of tokens, thus the total supply will decrease.


How does it matter in the context of Peculium?

A token is a virtual asset (digital asset) assigned to your address. The amount of tokens is your “balance”. These tokens can be created using a contract.

In case of Peculium, 20 billion tokens were created. Initially, all of these tokens were owned by the contract owner (These tokens could only be accessed via the private key of the owner).


Why should I care if the tokens are burned? the number of my tokens remains the same!

Let’s dive into the valuation of the cryptocurrencies. What causes the value of the cryptocurrencies to fluctuate?

The value is the simple function of demand and supply. When everyone wants the token (High demand), they compete with each other to buy it which drives the price higher!

But what if there is enough supply for everyone to buy the tokens? The high supply does not allow the competition to develop effectively, leading to lower price and possibly decrease in the price.

Peculium initially had the total supply of 20 Billion. If we burn half of the tokens, the total supply decreases. The demand-supply dynamic is then more likely to push the price higher!!

The lower the supply (more tokens burned) the higher is the chance that price will go higher.

Now let’s take an example of the Token generation event (TGE) of Peculium –


How many tokens from the ICO phase of the crowdsale will be burned?

During the token generation event, total 6000 Million ( 1B for private sale + 5B for ICO) tokens were allocated for sale. 836.8 Million tokens were successfully sold to raise 8.1 Million dollars at the base rate of 0.01 Euro cent each.

Therefore, at the end of the ICO, our investors are the owners of 836.8 Million tokens. Leftover 5163.2 Million tokens were unsold. There is no real purpose for these tokens to exist. Although Peculium still owns these tokens, there is no ground on which Peculium should keep these tokens. So, we have to burn/destroy these tokens.

We have planned to burn 1/5th of these tokens at the end of each month. Therefore, we will be burning 5,163.2 / 5 = 1,032.6 Million tokens for each end of the month starting March until July 31st, 2018.

 


How many tokens from the CCO phase of the crowdsale will be burned?

We allocated 55% of tokens (11 billion ) for the CCO phase of the crowdsale to raise funds from the bigger investors, professional investors and the institutions. We will sell them PCL at market price, with the price floor of 0.01 euro. We also have a hard cap of 100 Million for the crowdsale during the CCO phase.

There are 2 mechanisms of the tokens being burned-

Mechanism 1 for token burn during CCO:

Let’s imagine if the token price goes to 5 cents and we have 11 billion tokens to sell. If we sell all the tokens, we end up raising 550 Million dollars. That is way above our hard cap. We do not control the price in the market, but we can control how much we can sell. Therefore, to avoid going beyond 100M dollars, we will sell only 2 billion tokens [2 billion * 0.05 = 100 Million]. What to do with the rest of the 9 billion tokens? We will burn them!

Check out the graph below which shows what price of PCL in future, how many tokens are burned. The higher the price of PCL, more tokens will be burned

If the community holds the tokens, the price will go higher, and a huge chunk of tokens will be burned, leading to smaller total supply. Which should increase the price even further. This is very important because as the community can dictate the total supply just by not selling their tokens cheaper!!

Mechanism 2 for token burn during CCO:

Suppose, the price remains low so mechanism 1 does not take an effect. We have allocated 1B, 2B, 2B, 2B, and 4B tokens for 5 months of the CCO phase. Hypothetically if during the month of March with the allocation of 1B tokens, we sold only 300M tokens. The rest of the 700M tokens will be burned. Same is true for the months of April until July.

Although not selling tokens is not a great news for Peculium, but at the end of the CCO, the total supply should decrease significantly, leading to higher chance of price increase in the future.

This is exactly another reason for why the community should HOLD the tokens for at least until the end of the December when all of our products are supposed to come out. It is highly likely that the price will increase due to reduced supply and increased demand due to evidence and the working proof of AIEVE’s abilities to forecast the markets.


How many tokens from the Team stakes of the crowdsale will be burned?

Team stake is a bit complicated to understand. The total allocation for the Team stake was 3 billion tokens. Please check out the image below to understand the allocation of the tokens for different tasks.

The colors indicate the likelihood of tokens remaining at the end of the CCO.

Green indicates (No burning possible),

orange indicates (some proportion likely to be burned), and

Red indicates (Larger proportion likely to be burned).

Following is the quantity and the timings for the burning of these tokens.


Remember token burn is your friend !!

These are maximum possible values of burning. That means these tokens get burned only if these tokens are not used for their function.

For example,

if we end up selling 1 billion tokens during the month of July to the institutions, the reward will be 5% (50M tokens). The leftover allocated reward 150M  [200M – 50M = 150M] t will remain unused at the end of the CCO. We will burn those 150M tokens.

So all the reserved tokens for unpaid salaries, other expenses, discretionary spending will be burned at the end of July.

 

If all the tokens that “can be burned” are burned in reality the total supply of the coin decreases from

20 Billion (Total supply)

– 5.1632 Billion (ICO unsold tokens)

– 11 Billion (Potentially unsold tokens from CCO)

– 1.4 Billion  tokens (Potentially unused tokens from the team stake)

= 2.4368 Billion tokens only   (Remaining minimum supply) [Hypothetical minimum supply]

 

On the other end of the spectrum, if all the tokens get used or sold,

We are destined to have

20 Billion (Total supply)

– 5.1632 Billion (ICO unsold tokens)

= 14.8368 Billion tokens [Hypothetical maximum supply]

 

The real value of the total supply should remain in between 2.4368 – 14.8368 Billion tokens. At the end of each month, we will be updating our numbers to provide the narrower range for the future of the total supply at the end of the CCO.


So how many tokens will be burned at the end of March?

1.032B tokens from ICO

+ 1 B tokens from the CCO (allocation for March)

= 2.032 B tokens 

The transactions for burning tokens are here

https://etherscan.io/tx/0x2998cff2cbf3b70b6e0df11f06169d05080dba2dc27b5ea50e0f9033699f1d9c

https://etherscan.io/tx/0xf848423c764e2771f773ecf3a0ff1feaa7a5812d261a6757e8e16bdee6e779e3

Current balance after burning = 20B – 2.032 B tokens

https://etherscan.io/token/0x3618516f45cd3c913f81f9987af41077932bc40d


 

Take home message: You can help yourself by simply not selling cheap!! 

  • Lower supply increases “value” of the tokens! Therefore, token burning may prove to be your best friend
  • You can help us to burn more tokens by not selling PCL for cheap.
  • As the market price for PCL increases, the institutions will have to buy tokens at a higher price, and we will have to burn more tokens.! So higher price is a win-win for you !!
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