Within the CTPSB project, there is a small under project that burns CTPSB tokens on a weekly basis. It works as follows:
The account @ctpsb.pal is delegating out it's Hive Power to the @liotes.voter and for that gets daily dividends in the form of LEN tokens. At the end of the week these LEN tokens are used to purchase CTPSB tokens that will be burnt.
This burning mechanism has a weekly income that is used directly to burn tokens. However, there is a weakness to it because the income is kind of unchanging in terms of Hive value but the CTPSB token is going up in value over time. This means that the more we go forward, the less CTPSB tokens will be burnt every week. A fresh income source would be needed to constantly burn a similar amount of CTPSB tokens.
Making it scalable
For a couple of days, I've tried to come up with a solution to make this burning scalable. The idea is that over time, the amount of CTPSB burnt every week will remain constant or even increase, even if the price of CTPSB goes up. Unfortunately, there is no income source that we could tap into to make this true but I came up with a solution all the same.
Why burning tokens is important?
The value of CTPSB is defined by the Hive Power on the account @ctpsb divided by the number of tokens in circulation. So when we reduce the number of tokens, we actually increase the value of CTPSB and the return for investors. If we manage to increase the burn rate, the APR of CTPSB will actually climb faster than it would by adding additional Hive Power.
The solution
The solution that I came up with is the following. The income generated with the delegation of Hive Power will be used not to buy CTPSB tokens anymore. Instead, we will use this money to build a liquidity position in the pool LEN:LENM. When doing that, we will get a return of about 20 – 30% APR that is paid out partially in CTPSB tokens. So we will simply burn our CTPSB dividends from this liquidity position. The other tokens that we will get, will be used to increase this liquidity position over time.
Basically, this position will increase on a weekly basis and hopefully it will grow faster than the overall liquidity in this pool. This means that we would get an increasing reward and therefore we would be able to burn more and more CTPSB tokens.
The transition
At the moment, we managed to burn between 0.2 and 0.3 CTPSB per week. For the next weeks, we will burn a steady 0.3 per week from our token stock. During this time, we will use the income from delegation to build the liquidity position in the pool. Once the return from this liquidity position is big enough, we will burn the income from the liquidity position.
It will probably take a couple of months until we are at a similar burn level but once we reach it, little by little the burning rate might increase.
The positive side effect
The more CTPSB tokens we burn, the higher the APR for CTPSB will be. Since the liquidity pool, where we will build our position, pays its dividends in the form of CTPSB, by pushing the APR of CTPSB, we will actually increase the return of this liquidity pool and thereby also our return. The effect will be rather small but still, it's a kind of win-win.
Learn more about the CTP Swarm Booster:
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I think it's a good idea.
!HH
Thanks for the feed-back!
thanks for the update.
Burning the tokens will surely help increase the price.
!ALIVE
@ctpsb! You Are Alive so I just staked 0.1 $ALIVE to your account on behalf of @ imfarhad. (1/30)
The tip has been paid for by the We Are Alive Tribe through the earnings on @alive.chat, feel free to swing by our daily chat any time you want, plus you can win Hive Power (2x 50 HP) and Alive Power (2x 500 AP) delegations (4 weeks), and Ecency Points (4x 50 EP), in our chat every day.
Just from a mathematical point it will :-)
Seems like a good plan to burn the CTPSB rewards from the LEN:LENM position and use the rest of the tokens to increase the position. It will take a while to build up the position though, from what I see, but it's fine for me.
I agree that it will take time to have some tangible results but I will try to allocate some funds to this liq position from different places to kickstart it.
Kickstarting it with some initial funding would probably be a great idea.
I managed to bring quite a lot of funding to it to get started and I will add more in the coming weeks.
Well done!
I haven't looked at these rankings in probably a very long time. I had no idea I was in the Top 10, although I knew I had over 3% of the pool and that probably meant I was pretty high.
Good plan, burning is always good for a token!
!DHEDGE
!ALIVE
!SLOTH
!hiqvote
@ctpsb! You Are Alive so I just staked 0.1 $ALIVE to your account on behalf of @ libertycrypto27. (4/10)
The tip has been paid for by the We Are Alive Tribe through the earnings on @alive.chat, feel free to swing by our daily chat any time you want, plus you can win Hive Power (2x 50 HP) and Alive Power (2x 500 AP) delegations (4 weeks), and Ecency Points (4x 50 EP), in our chat every day.
Especially for CTPSB, since every token burnt mathematically increases the value of the token.
It takes time but I do think its a solid strategy. CTPSB tokens are being burned slowly. Are new CTPSB tokens being minted or are you just selling some of your existing stock on the market?
The tokens that are sold come from a stock that is owned by the market maker. Only new tokens are minted if the market maker runs out of stock.
Wow, I guess it's not that bad an idea. Let's keep burning
I hope so :-)
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