Burn-to-Earn
Last updated
Last updated
Burn to Earn incentivizes users to essentially ‘destroy’ a portion of their esrATP or esATG tokens in exchange for increased MATIC staking rewards, reducing total supply. The more tokens a user burns, the more Multiplier Points he or she will earn, thus increasing MATIC staking yield in fixed non-decaying increments. This mechanism both encourages users to lock up their tokens in the staking contract whilst reducing supply, leading to increased scarcity and increased value-generation without inflating the native token.
Through Burn-to-Earn, holders who burn rATP or ATG automatically earn 18% of their burned supply each year, distributed in esrATP and esATG. Notably, this is the only mechanism in all of Automatic’s smart contracts which can marginally increase supply – this process would take at least 5 years.
rATP: 18% per annum
ATG: 18% per annum
Note: Multiplier Points are pre-set to 50% APR
Automatic’s Burn to Earn mechanism enables any rATP or ATG holder to burn their tokens, which are set with specific percentages that users must burn to earn added Multiplier Points. These thresholds are as follows:
Each token burned triples the Multiplier Points attributed to that token; thus 1 token which normally earns Multiplier Points at 50% APR then instead yields Multiplier Points at 150% APR.
Overall, the Burn to Earn mechanism is a powerful incentive for users to stake their tokens for longer periods, increasing the implied value of both rATP and ATG by acting as a suppression force to maintain circulating supply.
