Burrow’s Token Buyback
Deflating an asset to bring back market stability
First, what is a token buyback?
The cryptocurrency industry is often associated with the notion of inflation, signifying a decline in value. In the current landscape, the cryptocurrency markets experience higher price volatility compared to traditional markets, leading to a diminished trust in digital assets due to the uncharted territories of DeFi and cryptocurrencies.
As a result, issuers of said assets face the imperative of crafting a transparent, functional, logical, and profitable value proposition that seamlessly operates within the system. This approach is crucial for attracting investors and showcasing the tangible benefits of the asset linked to the project.
Hence, in the crypto space, the buyback concept involves a project or company utilizing its financial resources to repurchase some of its tokens or shares from holders at the prevailing market price. Tokens can be bought in the market by the development team, reducing the available supply and supporting the token price, reigniting price stability and usability of the token.
Buyback of BRRR: Funds Source
At times, in the product roadmap of a project, a new strategy is needed to bring the project and its token back to life, so to speak. Even in the case of token deflation.
Cryptocurrencies with deflationary characteristics encourage holding and discourage spending, resulting in heightened scarcity and greater adoption of the currency as a reliable store of value.
Moreover, deflationary cryptocurrencies serve as a hedge against inflation, hyperinflation, and stagflation, effectively preserving their value over time.
The buyback strategy of the BRRR token is for this exact purpose.
The buyback funds for BRRR Token will come from the interest earnings of Burrow stablecoin supply, Reserve Pool profits, and Protocol Fees. Burrow will allocate 20%-60% of these earnings for the buyback of BRRR Token.
Buyback Three-Stage Plan
Stage One
- Extract 60% of the earnings from Burrow stablecoins as buyback funds.
- Execute a buyback every two hours.
Stage Two
- Increase the interval between buybacks, up to a maximum of one day.
Stage Three
- Decrease the amount of buyback funds to a minimum of 20% of earnings and will be sustained to this level hereafter
- Increase the interval between buybacks, up to a maximum of one day.
The three-stage plan has been set this way to support a successful progression of the token buyback in a gradual way as many steps are manual to this day.
The plan is to slowly move the buybacks to a new burrow contract in order to evenly distribute assets which will trigger the buybacks at regular intervals in an automated manner.
Disposition of BRRR Token
The BRRR tokens bought back will be allocated in three parts:
- 20% to be burned.
- 50% to be locked in the contract for two years, acting as company assets, stabilizing the asset’s volatility.
- 30% to be reserved for Ref and Burrow rewards, increasing usability.
These allocation ratios are controlled by the DAO and are adjustable.
From all that has been mentioned above, this buyback strategy has the purpose of stabilizing BRRR’s asset, with 50% locked in the contract for at least two years, the stability expected for market expansion permits to bring back trust to users and investors.
A 30% allocation of $BRRR to Ref and Burrow supports the continued narrative of the close relationship between the two projects, hand in hand, strengthening the offering of NEAR DeFi with the users’ best interest at the forefront of the product pipeline.
From the common practice of crypto projects to freshen up their tokenomics, it permits a product strategy to take a new course, and one the team is excited to announce: chain abstraction and multichain lending.
You’ve heard that right, keep your ears and eyes out for Q1 2024!
