🧩Market Flow & Fee Logic
At the heart of ERC-1001 lies a simple constant:
10 % of every trade re-enters the ecosystem as productive capital.
8 % fuels the Accumulation Pool, providing perpetual liquidity.
2 % powers the Burn Flow, guaranteeing deflation.
Over time, this creates a steady-state economy — volume produces liquidity, liquidity produces scarcity, and scarcity invites new volume.
⚙️ 1 Value Flow Diagram
Figure 4.1 — Fee Economics Flow The same liquidity that fuels buys also funds deflation, forming a closed feedback economy.
📊 2 Equilibrium Mechanics
SquareStrategy’s design targets a neutral equilibrium, where opposing forces balance automatically:
Market Activity ↑
Fees ↑ → Liquidity ↑
Burns ↑ → Supply ↓
Floor stabilization
Market Activity ↓
Fees ↓ → Liquidity ↓
Accumulation Pause
Capital preserved
Supply ↓
Scarcity ↑ → Demand ↑
Floor Buys
Continuous motion
The protocol never over-corrects — it adjusts organically to real market volume.
💠 3 Liquidity vs Scarcity Chart
Scarcity ↑
│ ●●●●●●●●●●●●●
│ ●● ●●
│ ●● ●●
│ ●● ●●
│●_______________________________ → Liquidity ↑Figure 4.2 — Dynamic Balance At the system’s center lies the equilibrium zone where liquidity and scarcity reinforce each other.
Too much liquidity → inflation. Too much burn → illiquidity. SquareStrategy’s 8 / 2 ratio keeps the curve in the sweet spot.
🧠 4 Economic Behavior in Practice
High Volume Phase → frequent executions + accelerated burns.
Moderate Phase → slower cycles, steady equilibrium.
Low Volume Phase → accumulation dominates until conditions reignite.
This “breathing” pattern ensures the system never collapses or overheats — it simply adapts.
🧮 5 Mathematical Stability Model
Let
L(t)= liquidity in pool,B(t)= burn rate,V(t)= market volume.
Then the system follows:
dLdt=0.08 V(t)−α L(t)\frac{dL}{dt} = 0.08\,V(t) - \alpha\,L(t)dtdL=0.08V(t)−αL(t) dBdt=0.02 V(t)\frac{dB}{dt} = 0.02\,V(t)dtdB=0.02V(t)
where α represents execution frequency. Over time, L and B converge toward equilibrium — ensuring the protocol neither drains nor over-accumulates.
🌍 6 Sustainability Perspective
Unlike token ecosystems that inflate to survive, SquareStrategy achieves sustainability through motion:
No new supply = no hidden debt.
Each trade strengthens the system instead of diluting it.
The loop requires only activity, not injection.
It’s not a yield farm — it’s a living, breathing economy.
🧩 7 Summary
10 % royalty = perpetual fuel.
8 / 2 split maintains economic balance.
Liquidity and scarcity form a self-regulating loop.
The system adapts organically to market volume.
SquareStrategy proves that NFT economies can sustain themselves — no emissions, no tokens, no external liquidity, just market physics turned inward.
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