🔥Burn & Supply Management
Deflation is not a slogan in SquareStrategy — it’s a mathematical process embedded in the ERC-1001 protocol. Every cycle removes NFTs permanently from circulation, creating verifiable scarcity and strengthening the remaining supply.
⚙️ 1 The Burn Flow
At each trade, 2 % of royalties are routed into the Burn Flow. When this balance reaches its threshold, the Burn Module executes:
Buy Strategy NFTs from open markets at market price.
Send them to the Null Address (0x00…dead) for permanent removal.
Emit on-chain events so burns are publicly auditable.
Figure 3.4 — Burn Execution Flow Each burn permanently removes Strategy NFTs, proving deflation on-chain.
📉 2 Supply Evolution Visual
A simplified supply-over-time curve you can later recreate in Figma or GitBook’s chart block:
Supply
│\
│ \
│ \
│ \
│ \
│ \__________
│__________________________ Time
↑
Burn Events (buy + send to null)The line bends gently downward — a living visual of scarcity.
🧮 3 Mathematical Model
Let:
S₀= initial Strategy supplyBₜ= burns executed up to time t Then:
St=S0−BtS_t = S_0 - B_tSt=S0−Bt
The burn frequency f depends on market volume V:
f∝Vf \propto Vf∝V
The greater the volume, the faster deflation accelerates — a self-balancing feedback loop between liquidity and scarcity.
🔍 4 On-Chain Verification
Every burn emits:
event BurnEvent(
address indexed collection,
uint256 tokenId,
uint256 price,
uint256 timestamp
);Explorers and dashboards can track:
Total supply remaining
Cumulative burn value (ETH spent on buybacks)
Average burn frequency
Transparency turns scarcity into data — visible, verifiable, unforgeable.
🧠 5 Behavioral Impact
Holders: see their asset pool shrinking → confidence rises.
Buyers: anticipate scarcity → secondary demand strengthens.
Investors: quantify deflation → easier valuation models.
Each burn is a signal of health — not a manual gesture but a systemic pulse.
🔒 6 Safety Mechanisms
Rate Limiter: prevents over-burn if volume spikes.
Pausable Emergency Switch: temporary halt during anomalies or audit.
Upgrade-Safe Storage: ensures supply data persists through proxy updates.
No single actor can initiate unscheduled burns; only protocol-driven events trigger them.
🧩 7 Summary
2 % of each trade funds deflation.
Burns occur automatically when conditions are met.
All actions are logged and auditable.
Scarcity is mathematical, not marketing.
SquareStrategy’s ERC-1001 standard turns royalties into a self-verifying deflation engine — a market that not only moves but reduces its own weight with every motion.
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