Token Burning Mechanism
Last updated
Last updated
PlayArts' token economics is designed to build a sustainable ecosystem, centering on three core elements: burn mechanism, staking system, and revenue distribution structure. This system aims to create an ecosystem where all participants can grow long-term, beyond simple token economics.
All economic activity revenue within the platform is concentrated in the Revenue Pool. This includes marketplace transaction fees, AI agent usage fees, node operation fees, and Paper credit sales. The funds collected in the Revenue Pool are distributed to the Burn Pool, Treasury Pool, and staking rewards according to predefined rules and market conditions.
Each pool operates independently but is organically connected to maintain overall ecosystem health. For example, when market conditions are unfavorable, allocation to the Burn Pool is increased to protect token value, and when the market is stable, staking rewards and Treasury accumulation are strengthened to secure long-term growth momentum.
The Revenue Pool acts as the heart of the PlayArts ecosystem. Beyond simply collecting revenue, it plays a central role in regulating the balance of the entire ecosystem. The operation of the Revenue Pool prioritizes transparency and predictability, with all distribution processes automated through smart contracts.
Fees generated in the marketplace are applied differentially according to the nature of the transaction:
Remix activities incur a 40% fee, which is fairly distributed between the original creator and the platform
Create Token transactions have only a 10% fee to encourage creative activities
General transactions incur a 2.5% fee, which is set considering industry standards
For AI agent usage fees:
Basic model usage: 60% fee to platform
Custom model usage: 40% fee to platform This differential structure is designed to encourage custom model development and enable more diverse AI services on the platform.
For node operators, a 15% fee is applied for providing computing resources. This is set as a minimal fee necessary for platform development while recognizing the contribution to network maintenance.
The distribution of funds concentrated in the Revenue Pool is designed considering both the ecosystem's long-term health and participants' benefits. Distribution is made in three directions: burning, staking rewards, and Treasury accumulation, with ratios flexibly adjusted according to market conditions and platform growth stages.
The burn mechanism is the most basic device for protecting token value. 30-80% of platform revenue is allocated for burning, with this ratio dynamically adjusted according to market conditions. When the market is bearish, the burn ratio is increased to defend token value, and when bullish, the ratio is lowered to invest more funds in other ecosystem development activities. Burning is executed regularly monthly, with burn rates reviewed and adjusted quarterly.
Staking rewards are a key reward mechanism for long-term holders. 15-40% of platform revenue is allocated for staking rewards, paid regularly on the first day of each month. Rewards are differentiated by staking tier and lock-up period, with higher rewards for those who hold more tokens for longer periods. This encourages long-term token holding and reduces price volatility.
Treasury accumulation aims to secure investment resources for the platform's long-term development. All remaining funds from the Revenue Pool move to Treasury, with a minimum of 5% always allocated to Treasury. Treasury funds are then managed by division into emergency reserves (30%), operational funds (30%), and ecosystem development funds (40%).
The Treasury Pool functions not just as a simple fund repository but as an active fund management center for the platform's strategic growth. Besides regular allocations from the Revenue Pool, Treasury receives funds from various sources including staking early withdrawal penalties, node operation penalties, and more. Additionally, Treasury holds supplementary income sources such as Treasury operation revenue, strategic investment returns, and partnership revenue.
Treasury Pool fund utilization is centered on three major areas. Each area has clear objectives and operational principles.
Ecosystem Development Funds:
Accounts for 40% of Treasury
Core resource for PlayArts' technological advancement and service expansion
Invested in AI model enhancement, platform infrastructure improvement, and new service development
Continuous R&D investment essential considering rapid AI technology advancement
Investment decisions undergo technical committee review and governance voting
Emergency Reserves:
Accounts for 30% of Treasury
Functions as a safety mechanism for unexpected market conditions or technical issues
Used for responding to extreme market volatility or resolving urgent system upgrade situations
Usage follows strict conditions and multi-signature procedures
Detailed reports mandatory after use, published to community
Operational Funds:
Accounts for 30% of Treasury
Used for platform's daily operations and growth activities
Includes marketing, community operations, partnership building, legal consultation
Special emphasis on nurturing creator communities and strategic partnerships in AI art ecosystem
Regular performance metrics and impact analysis reported to community
All Treasury fund operations are based on strict transparency and accountability. Monthly financial operation reports are published regularly, detailing expenditures and performance metrics for each area. For development fund usage in particular, quantitative indicators of ongoing project progress and performance are presented.
To enhance operational efficiency, Treasury operates a tiered approval system. While small expenditures can be executed swiftly based on operational team judgment, expenditures above certain thresholds must go through governance voting. This tiered approval system balances rapid decision-making with community participation.
PlayArts' burn mechanism is designed to preserve long-term token value and control inflation. It operates under three scenarios based on revenue scale and market conditions, each with clear execution criteria and expected effects.
For low revenue periods (under $100,000 monthly):
Implements aggressive burn policy with 80% of platform revenue allocated to burning
Actively defends token value in early market
Burns executed weekly to send positive market signals
Strategy aims to build long-term investor confidence
For medium revenue periods ($100,000-500,000 monthly):
Implements balanced burn policy with 60% of revenue allocated to burning
Remaining funds divided between staking rewards and ecosystem development
Burns executed bi-weekly with flexible ratio adjustments based on market conditions
Pursues dual objectives of token value preservation and ecosystem growth
For high revenue periods (over $500,000 monthly):
Implements balanced burn policy with 40% of revenue allocated to burning
More resources are invested in expanding the ecosystem and improving services
Burns executed monthly basis, minimizing the impact of large-scale burns on the market
The impact of the burn policy on the market is analyzed in short-term, medium-term, and long-term perspectives:
Short-term: Regular burning actions create direct upward pressure on token value
Medium-term: Predictable burn schedules stabilize market participant expectations
Long-term: Continuous burning increases token scarcity, naturally leading to value appreciation
