Burning to Bring Value 🔥 🔥 🔥

The REQ Token

So you may be wondering how the REQ token works into the ecosystem. Well, it gets burned, and that is the purpose it serves. This is not your average useful token play. Nonetheless, this token serves a purpose and brings value to the token holders as well as the Request Network.

The process of burning REQ on

The BURN

So how does the burn go down exactly? It happens in a couple of steps, which I am going to outline in the following example:

  1. This invoice is transacted on the blockchain, which incurs the standard gas price, both ways. In addition to the gas fee, there is a network usage fee (paid by Elise in ETH), which can be anywhere from 0.1–0.005%, but never more than $1.50. The network fee in ETH is stored in a Burner smart contract. You can see the code for the Burner smart contract here. So to sum up what has happened so far; an invoice has been sent/paid, and the network fee has been collected and stored in a Burner smart contract.
  2. Anyone can go to reqtokenburn.com and initiate a burn. It will cost you a little bit of ETH, but it is cool to know that anyone can do this. I made a short video demonstrating how to do this. The Request Network Foundation can also call the burning contract at random times.
  3. When the Burner contract is called, it will swap the full amount of stored ETH for REQ. This happens by a market order being initiated on Kyber Network. So yes, this is all automated. You, me or the Foundation clicks on the “R” on reqtokenburn.com, you pay a small fee, the contract is initiated, and the market order is placed to purchase REQ for the full amount of ETH in the contract.
  4. The REQ is now stored in the burner contract and the REQ is burned. Below is a diagram showing how all of this takes place.
Diagram Illustrating the above 1–5 steps
  1. Aren’t they going to run out of tokens since you are burning them? No! haha. Put your Satoshi Nakamoto hat on, and think like you are in blockchain/crypto land…. You can always add zeros to the decimal place….infinitely. Yeh, that’s a scary thought, but it is true. Right now the REQ token has 18 decimals in it. The team stated that if they need more, they can do a hard fork.

Wait, I still don’t get it

Ok, I hear you, I’ll pick the mic back up. Still not getting the real value of a decentralized network for payment requests burning their own tokens. I mean, why don’t we just use the REQ tokens for the transactions and not burn anything. Good question. Using ETH is not a bad plan though. Why? Because it is the second largest cryptoasset by market volume, its network is (usually) pretty fast, and anyone that is involved in crypto knows how to buy it and move it around. ETH is crypto 101. So Request Network saw the value in using an already established cryptoasset for it’s main medium of exchange. Let’s take value a step further and talk about incentives.

Incentives Bringing Value

If you are holding the REQ token, it is safe to say that you believe in the project. There is also potential monetary benefit. If there was not monetary benefit would you hold it? Maybe you would because you believe in the community and you want to be a part of something bigger than yourself. Or because you believe the project is helping others so there is an altruistic drive. These are all good reasons. But let’s think about mass adoption of a network that is built to provide multiple financial services and gearing up to take on some of the largest corporations in the world. Would altruistic reasoning or a great community take down multiple 900lb gorillas in an industry? Probably not.

The Three Options

Now that we have discussed incentives and what that means to a project and community, lets compare.

  1. The open source free model. A project is built out of the desire to help others and provide a free service. This is a great idea, but this does not really put food on the tables for the founding team. It also has the potential to fail do to the lack of resources and the chances of scaling are slim, but some do survive.
  2. The token economy that builds a functioning product that delivers a quality service that can scale. The monetary benefactors of this service are the founding team as well as you and me (if we hold REQ). In this model, the wealth is distributed to those that are holding REQ, while giving us a vested interest and incentivizing us to help with scaling the project.

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adamgdev

adamgdev

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Data Driven w/ strong Fundamentals, crypto evangelist, never ending learner, music and art nerd. I also play good tunes for cool people. twitter:@adamgdev