Introduction
This article describes a proposed acceleration of the buy-back-and-burn (BBB) mechanism using Market Cap Buy-back Tiers for Branded Coins (BCOs).
Introducing Market Cap Buy-back Tiers
The Market Cap Buy-back Tiers system is designed to accelerate the burn rate based on the market cap of each BCO. It’s important to clarify that this mechanism doesn’t increase the overall 2.5% allocation of each BCO to BBB but simply moves quicker, accelerating the benefit of the burn process over a shorter period of time. The market cap is calculated as the average quarterly BCO token price over that specific quarter times the total supply. The Buy-back multiplier might change from quarter to quarter depending on the market cap tier of that specific BCO for that quarter. The acceleration is based on the following tiers:
| BCO Market Cap Tier | Buy-back Multiplier | Quarterly BCO BBB Supply Allocation |
| $0 – $50M | 1x | 0.1563% |
| $50M – $100M | 1.25x | 0.1953% |
| $100M – $200M | 1.5x | 0.2344% |
| $200M – $500M | 1.75x | 0.2734% |
| >$500M | 2x | 0.3125% |
How the Market Cap Buy-back Tiers Work
The tier system varies the burn rate according to the BCO’s market cap. Here’s how it functions in practice:
- Initial Allocation: Each BCO allocates up to 2.5% of its total supply for the BBB mechanism.
- Quarterly Buyback and Burn: This allocation is distributed over 16 quarterly events for each BCO, equating to 0.15625% of its supply per quarter.
- Accelerated Rates: Depending on the market cap tier of the BCO, the base rate is multiplied to accelerate the burn process:
- Tier 1: $0 – $50M: 1x rate, maintaining the base rate.
- Tier 2: $50M – $100M: 1.25x rate, increasing the supply allocation to 0.1953125% per quarter.
- Tier 3: $100M – $200M: 1.5x rate, increasing the supply allocation to 0.234375% per quarter.
- Tier 4: $200M – $500M: 1.75x rate, increasing the supply allocation to 0.2734375% per quarter.
- Tier 5: >$500M: 2x rate, increasing the supply allocation to 0.3125% per quarter.
Understanding the BBB Mechanism
The BBB mechanism operates as follows:
- Allocation for Buybacks: Each Branded Coin (BCO) launched on the XDB CHAIN platform allocates up to 2.5% of its total supply for the regular buyback and burning of XDB coins.
- Quarterly Execution: This buyback and burn process is typically organized over 16 quarterly events over a life-cycle of 4 years for each BCO, if no acceleration takes place. First Burn event (Burn #1) is scheduled on July 1st, 2024 2pm UTC
- Transparency and Auditability: Each BCO burn event is made transparent to the XDB CHAIN community with full disclosure of on-chain data, ensuring complete transparency and auditability for the community.
- Cumulative effect: The more BCOs launched, the more XDB coins are regularly bought back and permanently removed from circulation.
Conclusion
The Market Cap Buy-back Tiers describe a proposed variation of the BBB allocation schedule. Every executed burn event is published with its on-chain transaction reference.
