Burn Koin is a maximum yield pool, which means that it focuses on giving depositors the opportunity to earn as much reward as possible.
To achieve this, BurnKoin does two main things:
- Routine re-burns ensure VHP levels are as high as possible.
- By burning on a regular basis, a depositor’s balance automatically compounds and further increase yields as opposed to no re-burning or only re-burning to maintain a steady VHP level.
- pVHP is issued to the depositor which can be used as collateral for DeFi opportunities.
The trade off is that $KOIN liquidity is reduced in an effort to maximize $VHP levels and increase the chances of producing blocks.
Lets take a look at a a few examples on how a miner would manage their $KOIN and $VHP assuming that the network is operating at ideal conditions of 50% KOIN and 50% VHP. The network yield is 2% for no re-burning and 4% for re-burning to maintain VHP levels. For auto compounding, depending on how often you auto-compound, the yields are higher still.
Joe has 10,000 KOIN and decides to solo mine by burning 9,000 $KOIN. He now has 9,000 $VHP and does not re-burn at all. His yield is 2% and at the end of the year, he earned approximately 180 $KOIN and now has 10,180 $KOIN total. He has no $VHP because all of it has been converted back to $KOIN over the course of 1 year.
Joe has 10,000 $KOIN and decides to solo mine by burning 9,000 $KOIN. He now has 9,000 $VHP and re-burns daily to keep his $VHP levels at 9,000. His yield is 4% and at the end of the year, he earned approximately 360 $KOIN. He now has 9,000 $VHP and 1,360 $KOIN.
Joe has 10,000 $KOIN and decides to join BurnKoin and deposits 9,000 $KOIN. BurnKoin automatically burns and converts it to 9000 $VHP. BurnKoin operates at maximum yield with automatic compounding and a 5% fee on profits (principal balance is never assessed any fees). Joe earns a yield of ~3.9% and at the end of the year, Joe has earned 351 $VHP. Since Joe never withdrew $KOIN, he has 1,000 $KOIN and 9,351 $VHP. Joe also has pVHP and can use that as collateral on DeFi opportunities, further increasing his total yield.
To get $KOIN, Joe withdraws 351 $KOIN from the BurnKoin $KOIN pool before the pool re-burns. Alternatively, Joe can also withdraw his $VHP at anytime and initiate a trade on KoinDX for VHP/KOIN. Joe will get more liquidity on KoinDX, but he’ll end up with trade fees and slippage.
To get a sense of how much you should expect to earn, I’ve provided two tables for you to use.
Table 1 Daily Rewards as a Solo Miner
- Liquid $KOIN = how much KOIN you have in your wallet
- $VHP (90%) = assumes 90% of your Liquid $KOIN is being burned.
- $KOIN Yield (4% + Re-burn) = how much $KOIN you should expect to earn after 365 days w/Re-burning
- $KOIN Yield (2% + No Re-burn) = how much $KOIN you should expect to earn after 365 days without re-burning.
- Daily Available (solo mining) = how much $KOIN you roughly expect to earn on a daily basis
How to Read this table:
If you have 1,000 $KOIN and burn 90% of it, you should expect to earn 36 $KOIN if you reburn, and you should expect about 0.098630136 $KOIN each day from mining activity.
You can scale this table as well to determine how much daily $KOIN you should expect to earn as a solo miner. Simply take the amount in your wallet, divide it by 1,000 and multiply the result by the daily KOIN reward (solo mining).
By comparison, BurnKOIN will always be able to generate your equivalent daily reward since we’re holding your $VHP. Assuming not all burners will want to withdraw all at once, the BurnKOIN $KOIN pool to likely be greater than what you would get from solo mining. IN the next table below, we show how much $KOIN would theoretically be in the BurnKoin $KOIN pool on a daily basis with a few assumptions.
Table 2 Daily Rewards Available on BurnKoin
- KOIN/VHP Ratio = The global network rate of burn (vhp.totalsupply+koin.totalsupply)
- BurnKoin Total VHP = the value of total VHP producing by burnkoin ( you can check this value here: https://koinosblocks.com/address/1NsQbH5AhQXgtSNg1ejpFqTi2hmCWz1eQS)
- Daily KOIN Reward: How much $KOIN produced by BurnKoin with 1,000,000 VHP.
How to Read this Table
If the KOIN/VHP global burn rates are operating at 60% KOIN and 40% VHP, then for every 1,000,000 $VHP that users have deposited into BurnKoin, 136.9863 $KOIN is available for withdraw by any depositor.
You can scale this table as well. Simply divide the total amount of VHP in BurnKoin’s wallet (found on Koinosblocks.com or on burnkoin.com) and multiply this by the daily KOIN reward for the correct global condition. Be aware that this assumes 100,000,000 virtual supply. You can scale this number down as well to match current conditions too.
Lastly, as of November 26, BurnKoin has about 10,000 $KOIN, of which 2,685 $KOIN is freely available for any depositor to withdraw from. If someone were yielding 2,685 $KOIN a day, then there would be more available for them to withdraw then they could just producing alone. Keep in mind that if you withdraw from the pool, you are also lowering your total yield!