Proof of Burn (PoB) Mechanism

1. What is Proof of Burn (PoB)?

   • Proof of Burn (PoB) is a mechanism used by 5D to manage token supply, ensuring long-term value for both 5DU (utility token) and 5DG (governance token). PoB works by permanently removing tokens from circulation, reducing inflation and enhancing token scarcity.

2. Purpose of PoB in the 5D Ecosystem:

   • Supply Control: By regularly burning tokens, the platform prevents an oversupply of 5DU and 5DG, stabilizing token value over time.

   • Incentive for Long-term Holding: The burn mechanism rewards long-term token holders by making their holdings more valuable as the total supply decreases.

   • Economic Balance: PoB ensures that as the platform grows, token value remains balanced with user activity, preventing deflation or runaway inflation.

3. How PoB Works in 5D:

   • Token Burn Events: After certain milestones or staking rewards, a portion of both 5DU and 5DG tokens is burned. These burn events are predefined in smart contracts to ensure transparency and regularity.

   • Staking Burn: When users stake 5DG tokens for voting or earning rewards, a small percentage of the rewards pool may be burned to maintain supply balance.

   • Marketplace Burn: A portion of the transaction fees generated in the 5D marketplace will be allocated to a burn pool, effectively reducing the total supply of 5DU over time.

4. Impact on Token Value:

   • As more tokens are burned, the remaining supply becomes more scarce, which can drive up the value of the tokens still in circulation. This aligns with the platform’s goal to maintain token value stability while encouraging active participation in staking and the marketplace.