Announcing Turing Network TUR Burning Event & New Token Burning Mechanism

In the following article we will describe and explain the Turing Network Token Burning Event which will reduce the circulating supply of our Kusama parachain tokens (TUR) by around 32%. Additionally we will describe the new automatic token burning mechanism which will be coming to the Turing Network in the short future.

Introduction

OAK Network’s Kusama parachain Turing Network has come a long way since producing the network’s first block. With nearly 4 million blocks generated since its launch, a substantial portion of the Turing Network’s treasury funds now resides freely in hardware wallets owned by the OAK team. Furthermore, an annual inflation rate of 5% (please refer to Token Inflation) allocates 33% of its newly minted tokens to those wallets each year.

In light of the current state of the treasury, where a significant portion of allocated funds remains under utilized, and as part of our commitment to supporting our dedicated community, we have made the strategic decision to refine the network’s future tokenomics. This will be achieved through a token burning event, effectively reducing the circulating supply of TUR tokens by an impressive 32%. To break it down further, this equates to an 8% reduction per quarter. However, due to a slight delay in conducting the burn, we have opted to burn the cumulative amount of four quarters’ worth of tokens at the year’s end.

In addition to this immediate token burning event, we have also introduced an innovative auto-burn mechanism, which will take place on a regular cadence in the future. This mechanism will further contribute to the ongoing optimization of our network’s tokenomics.

Turing Network has issued 754M TUR total at the moment — source: turing.subscan.io

What is a Token Burn?

A token burn is the process of permanently removing cryptocurrency tokens from circulation which reduces the total supply of tokens available on the chain. Essentially a token burn destroys or deletes a portion of the total coins available to the network. The removal of a portion of tokens from circulation creates a deflationary effect and are common across many blockchain projects.

While the Turing Network is currently using our Gas & Fee Instant Burning Mechanism, our team at OAK Network wants to accelerate the amount of tokens being burned by holding a one-time token burning event and introducing a secondary auto-burn mechanism.

As part of the one-time event for token burning, our team will burn 32% of the total tokens from the wallets listed below. It’s important to note that no user wallets will be affected by the burn.

• Ecosystem Growth
• Strategic Partnerships
• Developer Incentives
• Crowdloan Rewards
• Initial Collator Fund
• Early Backers
• Future Parachain Reserve
• Community DAO

This will result in the burning and removal of approximately 240 million out of the 755 million TUR tokens from circulation. For a breakdown of the TUR token distribution check out TUR Distribution on our website or see the diagram below.

Changes of Token Supply Curve

TUR Circulating Supply After Burn

The figures above illustrate the circulating supply curve of the TUR token before and after the token burning event. Following the burn, a significant number of TUR tokens will be removed from circulation, resulting in a reduced supply curve. The majority of tokens burned can be categorized into three groups:

1. Initial Collator Fund: This portion of tokens was intended to support the initial set of 24 collators responsible for running the network. Since the minimum token requirement for collator candidates was set relatively low, not all tokens in this category were fully utilized. As a result, 75% of this portion will be burned, while the remaining 25% is reserved for future collator needs.
2. Crowdloan Rewards: The Crowdloan Rewards portion was meant to reward participants in the Kusama crowdloan. However, due to a decrease in the KSM requirement to win a crowdloan during the launch of the Turing Network, only a small portion of the originally planned tokens were used. Consequently, 75% of this portion will be burned.
3. Future Parachain Reserve: This Reserve was designated for purchasing KSM with TUR to fund parachain slots over time. However, no TUR tokens from this reserve were utilized, as our team has been purchasing KSM using stable coins. Additionally, with both Polkadot and Kusama moving towards a more flexible coretime runtime model in the future, the demand for bidding on parachain slots is expected to decrease. As a result, we have decided to burn half of this reserve as well.

All other categories were burned by 10%, resulting in a total burn of 240M TUR, which accounts for 31.8% of the current token supply.

Changes of Category

The two pie charts below provide a visual representation of the changes in the allocation of treasury funds following the token burning event, highlighting the adjustments made to support the growth and development of the Turing Network.

Distribution of Treasury Funds After Burn

How will the Token Burn take place?

Similar to the Treasury of both Polkadot and Kusama, the token burn will take place using the treasury pallet of Turing Network. To do this, the mentioned tokens need to be transferred to Turing Network’s treasury pallet wallet, 68d8VZxMCLRDPBCCT67VEBVAamG1uozgWj3bHxCTv6iZcbYN, before they can be burned.

First, we will manually transfer the mentioned amount to the treasury pallet wallet. Then, we will start a governance proposal to change the burn percentage from the current 0% to 100% and set its cadence to 7 days. This means that in 7 days, all the transferred tokens will be burned by the treasury pallet.

Please note that the remaining ecosystem funds, such as developer incentives and ecosystem growth categories, will still provide funds for the growth of the Network, as specified on the Turing Token Page. If you are a developer or project interested in building automation functionality into your dApp, please check out the available grants on our website at the link below.

Future Solution — Auto-Burn Feature

Later on, we will introduce a new auto-burn mechanism to the Turing Networking. This mechanism will be implemented through our unique Time Automation feature, allowing us to automate the token transfer process mentioned above on a quarterly basis.

The auto-burn mechanism is designed to automatically reduce a portion of TUR tokens every quarter. The reduction will be based on the transaction volume recorded on the blockchain over the previous 90 days. The formula used for this calculation is outlined below.

Where,

• p represents the percentage of TUR token to be burned.
• Phigh and Plow are the upper and lower boundaries of p.
• x indicates the total on-chain transaction volume over the last 90 days.
• k is a manually determined factor that influences the curve of the burn rate chart.

The specific values for these variables will be established prior to the activation of the auto-burn feature. However, you can refer to the diagram below for an illustrative example, where:

• The y-axis represents the burn ratio (e.g., 0.06 equates to 6% of the treasury).
• The x-axis shows the past 90-day transaction volume (e.g., 5*10⁶ is 5 million transactions).
• The k-value is set at 1,000,000.
• P_high and P_low are set at 0.06 (6%) and 0.01 (1%), respectively.

Example graph of TUR burning ratio based on transaction volume

In this example, a near-zero transaction volume results in a 6% burn ratio, implying that 6% of the treasury’s tokens are burned at the quarter’s end. Conversely, with a transaction volume of 6 million, the burn rate drops to 1.8%.

The primary objective of this mechanism is to counterbalance the annual inflation of the network’s token. By aligning the burn rate with on-chain activity, we aim to regulate the token supply, ensuring it doesn’t deflate too rapidly, thus maintaining a healthy economic ecosystem within the Turing Network.

Other Possible Solutions

As OAK Network and the Turing Network continue to grow our team is committed to implementing and trying out new features which benefit the health of our blockchains and our community. This includes different token burning mechanisms such as token buy-back programs, which is something our team is exploring for the future.

About Ava Protocol

Ava Protocol is an intent-based Eigenlayer AVS that seamlessly enables private autonomous transactions for numerous use cases, such as DeFi, NFTs, and games. We're enhancing decentralized applications with scheduled and recurring payments, stop-loss orders, streaming rewards, and more. Ava Protocol’s event-driven execution model triggers cross-chain transactions based on signals such as time, price changes, and smart contract updates. Developers can easily schedule and automate functions across different blockchains, including Ethereum, ensuring efficient and reliable execution without compromising privacy.

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