What’s Up With the Burn?

Anyone hanging out in Centricland for more than a minute has heard references to The Burn. Posts on our Twitter and Telegram celebrate token burn milestones with zeal. Investors geek out over the burn like fans cheering for their favorite sports team.

Perhaps the concept of burning tokens strikes you as counterintuitive? Something akin to setting perfectly viable dollar bills on fire. (Yo, put down that Zippo and step away from the crypto, bro!)

We’ve come across community members scratching their heads over questions like the following:

Which tokens are burned?
How are tokens burned?
Will someone burn my tokens?
What difference does the burn make?
Why is everyone so darn excited about the burn?

Why three episodes? Because it’s a trilogy! And trilogies are epic. (And “episodes” sounds way more epic than posts, right?)

C’mon, ever heard of Lord of the Rings? Star Wars? (Everyone knows only the original three of that franchise count). Heck, even Back to the Future?

Film references aside, we also decided to break it up because there’s a lot to take in. Learning experts like Dr. Barbara Oakely recommend a “chunking” approach, rather than trying to learn something new in one fell swoop.

If it’s starting to sound like a lot of work, be assured, we’ll have fun along the way. No math, engineering, or accounting degrees required! 

We’ll explain everything simply on this journey.

We’ll use examples with apples and bananas.

We’ll introduce you to highly-trained robots who want to take over the planet.

You’ll meet a maniacal, rule-obsessed bean counter named Peg, and learn why we keep her around (despite her off-putting temperament).

If that’s not all, you’ll meet pampered cryptocurrency tokens convinced they’ve experienced the best life has to offer. That is…until they meet their eternal reward, after a life of faithful service.

Once you’ve read and digested this Epic Trilogy, it will be like you’ve learned the secret handshake of the Centric community. (No hazing ritual required.)

If you’re ready to get warmed up to the power of the burn, we invite you to shake off the doldrums and step into the Hero’s Journey. Fate is calling. Read on, because there’s no time to waste.

It’s time to wake up and smell the burn!

Disclaimer

If you’re looking for super-technical tokenomics, you might be disappointed. But if you’d like to gain a better understanding of how Centric works and don’t mind having a little fun along the way, you’re in the right place!

But What the Heck is a Smart Contract?

<<Jargon Alert!>> <<Jargon Alert!>>

“Hey, stop right there! You claimed this post was going to explain everything in simple terms.

You’re already dropping your fancy pants crypto lingo!

What is this ‘smart contract’ of which you speak?”

If “smart contract” is a new term for you, here’s a simple explanation (as promised!).

Some might say it’s an “over-simplification.”

Fair enough, we think it’s close enough to be helpful. So let’s proceed, shall we?

A smart contract is a computer program designed to perform a particular function, or set of functions. It operates with the basic logic of “If X, Then Y.”

Think for a moment of a real-world contract between two parties. A contract outlines an agreement. E.g., I’m going to pay you X amount of money, and in exchange, you’re going to give me Y. Perhaps Y is your car, your house, or the assets of your business.

A smart-contract self-executes. Once it’s been triggered, it enforces the terms of the agreement. If the contract has been properly built (without bugs, loopholes, or other security vulnerabilities), there’s no chance of the other party taking the money and running.

Perhaps you’ve heard the term “trustless” used in explaining blockchain technology? Smart contracts demonstrate an aspect of the “trustless” nature of blockchain. It makes trust between the parties unnecessary, because the contract automates and enforces the terms. No trust required.

Let’s look at another simple example. Let’s say there’s a smart contract designed to exchange apples and bananas. Imagine the contract specifies a 10:1 relationship between bananas and apples. The contract might specify some parameters like:

One apple can be exchanged for ten bananas.

Ten bananas can be exchanged for one apple.

Give the contract an apple, and boom, here are your bananas. Or present your bananas, and, thank you, here’s your apple. Smart, right?

(We’re not actually aware of any smart contracts designed to trade apples and bananas, but if you find one, let us know. We’d totally trade an apple for ten bananas. #potassiummaximalist).

Meet Mr. SmartBot

If you’re the more imaginative type, think of a smart contract like a robot trained to execute a single task. (It could be multiple tasks, but remember, we’re keeping it simple today). Let’s call him Mr. SmartBot.

Can you picture our robotic friend standing behind a little window, like a bank teller? Mr. SmartBot doesn’t care who approaches the window. This trusty little fella is going to execute exactly as he was trained. Go ahead, just try to slip him a few extra bucks for a bribe. Or point a gun at his head and threaten to reduce him to a pile of circuit boards. Your trickery won’t deceive Mr. SmartBot, nor even tempt him to go rogue. Fear is not part of his programming. He won’t even flinch. Yep, he’s going to stay on task and do exactly as his maker’s protocol trained him. (For the parents among our readers: sounds just like your kids, doesn’t it?)

By the way, not only is Mr. SmartBot at the teller window serving you—but look to your left—and now to your right. Do you see them?

There are thousands of Mr. & Mrs. SmartBots standing at-the-ready. Their sole mission in life? Handling the transactions of the customers that show up (always with a smile). No need to stand in a long line. No waiting for someone to return from their lunch break. Nope, just a long, long line of indistinguishable SmartBots (Oh no! We’re outnumbered!). They’ve all had the same training. They all live (but do they live? are they alive?) solely to perform their one special trick (or bag of tricks).

Enough with the dystopian sci-fi. Let’s return to the Centricverse.

Converting CNS —> CNR…

As we said, someone “converts” (and you know why that’s in air quotes now, right?) their CNS to CNR—or CNR to CNS—they do it by interacting with the Centric Rise smart contract. This is true whether they are using the “convert” function on the Centric Web Wallet, or if they are interacting with CentricSwap.com (for those with tokens held in an external wallet).

What does the smart contract do to “convert” CNS to CNR? We’re glad you asked!

When a user “converts” CNS to CNR, the smart contract does two things.

First, It burns the CNS out of existence. (Poof! The CNS is vaporized)

Second, it hands back CNR in an amount equivalent to the CNS provided.

Bye-bye, CNS. Hello CNR!

When we say the contract “burns” the CNS, what does that mean…like, technically?

Every blockchain has a “burn” address. Any tokens sent to that address are as good as dead. They are rendered useless; irrecoverable, from now to eternity. Think of it like a blackhole on the blockchain. (And please don’t go getting all science-y on us about the properties of blackholes and why that’s a bad analogy).

As you may know, Centric is both decentralized and censorship resistant. Those are two more blockchain buzzwords, but suffice it to say, holders of CNR and CNS can convert freely between the two tokens, in either direction. So let’s look at the conversion in reverse, shall we?

… And The Other Way Around CNS <– CNR

What happens when someone converts CNR to CNS?

Little Johnny waves his hand with vigor, crying, “Me! Me! Me!”

“Yes, Little Johnny?”

“Ummm…. the CNR is burned out of existence?”

“Nice try, but not quite, Little Johnny. Let me explain…”

When you convert from CNR, the smart contract mints (or prints, if you like) CNS in exchange for your CNR. That’s right, you get shiny new CNS tokens.

These aren’t some old coins that have been kicking around, circulating on the street. No, we’re talking germ-free CNS. Never-been-touched-by-human-hands. Straight from the CNS Mint and into your wallet. CNS with no hand sanitizer required.

But, you ask, if the CNR is not burned in exchange for minting CNS, what does the smart contract do with it?

Excellent question! Let’s take that up next.

CNR Goes On Vacation!

Recall that we just said anyone holding either CNR or CNS can convert between the tokens at any time, in either direction.

Converting from CNR mints or prints CNS (minting and printing mean the same thing). However, CNR cannot be minted. Centric began with an initial supply of 1 Billion CNR tokens. After that initial minting, no more CNR will be created.

This limited supply is quite different from some crypto currencies, as well as fiat (government-issued) money, where new currency is added to the supply all the time. To get an idea of the scale, consider the statistic often repeated in crypto circles that within a ten month period in 2020 the US Government printed more than 35% of all dollars in existence.

But I digress…

When a holder of CNR mints CNS, the CNR goes on a little vacation to a secure location. The smart contract holds it securely in quarantine to ensure the holder of the minted CNS (including any future holder of that CNS, if the original holder sells or otherwise transfers it) will always be able to redeem the CNS for CNR. The contract takes the CNR and locks it up for safekeeping, ensuring future redemption.

We realize the word “quarantine” may not sound so pleasant as we emerge from a global pandemic. But don’t worry. The CNR quarantine is a magical place. Think of it like an all-inclusive resort on an island paradise, surrounded by gigantic, impenetrable walls to keep the pirates away.

The CNR in quarantine still grows hour by hour as it spends lazy days lying on the beach. Feasting on three delicious meals a day. Hobnobbing with all the other delightful CNR tokens soaking up the incomparable pleasures of quarantine.

Whenever the holder of CNS wants to reunite with their beloved CNR, they can do so because the CNR has been safe and sound in quarantine. After some R&R, those CNR tokens will be refreshed and ready to get back to work for you in the real world.

Let’s Do a Quick Recap

We’ve introduced the burn, but we’ve only scratched the surface.

First, we demystified one of the “buzziest” buzzwords in the crypto space, the elusive “smart contract.”

We learned that when a CNS holder converts to CNR, their CNS tokens are burned.

We looked at the reverse—converting CNR to CNS. We saw that CNS is minted, and the CNR is happily locked up in quarantine, awaiting future redemption.

We’ve alluded to CNR burning, but haven’t quite covered that yet. Why the suspense?

We aren’t trying to be evasive. It’s just that….well, understanding the fundamentals of CNS and CNR is a necessary prerequisite for appreciating the burn of CNR.

There’s still more to learn, and since we’ve already covered some good ground in today’s episode, we’ll cap it here with some closing thoughts and a preview of the next episode.

A Preview of Coming Attractions

If Centric (and blockchain in general) has been a bit of a mystery for you, hopefully, things are starting to slowly come into focus.

We’re getting closer to the brink of discovery—to beholding the beauty of the burn. If you’re feeling a little overwhelmed, or concerned that you won’t be able to follow it all, fear not. Hang in and we’ll get you over the line.

Feel free to take some time to digest today’s episode. Read it again. Ponder it. Reflect. Next week, we’ll introduce the next episode. Here’s what you can expect.

In Episode 2, we’ll start off by introducing the Centric Protocol. We’ll look at the Protocol’s notorious and temperamental gatekeeper, Peg—the biggest bully on the Centric blockchain.

Your study will be time well spent, as you’ll soon be primed for a whiff of the burn smelled ‘round the world. That’s right, the hourly burn of CNR that makes Centric hodlers across the globe go wild.

After reading Episodes 2 and 3, the concepts will click into place in your mind like Legos. You’ll find your olfactory nerves firing up as you develop a smell for the distinctly delicious aroma of CNR hitting the incinerator. Trust us, there’s nothing quite like it!

Will you join us?

When you’re ready, click here to continue the journey.

Want to discuss what you’ve read so far? Share your questions and comments on Telegram or Twitter (#burntrilogy).