Alephium is the first scalable Layer 1 sharded blockchain that enhances the concepts of Proof of Work & UTXO. Decentralization, self-sovereignty and security meet energy efficiency in a developer-friendly network optimized for DeFi applications and smart contracts.
TokenFurnace is a decentralized application built on Alephium, designed to provide users with a seamless way to burn their tokens. The dApp offers an intuitive interface that supports the selection and burning of both listed and custom tokens, ensuring a straightforward and efficient user experience. Additionally, during a burn, users have the option to issue an NFT as proof of the burn.
What Is the Purpose of Burning Tokens?
At first glance, burning tokens might seem counterintuitive. However, this practice serves various economic or strategic purposes. Here are the most relevant examples:
Economic Value and Stability
Burning tokens is often employed to enhance value and maintain economic stability:
Scarcity and Economic Regulation:
By reducing the total supply of tokens, projects can increase scarcity, counter inflation, and stabilize the token’s value. Burning transaction fees or surplus tokens is a common strategy to manage market fluctuations and ensure long-term sustainability.
Community Rewards:
Token burns can indirectly reward holders by increasing the value of the remaining tokens, benefiting loyal community members through scarcity-driven value appreciation.
Uncluttering Wallets and Removing Worthless Tokens
- Token burning offers users a practical way to tidy up their wallets and optimize their wallets. By burning airdropped tokens that conflict with their personal values or investment strategy, users can remove unnecessary clutter and focus on assets that truly matter. This approach not only simplifies wallet management but also helps preserve a professional public profile by discarding tokens that might appear irrelevant or misrepresent their involvement in certain projects.
Proof of Dedication
Token burning is not merely an economic tool; it also serves as a powerful mechanism to demonstrate loyalty, active participation, and long-term commitment within a project or ecosystem.
Governance:
In decentralized systems, users may burn governance tokens as a way to contribute to balanced and fair decision-making. This mechanism can help prevent excessive influence by any single entity within a DAO, fostering equitable governance.
Access to Limited Opportunities:
Token burning can grant users access to exclusive opportunities, such as participating in high-value token sales, gaining early access to new features, or unlocking priority services. By tying these benefits to the act of burning, projects not only incentivize user commitment but also increase the perceived value of participating in the ecosystem.
Understanding the TokenFurnace Smart Contract
The TokenFurnace smart contract is designed for burning tokens and optionally minting NFTs as proof of burn. Below is a detailed explanation of its components:
Import and Class Declaration
Explanation:
This block imports the nft_collection_interface, which is essential for managing NFTs. The TokenFurnace contract is declared and implements the INFTCollection interface. The constructor parameters include:
nftTemplateId: ID of the NFT template used.
collectionImageUri: URI for the image associated with the collection.
totalSupply: The current count of minted NFTs.
Event Burned Declaration
Explanation:
The Burned event is emitted whenever tokens are burned. Parameters include:
caller: The address of the user initiating the burn.
tokenBurned: The ID of the token burned.
amount: The quantity of tokens burned.
nft: A boolean indicating whether an NFT was minted as proof of burn.
timestamp: The block timestamp when the burn occurred.
Enumeration of Error Codes
Explanation:
Defines possible error codes:
IncorrectTokenIndex: Invalid NFT index provided.
NFTNotFound: NFT not found in the collection.
NFTNotPartOfCollection: NFT does not belong to the collection.
TokenIdNotAccepted: Token ID is not allowed (e.g., ALPH tokens).
CannotBurnZero: Burning zero tokens is invalid.
Method burn
Explanation:
The burn function:
Validates that the token ID is not ALPH and the amount to burn is greater than zero.
Converts the token ID to a hexadecimal format using the convert function.
If withNft is true, mints an NFT as proof of burn by calling the mint function.
Emits the Burned event with details of the transaction.
Burns the specified tokens from the caller's balance.
Method mint
Explanation:
The mint function mints an NFT as proof of burn, it’s a private function, can only be called from the contract itself:
Encodes the initial immutable and mutable states for the NFT.
Creates a sub-contract for the NFT using the provided burner’s details and deposits.
Increments the total supply of NFTs.
Returns the ID of the newly created NFT contract.
Method getCollectionUri
Explanation:
This function returns the URI for the collection metadata, typically used to display the collection on marketplaces. It includes the name, description, and image URI of the collection.
Method totalSupply
Explanation:
Returns the total number of NFTs minted in the collection.
Method nftByIndex
Explanation:
The nftByIndex method retrieves an NFT based on its index:
Validates that the index is within the range of minted NFTs.
Derives the NFT’s contract ID and ensures it exists.
Returns the NFT object.
Method validateNFT
Explanation:
This method validates whether a given NFT ID corresponds to an NFT in the collection by comparing its contract ID to the expected one.
Method convert
Explanation:
The convert method converts a byte array into a hexadecimal string. This is useful for representing token IDs or other data in a human-readable format.
