[SQR-001]: Adding a Burn Mechanism to SQR Token

Introduction to Magic Square DAO

Magic Square is a comprehensive Web3 ecosystem that empowers projects and users to connect and thrive through its innovative Web3 App Store and Launchpad. The $SQR token is an integral part of this ecosystem, powering various functionalities and providing utility for both projects and users. This DAO enables the community to actively participate in decisions impacting the platform and the SQR token’s future. Voting power is calculated based on your staked and held $SQR; refer to the Magic Square DAO Documentation for more details. Join the conversation around this proposal and other key topics in our Discord Community.

---

Proposal Overview / TL;DR

This proposal seeks DAO approval to implement a burn mechanism for the SQR token. If approved, a varying percentage of company revenue will be allocated for burns, with members selecting between a 10%, 25%, or 50% reduction of the current 1 billion SQR supply. Initially, burn events will be manually conducted based on platform activity and revenue generation, with plans for future automated burns integrated directly into Magic Square’s products. Users will also be able to voluntarily burn their own SQR holdings. Note that this decision may be revised in the future through another DAO vote if necessary.

---

Reason for Action

A token or coin burn refers to the process in which a cryptocurrency project eliminates a portion of its tokens, thereby decreasing the available supply. The tokens are transferred to an inactive wallet with an undisclosed private key, rendering them permanently unspendable. Introducing a burn mechanism for the SQR token is intended to establish a deflationary model within the Magic Square ecosystem, increasing token scarcity over time. This proposal allows the DAO to decide on the scale of this burn initiative to support a sustainable, reduced supply model for SQR.

---

Detailed Plan

1. Initial Phase

• Until the burn process is automated in the Advanced Phase, burn events will be conducted manually based on platform activity, volume, and revenues generated. A varying percentage of company revenue will be allocated to these periodic burns, aligned with platform performance and activity levels.

2. Advanced Phase

• In a later phase, the burn mechanism will be fully integrated into each Magic Square product, enabling automated burns based on a percentage of each product’s revenue and transaction volume.
• Burn rates will be dynamically managed, reflecting each product’s revenue generation and activity.

3. User-Driven Burns

• Users will have the ability to burn their own SQR holdings at their discretion, providing an additional mechanism for token reduction.

4. Voting Options

• Members may vote between the following options:
  1. NO to the burn mechanism
  2. YES to a 10% supply reduction over time
  3. YES to a 25% supply reduction over time
  4. YES to a 50% supply reduction over time
• The overall burn timeline will be adaptable, depending on platform activity and the revenue generated.

---

How Will the Real-Time Burn Affect Me as a SQR Holder and User?

The real-time burn will not directly impact your holdings, and there is no action required on your part. The long-term effect of this deflationary model is to increase scarcity by gradually reducing the available supply. However, the extent of the impact will depend on SQR’s use cases and market demand.

---

Summary and CTA to Vote

This proposal provides the DAO with an opportunity to implement a deflationary model for the SQR token by reducing the total supply through periodic and automated burns. Please review the proposal details carefully and vote on whether to implement this mechanism, and if so, at which scale. This decision may be revisited in the future if a subsequent DAO vote determines adjustments are necessary.