Tokens FAQ
Burning Mechanism​
Will all SPORE eventually burn away?
No. An equilibrium will be reached where burning continues but at a sustainable rate.
Why complete burndown won't happen:
As SPORE supply shrinks, the cost to burn additional tokens increases:
- Burning 1 billion SPORE at USD 0.01/token = USD 10 million
- Burning 1 billion SPORE at USD 0.05/token = USD 50 million
- Burning 1 billion SPORE at USD 0.10/token = USD 100 million
What happens at equilibrium:
- Revenue available for burning stabilizes (e.g., USD 100M/year)
- SPORE price rises to sustainable level
- At high prices, USD 100M buys fewer tokens each year
- Supply stabilizes at sustainable level (estimated 2–4 billion SPORE)
- Network functions with stable, scarce supply
Result: Burning creates a self-balancing mechanism—price naturally rises until burning fewer tokens per dollar is economically rational.
Why is burning better than paying hosters dividends?
Burning and dividends are fundamentally different approaches to rewarding token holders:
Dividend Model (Traditional):
- Project issues 10% of revenue as new SPORE tokens to hosters
- Problem: Increases token supply, dilutes all existing holders
- Result: Price stays flat or drops despite company growth
Burning Model (Project Mycelium):
- Project buys SPORE on market and destroys it
- Benefit: Reduces token supply, making each token more valuable
- Result: Price appreciates as supply shrinks and demand grows
Concrete Example:
- 10,000 SPORE farmer earning for 4 years
- With dividends: Earn 50,000 more tokens, but price drops 70% = USD 600 value
- With burning: Earn 50,000 more tokens, price appreciates 6.5x = USD 3,250 value
Burning rewards existing holders through scarcity rather than inflation.
How does token burning reduce supply?
Token burning permanently removes SPORE from circulation each month. When 10% of revenue is allocated to purchasing SPORE on the market and destroying those tokens, the total outstanding supply shrinks. This is irreversible—burned tokens cannot be recovered.
Impact:
- Month 1: 10 billion SPORE → 9.99 billion SPORE
- Year 1: Cumulative burning reduces supply by ~1-2%
- Year 4: Supply could drop from 10B to 5.4B (46% reduction)
Does burning create consistent buying pressure on SPORE price?
Yes. Burning creates predictable monthly buying pressure because Project Mycelium must purchase SPORE on the open market every month to burn it.
How this supports price:
- Monthly purchases: ~USD 20-25 million in SPORE buys (based on revenue projections)
- Consistent demand: Unlike speculative traders, burning is guaranteed
- Supply shrinking: Each month, fewer tokens available = harder to find sellers
- Price floor effect: Consistent buying prevents sudden price crashes
Example: If USD 100M in annual revenue generates 10% burn allocation (USD 10M/year), this creates sustained monthly buying of ~USD 833k worth of SPORE.
Is the burning model sustainable long-term?
Yes, the burning model is sustainable because it creates a self-reinforcing cycle:
Sustainability mechanics:
- Revenue grows → Users adopt Project Mycelium
- Burning increases → More tokens removed monthly
- Supply shrinks → Scarcity increases
- Price appreciates → Each remaining token worth more
- Farmer incentives improve → Higher SPORE value attracts more hosters
- Network grows → More adoption = more revenue = more burning
- Cycle repeats → Virtuous cycle continues
Why this differs from unsustainable models:
- Not dependent on continuous new users (market saturation risk)
- Not dependent on token price staying high (self-correcting)
- Not dependent on new token issuance (creates inflation)
- Burning is deflationary by design, supporting long-term price
Risk mitigation: If adoption slows, burning slows proportionally, preventing over-scarcity and maintaining equilibrium.