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Buyback is an interesting mechanism which helps companies use the unutilized currency to buy back its shares. While the concept has been around for a while, it was best utilized by Apple in the non-crypto world. Last year, Apple announced that it would buy back 100 Billion USD worth of its stock. By repurchasing the shares, the company will boost the price of the shares, making their investors happy.
The same principle can be applied to cryptocurrency, as is evident with EverRise, a proprietary and hyper deflationary token. Instead of just buyback, digital currencies use a mechanism called buyback and burn, a terminology generally exclusive to cryptocurrencies. In this process, the native company buys back previously issued tokens on a secondary market to increase the demand and price by reducing market prices.
What are Buyback and Burn?
Buyback in the crypto world was successfully adopted by Binance. The company uses 20% of its profits to buy back and burn its BNB tokens every quarter to reduce the overall supply and increase the token price. In the crypto world, most cryptocurrencies use a burn mechanism to control the supply and demand chain to manage the much-feared volatility of the market.
To maintain investor confidence, crypto platforms have to ensure constant price growth of the token and consequent profits. Some platforms incentivize investment by giving governance rights, but the governance tokens still need a suitable, profitable underlying protocol. Buyback and burn is an efficient method of ensuring a continuous price growth of the token by buying back the tokens and burning them to reduce the supply. It can help the token issuer in the following ways.
- Buyback and burn programs help in the continuous growth of tokens and ensure price stability.
- As the token will have a continuous growth pattern, it attracts more investors, thus ensuring constant ecosystem growth.
- Buyback and burn offer increased liquidity as the demand for trading on the secondary market will increase which, in turn, helps in controlling the token’s volatility.
- It will help to boost share prices in the short term and incentivize HODL.
How does EverRise use Buyback and Burn?
EverRise is a hyper-deflationary token that uses the buyback and burn approach to reward investors for holding tokens. It is the first cryptocurrency to initiate automatic buyback in its underlying protocol. EverRise smartly collects a 6% buyback tax on every transaction and stores it inside the smart contract.
EverRise automatically buys back tokens from the liquidity pool when a sale is initiated using a fraction of the buyback amount. After purchase, these tokens are immediately burned to reduce the circulating supply of the token to decrease the supply and increase the price.
This buyback and burn mechanism of EverRise offers three benefits. Firstly, after buying back tokens for the liquidity pool, the new BNB amount is added to the pool, decreasing the number of tokens in the pool and increasing the price. Secondly, as no more tokens can be added to that pool in the future, it is like adding free BNB into the pool.
Thirdly, buyback and burn improves trust and reliability as this process controls the volatility of the market. Due to the automatic buyback created by EverRise, when the mechanism is turned on, there will not be more than two sales in a row.
This buyback mechanism also offers bonus holder advantages such as:
- Token holders receive 2% rewards on every transaction.
- EverRise has a trusted network of investors, making it a good opportunity for short or long-term investments.
- The buyback and burn mechanism of EverRise will help investors relieve their worry about the bearish market and enjoy rewards.
EverRise is also developing two dApps that will add an additional “wow” factor to the ecosystem. EverOwn, EverLock + EverSale will be launched soon and will offer additional benefits to the investors.