Deflationary Model

How 8BIT Supply Decreases Over Time

Unlike inflationary tokens that constantly increase supply, 8BIT uses a direct burn mechanism to permanently remove tokens from circulation.

The Burn Mechanism

How It Works

1. Player pays 2,000 8BIT to enter Standard Weekly tournament
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2. Tournament contract receives 2,000 8BIT
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3. Smart contract automatically splits payment:
   • 50% (1,000 8BIT) → Prize pool for winners
   • 50% (1,000 8BIT) → Burn address
   ↓
4. Burned tokens sent to 0x000...dEaD address
   ↓
5. Tokens permanently removed from circulation ♨️

Key Features

✅ Automatic - No manual intervention ✅ Trustless - Smart contract enforced ✅ Transparent - All burns visible on blockchain ✅ Irreversible - Tokens can never be recovered ✅ Continuous - Every tournament contributes

Tournament Entry Fees (Current)

Tournament Type	Entry Fee (8BIT)	Burned per Entry	Prize Pool
Standard Weekly	2,000	1,000	50,000
Standard Monthly	10,000	5,000	100,000
High Roller Weekly	10,000	5,000	150,000
High Roller Monthly	50,000	25,000	500,000

Burn Address

Official Burn Wallet: 0x000000000000000000000000000000000000dEaD

• Tokens sent here are permanently destroyed

• No private key exists (wallet is inaccessible)

• Reduces circulating supply forever

• Publicly viewable on Arbiscan

Impact on Circulating Supply

Monthly Burn Examples

Conservative Scenario (1,000 Tournament Entries/Month)

Metric	Value
Tournament entries	1,000
Average entry fee	10,000 8BIT
Total fees collected	10M 8BIT
Tokens burned (50%)	5M 8BIT
% of supply burned	1%/month
Annual burn rate	12% of supply

Effect: Net DEFLATIONARY (12% burn vs 6% emissions = -6% supply annually)

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Moderate Scenario (5,000 Tournament Entries/Month)

Metric	Value
Tournament entries	5,000
Average entry fee	10,000 8BIT
Total fees collected	50M 8BIT
Tokens burned (50%)	25M 8BIT
% of supply burned	5%/month
Annual burn rate	60% of supply

Effect: HEAVY deflation (60% burn vs 6% emissions = -54% supply annually)

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Growth Scenario (10,000 Tournament Entries/Month)

Metric	Value
Tournament entries	10,000
Average entry fee	10,000 8BIT
Total fees collected	100M 8BIT
Tokens burned (50%)	50M 8BIT
% of supply burned	10%/month
Annual burn rate	120% of supply

Effect: EXTREME deflation (120% burn vs 6% emissions = -114% supply annually)

Deflationary Timeline

Years 1-5 (Emissions Active)

Net Supply Change = Emissions - Burns

Tournament Activity	Emissions	Burns	Net Change
1,000 entries/month	+2.5M	-5M	-2.5M (deflationary!)
5,000 entries/month	+2.5M	-25M	-22.5M (heavy deflation)
10,000 entries/month	+2.5M	-50M	-47.5M (extreme deflation)

Key Insight: Even at low tournament volume (~500 entries/month), the token becomes net deflationary during emission period.

Year 6+ (Zero Emissions)

Net Supply Change = 0 - Burns

• All burns directly reduce circulating supply

• No new tokens minted from rewards pool

• Pure deflationary pressure

• Scarcity increases over time

Price Impact of Burns

Direct Burn Creates Scarcity

Unlike buyback models that rely on market conditions, direct burning guarantees supply reduction:

Example:

• 1,000 players enter tournaments

• 10M 8BIT in fees collected

• 5M 8BIT burned immediately

• Constant deflationary pressure regardless of market sentiment

Supply Reduction Increases Scarcity

Basic Economics:

• Same demand + Lower supply = Higher price

• As tokens burn, remaining tokens become more valuable

• Deflationary assets tend to appreciate over time

Example Projection:

Year	Starting Supply	Tournament Burns	Net Supply
0	200M	0	200M
1	230M	60M	170M (net -30M)
3	230M	180M	50M (net -150M)
5	200M	300M	Net circulation heavily reduced

Assumes moderate growth in tournament activity

Comparison to Other Models

Typical Token Models

Model	Supply Over Time	Examples
Inflationary	Always increasing	Most PoS chains, gaming tokens
Fixed Supply	Never changes	Bitcoin (eventually), many tokens
Deflationary	Decreasing	8BIT, BNB, ETH (post-merge)

Why Deflationary is Superior for Gaming

Problem with Inflationary:

• Constant sell pressure from emissions

• Token value decreases over time

• Late players earn worthless rewards

Problem with Fixed Supply:

• No mechanism to reward players

• Can't sustain play-to-earn model

Deflationary Solution:

• ✅ Rewards players during distribution phase

• ✅ Burns offset inflation

• ✅ Long-term holders benefit from scarcity

• ✅ Aligns player and investor incentives

Real-World Deflationary Examples

Binance Coin (BNB)

• Mechanism: Quarterly burns from exchange fees

• Result: Supply reduced from 200M to ~150M (25% burned)

• Price Impact: $15 → $600+ (4,000% gain)

Ethereum (ETH)

• Mechanism: EIP-1559 burns base fees

• Result: Net deflationary since "The Merge"

• Price Impact: Positive sentiment, reduced sell pressure

8-Bit Arcade (8BIT)

• Mechanism: 50% of tournament fees → direct burn

• Advantage: Burns tied directly to platform usage

• Sustainability: More players = more tournaments = more burns

Burn Transparency & Tracking

View Burns in Real-Time

1. Burn Address on Arbiscan

   • See exact balance of burned tokens

   • View all burn transactions

   • Track burn rate over time

2. TournamentManager Contract

   • View burn transactions

   • See entry fee amounts

   • Verify automatic execution

3. 8-Bit Arcade Dashboard (Coming Soon)

   • Total tokens burned

   • Monthly burn rate

   • Historical burn chart

   • % of supply removed

Burn Metrics

Track these key metrics to understand deflationary impact:

• Total Burned: Total 8BIT sent to burn address

• Burn Rate: Tokens burned per day/month

• % of Supply: Percentage of max supply burned

• Net Inflation: Emissions - Burns (positive = inflation, negative = deflation)

Long-Term Supply Projection

Conservative Path (Low Tournament Volume)

Year 0:  500M max supply, 200M circulating
Year 1:  170M circulating (+30M emissions, -60M burns)
Year 5:  50M circulating (+150M emissions, -300M burns)
Year 10: 20M circulating (0 emissions, -30M burns)
Year 20: 5M circulating (0 emissions, -15M burns)

Result: 99% supply reduction over 20 years

Moderate Path (Medium Tournament Volume)

Year 0:  500M max supply, 200M circulating
Year 1:  110M circulating (+30M emissions, -120M burns)
Year 5:  Approaching minimum supply

Result: Extreme scarcity within 5 years

What This Means for Token Value

Supply & Demand Dynamics

Demand Drivers (Buying Pressure):

• Tournament entry requirements

• Player need to participate

• Investor speculation

• Staking requirements (future)

• NFT minting (future)

Supply Factors:

• New emissions (Years 1-5 only)

• Burns (continuous, forever)

• Lost wallets (permanent reduction)

Net Effect: Demand increases + Supply decreases = Price appreciation

Deflation Incentivizes Holding

Investor Psychology:

• "Supply is decreasing, my tokens become scarcer"

• "No reason to sell, it'll be worth more later"

• "I'll hold and stake for passive income"

Result: Reduced sell pressure → More stable price → Higher valuations

Why 50% Split?

Tournament Fee Allocation

50% to Prize Pool:

• Ensures attractive prizes

• Incentivizes player participation

• Immediate value to winners

50% to Burn:

• Reduces circulating supply

• Benefits all holders long-term

• Creates deflationary pressure

Why not 100% to prizes?

• Wouldn't create deflationary pressure

• Token would be purely inflationary

• No long-term value accrual

Why not 100% to burn?

• Prizes would be too small

• Players wouldn't participate

• Platform wouldn't grow

50/50 = Perfect Balance ⚖️

Future Deflationary Mechanisms

Additional burn sources being planned:

NFT Badges (Phase 3)

• Mint exclusive achievement NFTs

• Pay 8BIT to mint

• 50% of minting fees burned

• Creates new burn source beyond tournaments

Governance Proposals (Phase 4)

• Submit platform proposals

• Small 8BIT fee to prevent spam

• 100% of fees burned

Premium Features (Future)

• Custom usernames

• Profile customization

• Exclusive games

• All paid in 8BIT, 50%+ burned

Conclusion

The deflationary model ensures:

✅ Long-term sustainability - Burns offset emissions ✅ Value accrual - Remaining tokens become scarcer ✅ Holder benefits - All holders benefit from burns ✅ Aligned incentives - Players and investors both win ✅ Transparent & trustless - Smart contract enforced

As adoption grows, deflationary pressure increases, creating a positive feedback loop for token value.

Next Steps

• Emissions Schedule - When new tokens are created

• Market Scenarios - Price projections

• Token Distribution - Where tokens go

• Tournaments - How to contribute to burns

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All burns are permanent, transparent, and verifiable on the Arbitrum blockchain. View the burn address anytime: 0x000000000000000000000000000000000000dEaD