What on earth is The Furnace?
Introduction
GVNRs, the time has come, we need to tell you about The Furnace. What is it? What does it do? What is its purpose? Well, strap in - we've got some alpha for you!
The first thing you need to know is that The Furnace is part of GVNR’s ecosystem and is a deflationary mechanism designed to reduce the supply of $GVNR over time. Think of a shovel, a big fire, and a pile of $GVNR tokens laying next to this fire, just waiting to be burned, fuelling our engine. Well, that is in short what The Furnace is.
But you didn’t come here for a topline overview, let's dig deeper.
Why Do We Need The Furnace?
Reducing the supply of any crypto token creates a supply and demand imbalance; fewer tokens in circulation can create increases in value over time.
This is obviously a counter to many inflationary tokens that you can see on the market, continuous dilution of the token supply can lead to suppression of price.
Why Deflationary Mechanisms Matter
The Furnace is more than just a clever mechanism, it’s the backbone of GVNR’s deflationary tokenomics and plays a crucial role in protecting the long-term value of $GVNR. But why is this so important?
At its core, the Furnace is designed to preserve and enhance the value of $GVNR over time by gradually reducing the overall supply of tokens. This isn’t just about scarcity for scarcity’s sake; it’s about tipping the scales in favor of long-term holders, ensuring that as demand grows, those who remain part of the ecosystem reap the benefits.
Protecting Your $GVNR Bag
The Furnace acts as the ultimate scarcity engine. Over time, as more tokens are burned through protocol activity, transactions and fees, the total supply of $GVNR decreases. Fewer tokens circulating in the market means that the value of each remaining token has the potential to increase - it’s simple supply and demand. If the supply is shrinking but demand stays steady (or grows), the fees accrue to the ecosystem.
This is particularly important when you compare it to inflationary tokens, where the total supply continues to rise, often leading to market flooding and devaluation. GVNR takes the opposite approach, fighting against dilution and ensuring that the value of your tokens isn’t eroded by unchecked supply growth.
More Than Just Burning
But the Furnace isn’t just burning tokens to reduce supply, it’s about creating an ecosystem where engagement pays off. As tokens become scarcer, the opportunities within the GVNR ecosystem grow. Whether it’s through staking for rewards, voting in governance decisions, or simply being an active member of the community, there’s value in staying involved.
More than that, as participation in the network increases, the network itself becomes stronger, and everyone wins. A healthier, more engaged community means more utility and value for the token, creating a positive feedback loop where the token’s scarcity supports the network’s growth, and the network’s growth fuels the token’s value.
Win-Win
In the end, the Furnace keeps members of GVNRDAO aligned with the long-term vision of the ecosystem. The more tokens are burned, the more scarce and valuable they become. And as you continue to participate—staking, voting, or simply holding—you stand to gain alongside the entire GVNR network.
The Furnace isn’t just about managing supply; it’s the engine that fuels GVNR’s growth, ensuring that the network thrives while protecting the value of your holdings. It’s a win-win for you, the community, and the ecosystem at large.
How does it work?
The Furnace operates by programmatically buying and burning a portion of the transaction fees generated by the network, which decreases the total circulating supply of $GVNR tokens, thus creating the scarcity element we just mentioned.
Here’s how it works:
Collection of Gas Fees: The process starts with gas fees collected from multiple EVM-compatible chains like Ethereum (ETH), Arbitrum (ARB), and others. These fees are collected in various native gas tokens (like ETH or ARB) from different blockchains.
Conversion to USDC: To avoid negative price action (e.g., reducing the value of the chains gas token), these gas tokens are converted into USDC on their respective native chains. This is done using Bancor’s Carbon Arb Fast Lane, which ensures efficient token swapping.
Consolidation via Circle CCTP: Once the fees are converted into USDC, they are then consolidated into USDC on Ethereum mainnet via Circle’s Cross-Chain Transfer Protocol (CCTP). This step ensures that the USDC from various chains is brought to one central place for further processing.
Automated Smart Contract: The USDC is then sent to an automated smart contract, which handles the next steps:
Buying $GVNR: The USDC is used to buy $GVNR tokens.
Burning a Portion: A percentage of the purchased $GVNR tokens is burned, reducing the total supply, thus contributing to the deflationary mechanism.
Staking Rewards: The remaining $GVNR tokens are distributed to a staking pool, incentivising node operators and ensuring network decentralisation.
Deflationary Impact and Rewards:
The process ensures that a portion of $GVNR is burned (supporting deflation), while the rest is used to distribute staking rewards, balancing network decentralisation with token scarcity.
This mechanism is inspired by models like Ethereum’s EIP-1559, where transaction fees are partially burned to create deflationary effects, ensuring that the more the network is used, the fewer tokens remain in circulation. The goal is to align the growth of the network with a reduction in token supply, potentially benefiting long-term token holders.
Let's wrap it up!
That’s a lot of information to condense into five points but that's all it is five points, and that’s it, you’ve seen inside The Furnace.
In summary, our innovative approach using cross-chain assets to create deflationary tokenomics sets us apart in the ever-evolving Crypto space. By eliminating the risks associated with traditional bridges and providing a decentralised, permissionless framework, we’ve paved the way for seamless cross-chain interactions.
Our unique Furnace mechanism ensures both token scarcity and robust staking rewards. As the crypto ecosystem continues to grow, The Furnace will have a key role to play in the decentralised future.
Last but not least, please visit our @galxe to complete the Quest to earn your stripes for the $GVNR airdrop!
