> ## Documentation Index
> Fetch the complete documentation index at: https://docs.monochrome.exchange/llms.txt
> Use this file to discover all available pages before exploring further.

# The Burn Engine

> 20% of net platform profit, every quarter, bought on the open market and permanently destroyed.

<div class="mc-eyebrow">Supply only moves in one direction</div>

# Usage funds the burn. The burn tightens supply.

MCR is a deflationary token. Monochrome commits to a structured, profit-funded buy-back and burn that permanently removes MCR from circulation. It is the mechanism the leading exchange tokens proved to be the primary driver of long-term value.

## The mechanism

**Every quarter, 20% of net platform profit is allocated to buying MCR on the open market. All MCR bought back is permanently destroyed** at a burn address no one controls.

| Element         | Detail                                                                                                                                                         |
| --------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| **Trigger**     | Quarterly, within 30 days of each fiscal quarter's close                                                                                                       |
| **Funding**     | 20% of net platform profit, as reported in reviewed quarterly financial statements                                                                             |
| **Execution**   | Open-market purchases across designated venues, through an appointed execution agent under a published policy designed to avoid market impact and self-dealing |
| **Destruction** | Transfer to a published burn address whose private key does not exist. No one, including Monochrome, can retrieve tokens sent there                            |

Because the buy-back is funded by real platform profit, the amount burned grows as the platform grows.

## Contingent burns

On top of the base quarterly round:

* **Launchpad and Digital IPO revenue.** 25% of Monochrome's platform fee revenue from every Launchpad offering and Digital IPO is added to that quarter's burn.
* **Deprecated products.** If a product line is retired, any MCR held in reserve against it is burned in the following round.

## Built to be verified

The credibility of a profit-funded burn rests entirely on verifiability. Monochrome commits to:

<Steps>
  <Step title="A published, fixed formula">
    20% of net profit, quarterly. Rule-based, not discretionary.
  </Step>

  <Step title="A single, immutable burn address">
    Published in advance. Anyone can verify the cumulative amount removed from supply on a block explorer, at any time.
  </Step>

  <Step title="A public burn ledger">
    Every round recorded: round number, execution window, average purchase price, MCR purchased, MCR burned, cumulative supply reduction, and the transaction link.
  </Step>

  <Step title="Independent quarterly attestations">
    From the first full fiscal quarter of operation, an independent third party confirms each burn matches 20% of reported net profit.
  </Step>
</Steps>

## The flywheel

<img src="https://mintcdn.com/monochrome-9f7841fb/Y89GHdbl1MFK9U6g/images/flywheel.png?fit=max&auto=format&n=Y89GHdbl1MFK9U6g&q=85&s=611036621827de87a713b0874c5e58da" alt="The Burn Engine flywheel" className="rounded-xl w-full" width="2400" height="2300" data-path="images/flywheel.png" />

The flywheel has two halves. The supply side is the Burn Engine. The demand side is everything on the exchange that requires holding MCR. Each turn of the loop strengthens both.

<Steps>
  <Step title="Usage">
    Trading across spot and derivatives markets, together with Launchpad offerings and Digital IPOs, generates platform fees.
  </Step>

  <Step title="Revenue and profit">
    Those fees are platform revenue. What remains after costs is net platform profit, reported in reviewed quarterly financial statements.
  </Step>

  <Step title="Buy-back">
    Every quarter, 20% of that net profit buys MCR on the open market. 25% of Launchpad and Digital IPO fee revenue is added on top.
  </Step>

  <Step title="Burn">
    Everything bought back is sent to the burn address and permanently removed from supply.
  </Step>

  <Step title="Scarcity">
    Supply was fixed at 210,000,000 at issuance and can only fall. Each round leaves fewer MCR to serve the same, or greater, platform demand.
  </Step>

  <Step title="Demand">
    Holding MCR is how participants trade cheaper, get into every Launchpad offering and Digital IPO, earn staking rewards, and qualify as a node. As the platform grows, more participants need MCR, which means more usage, and the loop turns again.
  </Step>
</Steps>

### Why it compounds

* **The burn scales with the business.** It is a fixed share of profit, not a fixed number of tokens, so a larger platform burns more MCR each quarter.
* **Digital IPOs turn the loop twice.** Each issuance creates subscription demand, because investors hold or stake MCR at snapshot, and burn demand, because 25% of the fee revenue goes to that quarter's burn.
* **Holding is never consumed.** Participating in an offering does not spend MCR. Demand for the token accumulates rather than churning.
* **Staking and nodes take supply off the order book.** MCR staked for rewards and allocation weight is locked for its term, and node tiers require a held balance, so a share of supply sits outside day-to-day trading while the burn reduces the total.

<Info>
  The buy-back and burn is a supply-management mechanism funded by platform profit. It is not a dividend, a profit distribution, or a payment to holders. Holders benefit only from any market-value effect of a reduced circulating supply.
</Info>

<Card title="First burn round: Q1 2027" icon="calendar" href="/token/roadmap">
  Covering Q4 2026 platform results, with the first public ledger entry and independent attestation.
</Card>