The revolutionary aspect of cryptocurrencies is that they allow transfer of value without an intermediary. This is almost exclusively seen as positive by the web3 community. However, with great power comes great responsibility; when the distributed ledger technology underlying a cryptocurrency replaces a human third party, it replaces all the cultural, legal, and historical understanding and nuance of a human being. At that point, it becomes important to consider mechanism design and how this may be programmed into a web3 project.

One such mechanism is called burn-and-mint. In burn-and-mint, a token is "burned" to pay for a service that a network provides; a token is "minted" to pay for a service that is provided to the network. The mint pays for the supply of a service, and economic demand sustains the burn. Burn-and-mint is useful because it is an equity-based way to bootstrap a network, avoiding the need to raise large amounts of capital. It is unique in that it can only be done with the use of cryptocurrencies.

This project seeks to contribute to a full macroeconomic understanding of burn-and-mint. The importance of understanding how burn-and-mint models work is in itself a public good. Currently, various decentralized physical infrastructure (DePIN) projects base their economies around burn-and-mint. These projects are deploying massive amounts of hardware into the field and sometimes it goes into disuse; an example is Helium's IoT network, the token of which rose so rapidly in price and led to inefficient deployment of Helium hotspots. Preventing misappropriation of public infrastructure is just one of the many public goods that can come from an understanding of burn-and-mint.

This project also contributes to how one may design a burn-and-mint economy to ensure sustainability not only from the supply side, as mentioned above, but also demand. It seeks to answer the question: How can a project design their economy to avoid a collapse in demand, ensuring steady, sustainable growth and healthy price appreciation without episodes of major volatility?

In particular, this project is but a stepping stone towards the eventual goal. The idea is to model a burn-and-mint economy as a partial-information game, in which participants can both earn minted coins, burn those same coins, and trade coins between each other. The project's results will be made fully available to the public and the aim is to publish these results in a peer-reviewed venue, such as a major conference or journal publication.