CURRENTLY IN TESTNET — Should be updated when in mainnet

The burn interaction consists of various processes. Let’s take a closer inspection at the processes within burn.lua which is responsible for swapping.

Quantity Validation

We validate the quantity of tokens to be burned is a valid token quantity based on assigned burn quantity:

  -- burn quantity
  local quantity = tonumber(message.Tags.Quantity)

  -- validate quantity
  arweave.TokenQuantity:assert(quantity)

Balance Check

The user initiating the burn needs to have a balance greater than or equal to the quantity of tokens they intend to burn:

  -- validate if the user has enough tokens
  assert(Balances[message.From] ~= nil, "No balance for this user")
  assert(Balances[message.From] >= quantity, "Not enought tokens to burn")

Pool Liquidity Check

We need to make sure that the specific quantity of tokens assigned to burn will not drain the entire liquidity pool:

  -- make sure the LP does not burn the total supply,
  -- as this action would drain the pool
  local totalSupply = balances.totalSupply()

  assert(quantity < totalSupply, "This action would drain the pool")

Burn Ratio Calculation

The ratio of tokens to be burned relative to the total supply in the liquidity pool:

                                           $burnRatio = \\frac{quantity}{totalSupply}$

local burnRatio = quantity / totalSupply