Burn & Claim

Overview

The Burn & Claim mechanism is a core feature of the Amica ecosystem that allows token holders to redeem their proportional share of underlying assets by burning their tokens. This creates a fair, trustless way to access treasury value without requiring governance or centralized control.

This mechanism is used by:

• AMICA Token: Burn AMICA to claim proportional treasury assets (AIUS, ETH, fees, etc.)
• Persona Tokens: Burn persona tokens to claim proportional LP tokens and treasury assets

How It Works

Basic Mechanism

The formula is simple and trustless:

Your Share = (Tokens You Burn / Total Token Supply) × Treasury Balance

Example:
- You burn: 100 tokens
- Total supply: 1000 tokens
- Treasury has: 500 USDC

Your share = (100 / 1000) × 500 = 50 USDC

Process Flow

1. Select Tokens: Choose which treasury assets you want to claim (ETH, AIUS, LP tokens, etc.)
2. Specify Amount: Decide how many tokens to burn
3. Burn: Tokens are permanently destroyed, reducing total supply
4. Claim: You receive your proportional share of each selected asset

Smart Contract Implementation

BurnAndClaimBase Contract

All tokens in the ecosystem inherit from the BurnAndClaimBase contract, which implements the core burning logic:

abstract contract BurnAndClaimBase is
    IBurnAndClaim,
    ERC20Upgradeable,
    ReentrancyGuardUpgradeable
{
    function burnAndClaim(
        uint256 amountToBurn,
        address[] calldata tokens
    ) external nonReentrant {
        require(amountToBurn > 0, "InvalidBurnAmount");
        require(tokens.length > 0, "NoTokensSelected");

        uint256 currentSupply = totalSupply();

        // Burn tokens first (CEI pattern)
        _burn(msg.sender, amountToBurn);

        // Calculate and transfer proportional shares
        for (uint256 i = 0; i < tokens.length; i++) {
            uint256 balance = IERC20(tokens[i]).balanceOf(address(this));
            uint256 claimAmount = (balance * amountToBurn) / currentSupply;

            if (claimAmount > 0) {
                IERC20(tokens[i]).transfer(msg.sender, claimAmount);
            }
        }
    }
}

Key Features

• Reentrancy Protected: Uses OpenZeppelin's ReentrancyGuard
• CEI Pattern: Burns tokens before external calls for security
• Multi-Asset: Claim multiple tokens in a single transaction
• Proportional: Fair distribution based on burn amount
• Gas Optimized: Efficient loops and calculations

Using Burn & Claim

For AMICA Token

Burn AMICA to claim proportional shares of the protocol treasury:

import { parseEther } from 'viem';

// 1. Check treasury balances
const aiusBalance = await aiusToken.balanceOf(amicaTreasuryAddress);
const ethBalance = await provider.getBalance(amicaTreasuryAddress);

// 2. Calculate expected returns
const burnAmount = parseEther('1000'); // 1000 AMICA
const totalSupply = await amicaToken.totalSupply();

const expectedAius = (aiusBalance * burnAmount) / totalSupply;
const expectedEth = (ethBalance * burnAmount) / totalSupply;

// 3. Burn and claim (tokens must be sorted by address)
const tokens = [aiusTokenAddress, wethAddress].sort();

await amicaToken.burnAndClaim(burnAmount, tokens);

// You now have your proportional share of AIUS and ETH!

For Persona Tokens

Burn persona tokens to claim proportional shares of treasury assets:

// 1. Check treasury assets
const treasuryAssets = await getPersonaTreasuryAssets(personaTokenAddress);

// 2. Burn persona tokens
const burnAmount = parseEther('500');
const tokens = treasuryAssets.sort();

await personaToken.burnAndClaim(burnAmount, tokens);

// 3. You receive proportional shares of all treasury assets

Use Cases

1. Exit Liquidity

Instead of selling on the market (which affects price), burn tokens to redeem underlying value directly from the treasury.

2. Portfolio Rebalancing

Burn some tokens to claim diverse treasury assets, effectively rebalancing your portfolio without market trades.

3. Treasury Arbitrage

If the market price is below the treasury backing value, you can buy tokens and burn them for a profit (helping restore peg).

4. Claiming Accumulated Value

As more assets flow into the treasury (fees, conversions, etc.), burning gives you access to that accumulated value.

Economic Implications

For Token Holders

• Price Floor: Treasury value provides a fundamental price floor
• No Slippage: Get exact proportional value, unlike market sells
• Trustless: No governance or admin needed to redeem
• Flexible: Choose which assets to claim

For Remaining Holders

• Supply Reduction: Total supply decreases, increasing scarcity
• Concentrated Ownership: Each remaining token represents larger share
• Self-Balancing: If price drops below backing, arbitrage burns tokens

For the Ecosystem

• Fair Exits: Anyone can leave without permission
• Value Preservation: Treasury backing can't be stolen or mismanaged
• Market Efficiency: Arbitrage keeps price aligned with backing

Security Considerations

Contract Security

• Reentrancy Protection: All burn functions use ReentrancyGuard
• CEI Pattern: State changes before external calls
• No Admin Keys: Burn mechanism is fully trustless
• Token Validation: Prevents zero address and invalid tokens

User Risks

Best Practices

• Always check treasury balances before burning
• Calculate expected returns and compare to market price
• Sort token addresses correctly (ascending order)
• Use reasonable gas limits for multi-token claims
• Consider tax implications of burning vs selling

Mathematical Properties

Proportional Distribution

The mechanism preserves fairness through proportional distribution:

If Alice owns 30% of supply and burns all her tokens:
- She receives 30% of all treasury assets
- Remaining holders now own proportionally more
- Total backing per token increases for remaining holders

Example with 3 holders:
Initial:
- Total Supply: 1000 tokens
- Treasury: 500 ETH
- Alice: 300 tokens (30%), Bob: 400 tokens (40%), Carol: 300 tokens (30%)

Alice burns all 300:
- Alice receives: 150 ETH (30% of 500)
- New supply: 700 tokens
- New treasury: 350 ETH
- Bob: 400 tokens (now 57% of supply)
- Carol: 300 tokens (now 43% of supply)
- Backing per token: 0.5 ETH/token → 0.5 ETH/token (unchanged!)

Arbitrage Mechanics

The burn mechanism creates a price floor through arbitrage:

Market Price < Treasury Backing:
1. Arbitrageur buys tokens cheaply on market
2. Burns tokens to claim treasury assets
3. Sells treasury assets for profit
4. This reduces supply, increasing scarcity
5. Price returns to backing value

Market Price > Treasury Backing:
1. Holders keep tokens (no arbitrage opportunity)
2. New participants may prefer to buy on bonding curve
3. Treasury grows from fees and conversions
4. Backing value catches up to price

Related Mechanisms

• AIUS to AMICA Conversion - Converts AIUS to AMICA, adding to treasury
• Creating Personas - Persona tokens also support burn & claim
• Token Launch - Understanding bonding curves and graduation

FAQs

Can I un-burn tokens?

No, burning is permanent and irreversible. The tokens are destroyed forever and the total supply decreases. Make sure you want to exit before burning.

What if the treasury is empty?

If a treasury asset has zero balance, you simply won't receive any of that asset. The transaction will still succeed for any assets that do have balance.

Is there a minimum burn amount?

Technically no, but burning very small amounts may not be economical due to gas costs. The contract will revert if your burn amount is zero or if you don't receive any claimable assets.

Resources

• BurnAndClaimBase.sol Contract
• API Reference
• Security Best Practices
• Join Telegram