We’re proud to share the results of a year dedicated to second chances, empowerment, and community transformation. Discover how Operation 261, Conscious Choices, and Stones are creating real opportunities, rebuilding lives, and strengthening communities. Read the full Impact Report and see the change in action.Together, we’re turning justice into opportunity.#ImpactReport #FallenJustice #SecondChances #CommunityChange

Liquidity Pools vs. Order Books

To understand how liquidity pools are different, let’s look at the fundamental building block of electronic trading – the order book. Simply put, the order book is a collection of the currently open orders for a given market.
The system that matches orders with each other is called the matching engine. Along with the matching engine, the order book is the core of any centralized exchange Centralized Exchange (CEX). This model is great for facilitating efficient exchange and allowed the creation of complex financial markets. Our current stock market is based on this model. 

DeFi trading, however, involves executing trades on-chain, without a centralized party holding the funds. This presents a problem when it comes to order books. Each interaction with the order book requires gas fees, which makes it much more expensive to execute trades. It also makes the job of market makers, traders who provide liquidity for trading pairs, extremely costly.  This means that on a blockchain like Ethereum, an on-chain order book exchange is practically impossible. The issue behind excessive gas fees is what motivated Fallen Justice to create the FJUST token on the Binance Smart Network. 

How Do Liquidity Pools Work?

Automated market makers (AMM) have changed this game. They are a significant innovation that allows for on-chain trading without the need for an order book. You could think of an order book exchange as peer-to-peer, where buyers and sellers are connected by the order book. For example, trading on Binance DEX is peer-to-peer since trades happen directly between user wallets.
Trading using an AMM is different. You could think of trading on an AMM as peer-to-contract.. When you’re executing a trade on an AMM, you don’t have a counter-party in the traditional sense. Instead, you’re executing the trade against the liquidity in the liquidity pool. For the buyer to buy, there doesn’t need to be a seller at that particular moment, only sufficient liquidity in the pool. To avoid draining the Fallen Justice liquidity pool and ensure the Algorithm continues to fund our Operation 261 projects and our organization we've added protection features like token burns. 

When you’re buying the FJUST on PancakeSwap, there isn’t a seller on the other side in the traditional sense. Instead, your activity is managed by the algorithm that governs what happens in the pool. In addition, pricing is also determined by this algorithm based on the trades that happen in the pool. If you’d like to get a deeper dive into how this works, read our AMM article.
 
 

Does burning work?


The best example is the Binance Quarterly Burns. The company has burnt around $60 million in BNB tokens since the inception of the Quarterly burns.

Stellar, another cryptocurrency company, proceeded with a $55M burn to increase the coin’s value. This burn effectively reduced XLM supply by over 50%. The price effect on XLM was quickly noticeable in the short term, moving from $0.069 to $0.088 in a day (around 25% from November 5th, 2020 to November 6th, 2020).

Even stablecoins like USDT, GUSC, USDC and HUSD (1:1 ratio to the $USD) have conducted burns of over $2.8 billion. This provides transparency of the reserves once funds are added or retired. When there is a deposit in reserves, tokens are minted. The burning happens when the coins minted into the reserve are withdrawn, regulating the circulating supply and keeping the balance stable.

What are the benefits of token burning?
 
There are several benefits of token burns. Trust and confidence in the project is a key element. This is where, for example, during the ICO stage, it is common to find the burning process is done once the token or coin is finally launched to provide the new investors with the reliability that their fund will not be affected by an over circulation.

Additionally, by reducing the circulating supply of a portion of the circulation of a cryptocurrency like the XRP example we discussed above, the number of transactions gets equally reduced. In a nutshell, a reduction in volume lowers the chances of spam attack which leaves enough bandwidth for health transaction count for the community.


How token burning works at Fallen Justice

- FJUST’s Protect and Burn mechanism While many tokens might have an initial burn following launch, many make coin burns a part of their DNA. The protect and burn mechanism is one of the unique utilities of the FJUST token.

The initial liquidity is sent to a locked account preventing Fallen Justice from removing the liquidity and ensuring the growth of the fund for the community participants. Fallen Justice adds 6% of the profits made on fees in the to a reserve to protect the price of the FJUST token, marketing and growth as an organization.
 


The protect and burn utility has been designed to connect with the community’s sense of growth. According to Fallen Justice’s Founder Joshua Pierce:

"The amount of FJUST token burnt is calculated in real-time based on revenues generated by the organization as well as the level of community contributions to the liquidity pool. We will share objectives with our community, such as Operation 261 milestones, voting calendars, and new participants for the next 9-month program, allowing each donor to connect and personalize their donation with the actual community participants their helping support.”