Absorption and burning
When a sale reaches an ETH-funded range, it can exchange CUBIT for that ETH. Tokens acquired by the wall must be removed from tradable liquidity and reserved exclusively for destruction.
The reduction in a wall’s ETH depth and the destruction of tokens are two distinct consequences of this operation.
A fixed initial supply, then deflationary
21 million CUBIT are issued initially, with no subsequent minting. When the hook destroys tokens bought back by walls, totalSupply() decreases and totalBurned() increases. Deflation corresponds to these actual destructions; it does not depend simply on elapsed time.
A sale reaches a wall
→ ETH from that position buys back CUBIT
→ the CUBIT is isolated, then destroyed
→ the total supply decreases
CUBIT bought back by a wall never returns to tradable LP liquidity, even if the price subsequently rises. A pending burn queue has already been removed from that liquidity.
When the price oscillates within a range
If oscillations reach the walls, successive sales can consume ETH there and gradually remove CUBIT from the market. Some ranges may end up with no executable liquidity. Their ticks remain identified even when their funds are exhausted.
A price recovery does not automatically reload a wall with the CUBIT it bought back: those tokens were isolated for destruction. New funding can, however, deepen the position at the same tick.
| Oscillation zone | Possible effect |
|---|---|
| The range stays above the walls | Swaps do not reach those positions; no wall burn results |
| The range crosses one or more walls | CUBIT is absorbed and destroyed; the ETH in those ranges may be gradually consumed |
| The price crosses the ladder | Its positions change inventory; its own tokens can be recycled or repositioned at rebalance |
It is liquidity ranges that can be exhausted, not ticks disappearing as price units. Not every range therefore automatically drains all ticks. See the ladder’s role.
Three states to distinguish
| State | Meaning |
|---|---|
| ETH in a wall position | Funds still usable by that position depending on the price and range |
| Absorbed and isolated CUBIT | Inventory removed from the market, possibly awaiting burning |
| Destroyed CUBIT | Total supply actually reduced by CubitToken.burn() |
The token authorizes only the hook to burn. The public entry point burnAbsorbed() does not let the caller choose a recipient to recover the isolated inventory.
The CUBIT router path
In the shipped router, a sale first settles pool swaps, completes the arbitrary transfers needed for refunds, then calls the burn if a queue is present. A failed burn reverts the entire sale.
This behavior is specific to this execution path. It does not establish that a sale through any third-party router always destroys every token in the same transaction.
Third-party integrations
A compatible router may leave a queue of isolated tokens. These remain reserved for burning and must no longer be purchasable from wall liquidity. A later call to burnAbsorbed() completes their destruction.
This function remains callable during a guardian maintenance pause and pays no bounty. A keeper with a positive profitability threshold may therefore delay calling it.
What burning does not guarantee
Destruction reduces supply; it does not create ETH. If a wall has spent its funds absorbing a sale, its historical level does not automatically restore its depth.
With multiple fixed walls, isolation and remainders must remain correctly allocated to each position. Test campaigns for the old single wall alone do not prove these properties for the new implementation.
Verifying the evidence
The hook’s TokensBurned and token’s Burned events, along with totalBurned() and totalSupply(), allow actual destruction to be tracked. The pendingBurnTokens queue represents a separate state.
Actual absorption on a network environment or canonical fork and an independent strict-burn review remain validation conditions. See known limitations.
Sources: CubitRouter._finishSwap, CubitHook._isolateAbsorbedTokens, _burnAbsorbed, CubitToken.burn and contracts/docs/STRICT_BURN.md for the design history.