The Floki Inu community recently decided to drastically reduce their transaction tax by 0.3% after voting overwhelmingly in favor of burning 4.2 trillion FLOKI tokens on the cross-chain bridge—99.97% voted for the proposal, with only 0.03% opposing it. These changes will officially come into effect at 8 PM UTC on Feb 3rd, and all 4.2 trillion tokens will be permanently destroyed at 8 PM UTC on Feb 9th, 2023.
On Monday, CoinGecko data revealed that the planned token burn is valued at more than $100 million. Burning tokens decreases supply, which raises their worth, assuming the demand remains constant. Moreover, Floki Inu proposed security threats connected to cross-chain bridges as an additional justification for this action. Last year over $2 billion was stolen or misplaced from cross-chain bridges.
The proposal declared that “more data and exploits have been unveiled to suggest how hazardous cross-chain bridges can be, particularly if they possess a substantial portion of the token’s supply.” Regarding Floki’s case specifically, developers highlighted in their now-approved proposition that an exploit on their cross-chain bridge could lead to disastrous outcomes. This is because it holds 55.7% of what FLOKI’s total circulating should amount to.
Floki Inu, a Shiba Inu dog breed-themed project team, had previously said that the transition was part of their broad design to make Floki Inu into a respected decentralized finance (DeFi) venture. Over the past several months, they have released initiatives such as Floki Locker and the Valhalla metaverse game.
Why Floki built a cross-chain bridge
In 2021, Floki took the initiative to listen to its community members and expanded onto BNB Chain for faster transactions at lower costs. However, this meant launching a separate contract on the new network with another 10 trillion token supply. To keep the total circulating FLOKI tokens within that limit while permitting users to move their coins from Ethereum‘s blockchain to BNB Chain (and back), the Floki tech team had no choice but to build a cross-chain bridge.
At the time, the team took out 600 billion FLOKI tokens from its treasury on Ethereum and BNB Chain to kick-start the bridge. Subsequently, most holders locked their FLOKI tokens on Ethereum before transferring them to BNB Chain. Thanks to the balance of supply between both chains, Floki developers have stated that even without a bridge, the stability of the project would not be at stake.