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Floki devs announce plans to burn $11 million worth of tokens

TL;DR

  • Floki developers have announced plans to burn about $11 million which is 2% worth of its tokens.
  • Rationale and market response.

Floki (FLOKI) developers are considering a proposal to burn 2% of the token’s circulating supply. The aim is to enhance scarcity and bolster network security for the dog-themed crypto platform. Lead developer B revealed that they plan to burn approximately 190,918,585,431.84 $FLOKI tokens, amounting to around 2% of the current circulating supply. At current market prices, this token burn would equate to over $11 million.

Floki set to burn 2% worth of its tokens in supply

Token burns involve permanently removing tokens from circulation by transferring them to a crypto wallet that no single entity controls. This strategy aims to decrease the token supply, thereby potentially increasing its value over time. The proposed token burn by Floki follows a previous burn event conducted in January 2023.

Interestingly, the January 2023 burn was followed by a notable 70% price spike in the days that ensued. Developer B disclosed that the tokens slated for the proposed burn would originate from the supply stored on the Multichain bridge. Multichain was a platform designed to facilitate token transfers between various blockchain networks.

However, the platform faced a significant setback in July 2023 when it suffered an exploit, resulting in the loss of over $130 million in funds. Floki had taken precautionary measures before Multichain’s downfall by removing tokens from the platform. These tokens were subsequently held in a secure wallet. Developer B explained that they had noticed concerning signs with Multichain the previous year and promptly withdrew the bridge tokens into the Floki multisig wallet.

Rationale and market response

The decision to burn these tokens stems from a belief that it is the only trustless method to ensure they never enter circulation again. Following the announcement of the proposed token burn, Floki experienced a surge in its price. The token climbed as much as 13%, with a recent trading price showing a 10% increase. In comparison, the CD20, a metric used to gauge the broader crypto market, remained relatively unchanged over the same period.

The decision to burn tokens is not uncommon within the cryptocurrency space. Projects often employ token burns as a strategic move to manage token supply, enhance scarcity, and potentially drive up token value. By reducing the circulating supply, token burns aim to create a sense of scarcity among investors, which could lead to increased demand and higher prices.

However, it’s essential to note that token burns are not without controversy. Critics argue that while token burns may temporarily inflate token prices, they do not address fundamental issues within the project or provide long-term value. Additionally, some view token burns as a short-term solution that may not necessarily result in sustainable growth or development for the project.

Despite the debate surrounding token burns, they remain a popular tactic utilized by crypto projects seeking to manage token economics and enhance investor sentiment. For Floki, the proposed token burn signifies a strategic move aimed at both increasing scarcity and reinforcing network security. As the crypto market continues to evolve, it will be interesting to observe the impact of this proposed burn on Floki’s token dynamics and market performance in the long run.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Owotunse Adebayo

Adebayo loves to keep tab of exciting projects in the blockchain space. He is a seasoned writer who has written tons of articles about cryptocurrencies and blockchain.

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