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Highlights
- Charles Hoskinson finally speaks on ADA burn prospects
- Constitutional provisions on the ADA Treasury burn
- Other protocols are embracing token burn mechanism, will Cardano endorse it soon?
Cardano Founder Charles Hoskinson has finally responded to some in the community who wants the protocol to adopt a burn mechanism for Treasury assets. While the tech innovator has always maintained an anti-burn stance, this latest take comes following the transition to the Voltaire Era.
Will Community Prevail in Cardano Burn Demand?
In communicating his stance, the Cardano Founder dismissed the prospects of burning ADA or funds in Treasury. He buttressed his point noting that the treasury did not come from some “preprinted tokens” that came out of nowhere.
He enlightened the community, saying the funds were aggregated from a tax on block production and transactions. “The entire treasury comes from people building blocks and economic activity,” he said adding that if the burn demands were to come into effect, it would mean “effectively stealing from every SPO and ada holder.”
The subject of burning 1.5 billion ADA is at the fore in the ecosystem now. While so many are in support of this move, Charles Hoskinson has a sizable number of stakeholders who shares his view.
Ecosystem proponent Dave (@ItsDave_ADA) reflected on the terms of the constitution. As predefined, the ADA in the treasury is prohibited from burning as it is a collective resource meant for ecosystem support. However, with emergence of Chang Hard Fork, there is a lot of gray areas that may be explored.
Since community governance will determine the next phase of Cardano evolution, the trend may change in due course.
Blockchains and Token Burning
Burning tokens is not uncommon in the digital currency ecosystem. Infact, many protocols integrates this mechanism into their Whitepaper as a means to drive value in the long term.
In simple terms, projects burn tokens when they send defined quantity of the asset to inactive wallets. With these assets locked forever, they become inaccessible and useless. Ethereum became deflationary when it launched the London Hard Fork (EIP 1559). Since then, a total of 4493914.1 ETH or $10,660,193,393 has been burnt per data from Beaconcha.in.
Today, beyond Cardano, some of the protocols with scheduled burn events include Terra Luna Classic (LUNA) and Shiba Inu (SHIB). To further automate the burn transactions, the Shiba Inu team launched a burn portal on Shibarium in August.
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