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Klaytn Foundation Proposes Burning 5.28B KLAY Tokens, Cutting Token Supply by Nearly 50%
The proposal suggests an initial burning of 73% of the reserve supply, amounting to 5.28 billion KLAY tokens or approximately 48% of the total token supply.
Updated Feb 22, 2023, 3:39 p.m. Published Feb 22, 2023, 8:36 a.m.
Klaytn Foundation, one of the key developer and code maintainers of the Klaytn blockchain, has submitted a tokenomics optimization proposal to its Governance Council (GC) to help Klaytn develop into a sustainable decentralized network.
The proposal will be voted on by the GC, a group of network participants that currently oversee the governance of the Klaytn network, from Feb. 22 to Feb. 28.
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The proposal includes short-term tokenomics improvements: from the initial burning of 73% of the reserve supply, amounting to 5.28 billion KLAY (approximately 48% of the current total KLAY supply), to enhancing transparency in information disclosures and modifying the management structure of ecosystem resources.
Over 75 million KLAY has been burned to date through strategic buybacks and the burning of gas fees. Currently, around 3.073 billion KLAY is in circulation.
Out of the initial minting reserve of 7.48 billion KLAY, the Foundation looks to initially burn 5.28 billion KLAY that has remained unused in the last three years and eight months. Approximately 200 million KLAY that has already been contracted to be paid to GroundX, the subsidiary that developed the Klaytn blockchain, for infrastructure development, network operation and management services will be transparently executed.
The remaining 2 billion KLAY will be designated as the "KLAY Value Creation Reserve," which will only be channeled towards use cases and scenarios that will help facilitate deflationary KLAY tokenomics.
Such tokenomics are intended to create long-term value for KLAY tokens. “The Foundation looks to increase KLAY demand in a few ways: first, increasing on-chain interactions by collaborating with major portfolio projects as well as fostering services within the Klaytn ecosystem, especially dapps that look to ‘use and burn’ KLAY as their main tokenomics model,” Klaytn said in the proposal.
The foundation added it aims to increase the utility of KLAY beyond transaction fees by securing infrastructure services that are necessary for the ecosystem, such as oracles, as well as investing in high-growth potential projects necessary for the Klaytn ecosystem, such investments will channel returns back to the ecosystem and leverage said returns to expand KLAY demand.
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