In addition to the deflationary approach to increasing the value of KLAY, the protocol also revealed that it is committed to increasing the utility of the digital currency beyond its use as a gas fee.
The Klaytn Foundation, the blockchain startup in charge of maintaining the code of the Klaytn Blockchain, has proposed to reduce the total supply of the KLAY token by 50%. According to a Coindesk reportthe demands were contained in a tokenization optimization proposal that will affect the core perspective of the protocol.
The proposal is ready to be voted on by the Governing Council of the Klaytn protocol in an event that will run from February 22 to 28. If the proposal is approved, up to 5.28 billion KLAY units will be burned. This equates to 73% of the reserve supply and around 48% of KLAY’s total supply.
Klaytn Blockchain rose to fame in June 2019 thanks to the development efforts of GroundX. It was designed as a public blockchain focused on the metaverse, gamefi, and the creator economy. Due to GroundX’s affiliations with Korea’s largest mobile platform, Kakao, the protocol recorded immense popularity at the time.
The protocol launched with plans for a total token supply of over 11 billion KLAY units. Since its creation, around 3.1 billion tokens have been in circulation so far. With the new proposal from the Klaytn Foundation, the initial minting pool of 7.48 billion tokens will be reduced to 2.2 billion after extinction.
The $200 million on top of the remaining supply was designated as a reward for GroundX. This will serve as payment for works destined to infrastructure development, network operation and administration services.
The remaining 2 billion tokens will now form the ‘KLAY Value Creation Pool’ and will only be deployed in initiatives that can further the deflationary momentum of the protocol.
Long-Term Value of the Klaytn Foundation Burn Proposal
Converting a digital currency asset to a deflationary one is considered a bullish move that is billed to encourage future value accumulation of the currency. The same sentiment applies to KLAY.
“The Foundation seeks to increase demand for KLAY in a number of ways: first, by increasing on-chain interactions by collaborating with major portfolio projects and by fostering services within the Klaytn ecosystem, especially dApps looking to ‘use and burn’ KLAY like its main tokenomic model,” Klaytn said in the proposal.
In addition to the deflationary approach to increasing the value of KLAY, the protocol also revealed that it is committed to increasing the utility of the digital currency beyond its use as a gas fee. Options being explored include the introduction of Oracles. Additionally, the Klaytn Foundation said it is looking for new partnerships in the broader ecosystem that can help bolster the protocol.
The KLAY token is currently changing hands at $0.3141, up 0.86% in the last 24 hours at the time of writing. The coin is down more than 92% from its all-time high price (ATH) of $4.38.
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Benjamin Godfrey is a blockchain enthusiast and journalist who enjoys writing about the real-life applications of blockchain technology and innovations to drive mainstream acceptance and global integration of emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain-based sites and media. Benjamin Godfrey is a lover of sports and agriculture.
