$167 Million Worth of EOS Tokens Have Been Burned
EOS decided to remove over 34 million EOS worth $167 million from the circulation supply permanently. This massive burn is an attempt to try to lower the inflation rate on the blockchain from 5 to 1 percent.
15 or more of EOS’s 21 block producers voted on July 31, 2018, to burn 34 million idle EOS tokens from the blockchain’s savings account.
The savings account was established in January of 2018 when EOS was launched. But the account has been inactive for eight months, just accumulating funds and not distributing any. Nearly 3.6 million EOS ($17 million) is issued and deposited in the eosio.savings account on a monthly basis. And the amount is only growing due to inflation.
The EOS blockchain has an inflation rate of 5 percent per year which is distributed like so: 4 percent of this inflation is deposited in the eosio.savings account while 1 percent goes to the block producers.
On the 22nd of April 2019, the EOS block producer, EOS Nation, issued a proposal to burn over 34 million EOS tokens. The proposal sought to remove the 4 percent inflation and keep the 1 percent inflation for block producers. It received much support from the community and block producers. The voting process will end at the end of May.
“This large quantity of accumulated tokens has now become excessive and if we continue to allow it to keep growing, it will eventually become an attack vector for the network,” read the proposal.
On May 7th, the initiative was carried out and 34,171,037 EOS was permanently burned from the circulation supply. However, this removal did not disturb upcoming contributions to the savings account and inflation payments will still be made until the vote to reduce inflation is passed.
Even Dan Larimer, the project’s founder, has personally stated that believes the token burn is a good idea. He also stated that the total inflation model has to be changed so that savings fund does not get the 4% deposit.
“I’d strongly recommend disabling 4% and burning savings. Only increase inflation if cost of being a bp increase.”- said the CEO.
By reducing the total circulation supply, EOS token holders are at an advantage. This is because each token will represent a higher value as there will be fewer of them.
Featured Image: Ethereum World News