The developers behind Floki Inu, the Shiba Inu dog breed-themed project, have put forward a governance proposal to burn nearly $55 million of its eponymous FLOKI tokens and lower a tax levied on every transaction.
Token burning is a way to reduce supply, which subsequently adds value to each token as long as demand remains the same. The Floki team hopes to position the project as a serious contender for decentralized finance (DeFi). “Floki’s recent DAO vote makes it clear that Floki is more than just a memecoin,” B, a member of Floki’s core team, told CoinDesk, referring to a decentralized autonomous organization.
“Floki has demonstrated a strong focus on utility and fundamentals: through the mainnet release of our FlokiFi Locker protocol and the first major testnet release of our Metaverse game Valhalla in a bear market,” added the core team member.
The proposal also pointed to safety risks associated with bridges as another rationale. Over the past year alone, over $2 billion was lost or stolen by cross-chain bridges, CoinDesk reported.
“Further exploits and data have emerged to show what threat cross-chain bridges could pose, especially when they hold a significant portion of the token supply,” the proposal reads.
“In the case of Floki, an exploit on our main cross-chain bridge would have catastrophic effects on the project as this bridge currently holds 55.7% of FLOKI’s total circulating supply. That’s a lot of tokens, and that’s more than enough to drain the project’s liquidity pools and essentially destroy the project if exploited,” they added.
If this proposal is accepted, approximately 4.97 trillion FLOKI tokens will be burned in the Floki Bridge, while the self-imposed buy and sell tax on each transaction would be reduced to 0.3%. The bridge would also be permanently disabled.
As of Friday’s press time, an overwhelming 99% of all voters backed the newly presented proposal, the governance forum shows.
Bridges refer to a blockchain-based tool that allows users to transfer tokens between different networks.
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The Floki Bridge
Floki initially issued its token on Ethereum with a total supply of 10 trillion tokens before eventually expanding to the faster and cheaper BNB chain in 2021 following community requests.
The team had to launch another contract on the BNB chain with their own total supply of 10 trillion tokens. However, this required a cross-chain bridge to ensure that the total circulating FLOKI supply never exceeds a total supply of 10 trillion tokens at any given point in time, and to allow users to transfer their FLOKI from Ethereum to the BNB chain and vice versa.
Back then, the team used 600 billion tokens from its treasury on Ethereum and BNB Chain to provide the initial funds for the bridge.
Since then, most holders have locked their FLOKI tokens on Ethereum and transferred them to BNB Chain. “As a result, most of the supply is still going [Ethereum] Chain there is now such a balance that the lack of a bridge would not threaten the stability of the project,” the developers wrote in the proposal.
FLOKI remained nominally changed over the past 24 hours, data from CoinGecko shows. The tokens are up 6% over the past week.
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