Floki Inu DAO Approves Burning Tokens Worth $100M
Floki’s price is rallying in a seven-day run amidst the approval of burning tokens. The uptrend witnessed in the past week coincides with the decision exercised by the Floki Inu community in voting in support of the governance suggestion to burn 4.2 trillion tokens. Explaining the proposal, the governance suggestion seeks to leverage the cross-chain bridge and reduce transactional tax.
Burning Tokens Mechanisms
The developers explained that burning tokens involves a mechanism to lower supply. Reducing supply yields an additional value for the remaining tokens since demand levels are unchanged. In addition, the developers considered approving the proposal would eliminate security risks within the bridges. The developers supported the rationale by indicating that $2 billion worth of tokens disappeared from the cross-chain bridges.
The team indicated that multiple exploits and data breaches affirmed the threat posed by cross-chain bridges when holding significant token supply. The proposal indicated that the occurrence of an exploit targeting Floki within the primary cross-chain bridge would turn calamitous given its 55.7% holding of the entire supply. The exploit would both drain the liquidity pools and destroy the entire project.
Floki Inu developers disclosed that the proposal to burn the tokens is a constituent of the broader plan to convert the Shiba Inu dog-themed project into a critical DeFi. In particular, the team confirmed launching Floki Locker alongside the metaverse-based Valhalla game.
The Floki Bridge
The developers admitted utilizing the Ethereum ecosystem for its initial Floki issuance. Later the developers would bow to the community’s request in 2021 to expand the scope and leverage the cheaper BNB chain. The relocation prompted FLOKI to enter a contract indicating a 10 trillion tokens supply. The contract stipulated that the entire circulating tokens supply would not surpass 10 trillion within the cross-chain bridge.
The contract facilitated FLOKI transfer across the BNB chain and Ethereum. The team demonstrated using 600 billion tokens drawn from the treasury on both platforms for initially funding the bridge.
The developers indicated that the majority of Floki token holders preferred Ethereum. The process left the majority of tokens within the ETH chain. The balance reveals that bridge absence would hardly erode the project’s stability.
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