• Floki Inu is proposing to burn $55 million of its tokens as part of a move towards positioning the project as a serious DeFi contender.
• The proposal also addresses security risks associated with cross-chain bridges and aims to reduce the tax levied on each transaction.
• If it passes, 4.97 trillion FLOKI tokens in the Floki bridge will be burnt.
Floki Inu Floats DAO Proposal for Token Burn
Floki Inu developers have floated a governance proposal to burn nearly $55 million of its namesake FLOKI tokens and reduce a tax levied on each transaction. The project hopes to position itself as a serious decentralized finance (DeFi) contender by reducing token supply and demonstrating focus on utility and fundamentals.
Rationale Behind Token Burning
Burning tokens is a way of reducing supply, which subsequently adds value to each token as long as the level of demand remains the same. This rationale is supported by the team’s efforts to increase Floki’s utility through mainnet releases such as FlokiFi Locker protocol and Valhalla metaverse game testnet release in bear market conditions.
Security Risks With Cross-Chain Bridges
The proposal also pointed out security risks associated with bridges since over $2 billion was lost or stolen from cross-chain bridges last year alone, according to CoinDesk reports. As such, an exploit on Floki’s main bridge could have catastrophic implications due to holding 55% of what should be its total circulating supply – enough to drain liquidity pools and destroy the project if exploited.
What Will Happen If Proposal Passes?
If this proposal passes, some 4.97 trillion FLOKI tokens in the Floki bridge will be burnt while the self-imposed buy and sell tax on each transaction will be reduced accordingly in order to incentivize trading activity within the network.
The proposed token burning initiative is seen as an important step towards establishing Floki Inu as a serious DeFi contender through regulating its token supply while addressing security risks associated with cross-chain bridges in order to protect users against theft or loss of funds. If successful, it could lead to increased usage and adoption across DeFi protocols