The decentralized autonomous organization (DAO) of the popular dog-themed meme multi-chain coin, Floki Inu, has given its approval to a 4.97 trillion token burn.
Last week, members of Floki DAO voted on a governance proposal that sought to burn the cross-chain bridge tokens and reduce the Floki transactional tax. The proposal was eventually passed on Saturday night, with a massive 99.97% majority voting in favor of burning the bridge tokens.
Data on Snapshot shows that the proposal received 701 votes, out of which a meager 0.03% of the voting power was against the decision.
Moving forward, the Floki transaction tax will be reduced to 0.3% effective on February 3, while 4.97 trillion FLOKI tokens in the main Floki cross-chain bridge (currently worth $102 million) will be permanently burnt on Thursday, February 9, 2023.
For the uninitiated, token burn is a way of reducing the supply of an asset. This subsequently adds value to the token, assuming the demand remains the same. In the case of Floki, the tokens to be burned were worth around $55 million at the time the proposal was initiated but have since doubled in value.
The decision to burn the bridge tokens does not come as a surprise, given the spate of security breaches on cross-chain bridges. In 2022, more than $2 billion was lost to attacks on cross-chain bridges. The Floki team explained:
In Floki’s case, an exploit on our main cross-chain bridge would have a catastrophic impact on the project since this bridge currently holds 55.7% of what FLOKI’s total circulating supply should be. This is a lot of tokens, and that’s more than enough to drain the project’s liquidity pools and essentially destroy the project if exploited.
That said, the team believes that it would be in the best interest of the project to permanently disable its main cross-chain bridge and burn the tokens in the bridge.
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