The Floki token community has voted to burn about five trillion of the token to improve the ecosystem. In a voting process held at Snapshot.org, the community highlighted some of the problems the Floki token was still facing and how the token burn will help improve the value of the cryptocurrency.
While proposing the burning of some of their tokens, the official proposal read,
“The purpose of this proposal is to let the DAO decide on two critical issues that affect Floki’s future:
- The original Floki cross-chain bridge.
- The 3% tax on the FLOKI token.”
After the voting, the developers will proceed to take down one of their key bridges. The bridge which the community voted to be removed is the one that allows users to move Ethereum-based Floki tokens over to the BNB Chain. Taking down the bridge means that the Floki ecosystem has to carry out a token burn of approximately five trillion Floki coins. Assuming these tokens are sold in the crypto market, it is worth roughly over a million.
However, many users ask, “are Floki developers destroying 5 trillion worth of their tokens?” The answer is no, and there’s a reason behind that.
Floki Cross-chain Bridge
When Floki launched its cross-chain bridge in 2021, the developers of this project needed to mint an equal amount of Floki tokens existing on the Ethereum network. This means the Ethereum network had about 10 trillion Floki tokens, so the BNB Chain also needed the same number of tokens.
To complete this project, Floki developers needed to deposit a “seed” token of 600 billion Floki units in the BNB Chain to ensure transactions.
Users moving from the Ethereum network to BNB Chain needed to deposit their Ethereum-based Floki coins into the bridge and receive the BNB-based tokens in return. By doing this, those tokens existing in the Ethereum network were effectively leaving circulation. This means that the tokens entering the BNB Chain didn’t add up to 20 trillion; rather, it was mirrored in the Ethereum network.
These tokens outside of the BNB Chain do not currently affect Floki token supply, so burning 5 trillion worth of Floki tokens won’t affect its price.
Floki Token Tax Removed
Apart from burning 5 trillion tokens, the Floki community also discussed removing the transaction tax in their ecosystem. In an official statement, Floki developers said, “The second part of this proposal involves removing the 3% buy & sell FLOKI transaction tax (or, more accurately, reducing it drastically to 0.3%).”
According to them, they have looked carefully at the project’s development, and feedback showed them that transaction taxes were doing more harm than good. Hence, the decision to remove the 3% tax from their ecosystem.
” We’ve gotten a lot of feedback about the transaction tax, paid attention to industry sentiments about it, and carefully looked at the data and our conclusion is that the tax is currently causing the project more harm than good and significantly limiting its growth and adoption. Many people (individuals and institutions) would NOT engage with a token with a high transaction tax,” Floki developers said.