December 9, 2022

Charles Hoskinson Explains Cardano's Lack of Token Burning Mechanism

Charles Hoskinson Explains Cardano's Lack of Token Burning Mechanism

Unlike a number of other cryptocurrency projects, burning ADA tokens to create scarcity is not possible, because it would be "theft" of someone else's property, said Cardano founder Charles Hoskinson.

He replied to a user who rebuked him for his ignorance. According to a commentator named PerAsperaVinco, the destruction of part of the property increases the value of the rest.

Hoskinson clarified during the discussion that some other projects have a team-controlled pool of tokens.

“There are usually several large premines that the founders control and destroy in order to manipulate the price during periods of low liquidity. ADA doesn’t have that,” he wrote.

According to Hoskinson, all ADA tokens are owned bytheir holders and staking pool operators. They are rewarded in a coin and taking away their ADA for burning will be nothing more than theft of property, the founder of Cardano emphasized.

In the Ethereum network, the mechanism for burning coins as part of transaction fees was activated in August 2021 during the London hard fork.

At the time of writing, the total number of liquidated tokens exceeded 2.6 million ETH. According to the forecast, after updating The Merge and switching to the Proof-of-Stake algorithm, the network will become deflationary.

One of the commentators recalled that Ethereum is technically unlimited. ADA, by analogy with bitcoin, has a limit on the market supply of the coin, he noted.

Recall that Cardano bypassed Bitcoin in the ranking of global brands, taking 26th place. Digital gold was on the 30th position.

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