Tag: token burning

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Australia GMT Token Markets Solana

Adelaide-Based STEPN Announces $122 Million in Q2 Profits, Plans Buyback and Burn

On July 12, Adelaide-based move-to-earn platform STEPN announced a Q2 profit of US$122.5 million, which it says was generated through its platform fees.

In keeping with the economic plan outlined in the project’s whitepaper, STEPN plans to allocate 5 percent of this profit to its Q2 buyback-and-burn program. The Solana-based move-to-earn leader also revealed that a portion of the profit would be spent addressing security and cheating issues that have plagued the platform recently.

Details of Token Burn

According to STEPN, its buyback-and-burn program is designed to ensure its users are “best supported”. Generally, token burning is seen as a way to increase the scarcity of a token and therefore increase its price – STEPN uses this mechanism to increase its token’s value over time and make its platform more attractive to users. 

Based on the 5 percent figure cited in the announcement, the Q2 buyback-and-burn program should see just over US$6 million worth of tokens burnt. STEPN explained that the program may “take a few weeks to complete in order to avoid causing sudden price volatility”.

Security, Integrity Top Spending Priorities

After a string of DDoS attacks targeting the platform in the first half of 2022, the STEPN team says it has decided to spend more resources increasing server capacity and enhancing the security of the platform.

We are committed to delivering the best possible service to our users and have been working to amplify the platform’s security and server capacity to prevent future DDoS attacks. With the profits realised during Q2, we will be able to double down in our commitment to this and devote more resources to our efforts.

STEPN team

While the platform has always had an anti-cheat system, the team said part of the Q2 profit would be used to enhance this system:

We have heavily invested in this mechanism since day one and we will continue to do so [to] ensure the fairness of the STEPN game landscape. We are set to improve upon our AI’s ability to detect anomalies, prevent accounts from using bots for mining, accounts faking movement to gain additional rewards, and more.

STEPN team

Other areas of the business that will receive spending boosts heading into Q3 include team expansion, partnerships, and marketing.

STEPN Leads Emerging Move-To-Earn Sector

STEPN is one of the leaders in the emerging sector of move-to-earn platform: crypto-based apps that allow users to earn rewards by exercising. The platform has seen significant growth since launching in December 2021. By April of 2022, STEPN had soared in value 217x. 

Like most crypto projects, though, it has recently seen its value drop dramatically, partly due to factors affecting the whole market and partly due to a spate of DDoS attacks and cheating scandals that have rocked confidence in the project.

Currently, STEPN’s governance token GMT is changing hands at US$0.85, down around 78 percent from its all-time high of US$3.83, which it hit in April.

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Blockchain Cardano Hydra Tokens

Cardano Exploring Token Burning Mechanism Similar to Ethereum

The latest roadmap status update from Cardano suggests the blockchain may be investigating adding some form of token burning functionality, a feature that was added to Ethereum last year as part of the London hard fork update.

The Cardano update, released on its website on March 18, was vague about what is planned in terms of token burning, simply saying it was an option under consideration by the Hydra Team:

Finally, they inspected the options of token minting and burning within a Hydra Head along with scenarios of using tokens instead of datums.

Cardano status update

Confusion About Token Burning

The mention of token burning in this update was taken by some in the crypto industry to signal that Cardano founder Charles Hoskinson had dropped his known, long-standing opposition to token burning on the blockchain:

However, close followers of Cardano emphasised that the update stated token minting and burning may be coming to the Cardano layer-2 scaling solution Hydra, not the main Cardano blockchain itself:

Hydra is a layer-2 scaling solution for Cardano currently under development. Matthias Benkort, a Cardano software engineer, describes it as “an off-chain mini-ledger between a restricted set of participants, which works similarly (albeit significantly quicker) to the on-chain main ledger”.

Token burning being restricted to Hydra implies that the overall supply of ADA, Cardano’s native token, won’t be reduced and therefore won’t cause upward price pressure for ADA investors.

Hoskinson Attempts to Clarify

Hoskinson himself weighed in on the debate, retweeting a suggestion that Cardano is exploring token burning on its main blockchain and adding a GIF of an exasperated-looking Jackie Chan to express his frustration with the confusion:

Across the broader crypto market, token burning functionality has been implemented on many blockchains as a deflationary mechanism in order to increase token price. Last year, Binance burnt over 1.3 million BNB, at the time valued at almost US$400 million, in one of its quarterly token burns.