Merit Circle hugely reduces supply with 200 million token burn

Merit Circle hugely reduces supply with 200 million token burn

Merit Circle has announced that 200 million tokens that would have been burned over years will now be burned immediately.

Gaming DAO Merit Circle has announced that a vote recently taken by community members has resulted in a decision to burn 200 million MC tokens at once, rather than slowly burn them over a long period of time.

According to the Governance Proposal, the tokens were originally set aside for community incentives and rewards. The wallet that held the tokens started with 294 million MC tokens, which amounted to 29.4% of the total MC supply.

However, it was deemed by the community that the tokens had no real utility and that it wasn’t worth waiting for the periodical burns. The decision was therefore taken to “get it over with”.

The explanation as per the Governance article by SadCatCapital was that:

“Burning them now will represent a significant reduction in total supply and fully diluted valuation, and will prevent the tokens from increasing our circulating market capitalization each month. Keeping these tokens negatively bloats our tokenomics data and serves no beneficial purpose.”

Reasons for the burn were further explained in the “Motivation” section. Here the following bullet points were set out:

  • Significantly reduce total supply and further reduce disparity between market capitalisation and fully diluted valuation;
  • Take away investor fear that these tokens could hit the market at some point;
  • “Cut the dead weight”;
  • Celebrate the 1 year anniversary of Merit Circle;
  • Enhance value of remaining supply;
  • No benefit in “waiting it out” as tokens would have taken a long time to burn

The Governance proposal also answered the question that said “Can’t we think of something better to do with the tokens as it seems a waste”, with:

“Burning a supply is only a waste if there is a better use for the same liquid MC. Every token use decision should lead to the max amount of value creation for the DAO. We think there are instances where there are better uses. Such as staking dividends, sales to strategic partners with long lockups, or incentivizing certain behaviors that will generate more profits to the DAO. However, as it stands today, and in the current proposal, we have enough MC available to facilitate these needs.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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