MEXICO CITY – The Stellar Development Foundation has burned 55 billion of its XLM tokens, over half the cryptocurrency's supply, CEO Denelle Dixon announced from the stage of the Stellar Meridian conference Monday.
Previously, there had been 105 billion XLM in existence, with 20 billion in circulation. With this burn, the supply has shrunk to 50 billion.
"We didn't start by wanting to burn. We started by asking, 'What do we need?'" Dixon told the room of roughly 200 attendees."As much as we wanted to use the lumens that we held, it was very hard to get them into the market."
The organization decided instead it was better to project how much it could actually use over a 10-year period and calibrate to that number. "To derive a plan from an arbitrary number serves no purpose," Dixon said.
The news was greeted warmly by the crowd, many of whom likely own the token. One participant in the packed room stood up and asked everyone to give Dixon a round of applause, which they did.
In the hour following the announcement, XLM's price jumped about 14 percent, to $0.08, according to data provider Nomics.
:format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/27XWN2BEAVA2JAA65VA53Y7CBA.png "Stellar's Foundation Just Destroyed Half the Supply of Its Lumens Cryptocurrency (1)")
Dixon told CoinDesk that she couldn't anticipate how the crypto market might react, saying:
"I don't know. I really just don't have a sense at all of what the market response is. From my standpoint, it's how the ecosystem feels about it. We got a lot of positive response from the ecosystem because we are rightsizing what the foundation has and the foundation holds."
The foundation now controls 30 billion XLM, divided into several buckets.It has 12 billion XLM in the direct development fund (formerly called "operations"), to support the organization.
In "ecosystem support" it has 2 billion XLM remaining (1 billionfor currency support, and 1 billion for infrastructure grants).
Stellar has 10 billion XLM set aside to makeinvestments (with 2 billion XLM for new products, and 8 billion XLM in its enterprise fund).
Finally, under user acquisition, the foundation has 6billion XLM (2 billion for marketing stellar and 4 billion for in-app promotions).
The supply of XLM is fixed now because the community of token holders voted to discontinue inflation on Oct. 28.
"SDF will not burn any additional lumens," Stellar said in a blog post.
Denelle Dixon and Jed McCaleb, Stellar's founder, on stage at Stellar Meridian, Nov. 4, 2019, photo by Brady Dale for CoinDesk
I am an enthusiast and expert in the field of blockchain technology and cryptocurrency, particularly focusing on projects like Stellar. My knowledge is deeply rooted in the technical aspects, market dynamics, and strategic decisions made by blockchain platforms. To demonstrate my expertise, let's delve into the concepts mentioned in the article about the Stellar Development Foundation's recent token burn.
The Stellar Development Foundation (SDF) has undertaken a significant move by burning 55 billion of its XLM (Stellar Lumens) tokens. This action, announced by CEO Denelle Dixon at the Stellar Meridian conference, involved eliminating over half of the cryptocurrency's total supply. Before the burn, there were 105 billion XLM in existence, with 20 billion in circulation. Post-burn, the supply has been reduced to 50 billion.
The motivation behind this move, as explained by Dixon, was a strategic decision based on the Foundation's assessment of its actual needs. Instead of trying to bring all the lumens into the market, the organization opted to project its usage over a 10-year period and adjust its supply accordingly. This approach ensures a more controlled and purposeful use of the cryptocurrency.
The response from the market was positive, with XLM's price experiencing a 14 percent increase to $0.08 within an hour of the announcement. The article also mentions the difficulty faced by the Foundation in bringing lumens into the market, leading to the decision to burn a substantial portion of the tokens.
Dixon outlined the new distribution of the remaining XLM tokens under the Foundation's control. Notably, 30 billion XLM are now held, with 12 billion in the direct development fund, 2 billion in ecosystem support, 10 billion for investments, and 6 billion for user acquisition.
It's crucial to highlight that the supply of XLM is now fixed, as the community of token holders voted to discontinue inflation on October 28. This decision was communicated in a blog post, stating that the SDF would not burn any additional lumens.
In summary, the Stellar Development Foundation's token burn is a strategic move aimed at optimizing the use of XLM over the long term. This decision has been well-received by the community, resulting in a positive market response and a significant increase in XLM's price immediately after the announcement. The fixed supply, as voted by the community, adds a layer of stability to the Stellar ecosystem.
