Posted 3 years ago | by Ben Armstrong
Stellar’s Foundation Just Destroyed Half of its Lumens
In the Stellar Meridian in Mexico City conference was held on Monday, the CEO of Stellar Development Foundation announced that it had burned about 55 billion of the XLM tokens, which is over half of the cryptocurrency supply.
“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.”
Stellar’s Foundation held 105 billion XLM with 20 billion of that circulating previously. The burn saw the supply shrinking to 50 billion. The Foundation apparently thought that a big token burn was a better way to project how much it could use over the next decade, and calibrate to that number. Or in the words of Dixon, “To derive a plan from an arbitrary number serves no purpose.”
A Big Burn
Though most people were into the room who likely own the token, the crowd greeted the news warmly. Even that there was one participant in the packed room stood up and asked everyone to give Dixon a round of applause for what they did.
According to data provider Nomics, XLM’s price jumped about 14 percent, to $0.08 while the news was being announced.
Dixon said to CoinDesk :
“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.”
Still a Lot of XLM at Stellar
According to the foundation:
-There is 30 billion XLM controlled by the foundation and it divides that amount into several buckets.
-12 billion XLM is being held in the direct development fund (formerly called “operations”), to support the organization.
-2 billion XLM remains in “ecosystem support” (1 billion for currency support, and 1 billion for infrastructure grants).
-10 billion XLM is set aside to make investments (with 2 billion XLM for new products, and 8 billion XLM in its enterprise fund).
Finally, billion XLM (2 billion for marketing stellar and 4 billion for in-app promotions) is under user acquisition.
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.