DebtDAO To Burn 18M FTX User Debt Tokens Citing Demand Frenzy

DebtDAO has to burn 18 million FTX User Debt tokens, FUD, following a recent value surge that caused a demand frenzy.

• What: DebtDAO  to burn 18M FTX User Debt (FUD) token
• Why: Trader excitement for the FUD token fueled an impressive FUD price rally on Monday, altering the value of FTX’s debt as the controversy around what is “fair value” spread
• What next: After burning, the rate will change the equivalence of 1FUD from $1 to $10, with more tokens to be created after FTX confirms the actual debt

Untenable excitement from cryptocurrency traders for the newly-issued FTX User Debt (FUD) tokens has fueled volatile price swings, controversies, millions in trading volumes, and a resolve to destroy most of the token’s supply permanently.

DebtDAO issued FUD last week, claiming it was on behalf of FTX creditors. FUD tokens, which represent 2% of FTX’s debt, have an initial supply and circulation of 20 million FUD tokens, giving every FUD token a value of $1 while representing around $100 million owed to FTX creditors. To this point, DebtDAO considered ‘$1=1FUD’ as the fair value. However, after the Monday price surge to $65, the debt’s value went above $220 million against FUD’s $113 price level.

Consequently, 18M FUD tokens will be burnt today, February 7, bringing the debt’s valuation to align with DebtDAO’s fair value. In the latest announcement, Huobi cited a DebtDAO proposal, saying, “The total issue will become 2 million FUDs and change from the initial 1 FUD=1 USD equivalent claim to 1 FUD=10 USD equivalent claim after the destruction.”

Notably, the Tron-based FUD token is unrelated to bankrupt crypto firm FTX, with DebtDAO revealing plans to create more tokens once FTX confirms the actual debt and spread out the extras via airdrops to FUD holders, who will get priority to claim their right on the debt.