Denelle Dixon, CEO of the Stellar Development Foundation, announced at the Stellar meridian Conference on Monday that 55 billion XLM tokens would be burned in order to facilitate proper growth of the Lumen cryptocurrency.
Burning Away Supply
Before the burn, there was 105 billion XLM in existence, but only 20 billion was in circulation throughout the ecosystem. With the new burn happening, the supply will shrink to less than half the original size and only allowing a maximum of 50 billion XLM in existence.
Dixon gave a statement about the matter. She explained that they didn’t want to burn Lumens at the start. However, they asked what would they need to do in order to further Stellar’s growth. They realized that the lumens they held were a lot, but putting it in the market was a complicated process.
The Proper Number Crunch
The organization concluded that a smarter plan was to project how much lumens could be used within a span of ten years. After they crunched the numbers, they would calibrate the number of lumens to that calculation. Concerning this, Dixon noted that planning through the use of some arbitrary number would not serve any purpose.
The attendees joining the announcement, around 200 in total, took to the news with good sentiments. Many of these attendees likely owned the token and they saw a decrease of supply as something that should be celebrated. One of those attending actually stood off their seats and asked the others to give a round of applause for Dixon, something they rather quickly obliged.
If $XLM can cut supply in half, they could also double it.
Alts can be great trading opportunities.
But it’s hard to justify holding many long-term with no ownership rights & at the mercy of a small centralized team.
— Luke Martin (@VentureCoinist) November 5, 2019
An hour after Dixon made the announcement, XLM enjoyed a hefty 14% increase in price. The growth totaled into Lumen’s value clocking in at $0.08. While it may not be anything as spectacularly expensive as Bitcoin, it’s a good start in the right direction.
An Ecosystem With Positive Sentiments
After the announcement, Dixon told the press that she had no idea how the crypto market would react to the decision to burn more than half of their tokens. She states that she believes it’s less about anything factual and more about how the ecosystem as a whole feels about the decision. She said that the ecosystem’s response was positive this time, due to its opinion that the Foundation did a proper resize of what the Foundation holds and what the Foundation has.
At the time of writing, the Stellar Development Foundation holds 30 billion XLM that they have divided into several buckets. The Direct Development Fund holds 12 billion that will be dedicated to supporting the company. Ecosystem Support holds 2 billion that’s been further split into two groups: 1 billion in currency support and 1 billion in infrastructure grants.
Another 10 billion has been set aside for investments, with 2 billion dedicated in new products and 8 billion for its enterprise funds. The last 6 billion is dedicated for user acquisition, with 2 billion dedicated in marketing and 4 billion for in-app promotions.