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Cardano Ecosystem

Crypto News Flash (EN)

10/20/2021

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Cardano sets sight on token burning despite resistance from founder Charles Hoskinson

Cardano is now looking into a token burning mechanism, proof of burn (PoB) from Iagon tech company. Initially, founder Charles Hoskinson adamantly rejected the proposal, but now seems to have given in to pressure to cut down the 45B...

Cardano sets sight on token burning despite resistance from founder Charles Hoskinson

  • Cardano is now looking into a token burning mechanism, proof of burn (PoB) from Iagon tech company.
  • Initially, founder Charles Hoskinson adamantly rejected the proposal, but now seems to have given in to pressure to cut down the 45B ADA token supply.

The Cardano (ADA) blockchain has been considering introducing a proof-of-burn (PoB) mechanism to its ecosystem. Proposed by Cardano founder Charles Hoskinson, the PoB will be brought forth by the Iagon decentralized cloud services platform.

Invented by Iain Stewart in 2012, PoB is an alternative consensus algorithm with several applications. In proof of work (PoW) blockchains, burning cuts down energy consumption by reducing the amount of mining energy required. Additionally, the mechanism allows miners to “burn” virtual currencies, in exchange for mining privileges or the blockchain’s native currency, in this case, ADA. And as Iagon notes in its blog, the burning mechanism “may be used as a proof of commitment in blockchain protocols.”

To burn coins, miners need to send them to a verifiably un-spendable address, also known as a “black hole” address. Tokens in this address can never be retrieved. Resultantly, ADA tokens become scarce (deflationary pressure), boosting their value. Other token-burning techniques, such as Ethereum’s EIP-1559, burn a portion of the transaction fees instead.

Cardano Proof of Burn solution for deflationary pressure

Notably, the PoB solution has come in response to criticism directed to Cardano for its huge supply of ADA tokens. According to our data, the network has its token supply capped at 45 billion, with over 32 billion tokens currently in circulation.

Some members of its community are also concerned about growing competition from rival networks Ethereum and Binance Smart Chain (BSC). The former recently introduced a deflationary mechanism through the EIP-1559. Similarly, Binance Coin recently held its 17th token burning, removing 1 million BNB tokens, or $639 from the supply. Hoskinson noted after the observations were made that;

It’s time for the Cardano community to deal with hostile proposals,” 

Lagon’s protocol came up as the best choice for Cardano due to its censorship-proof abilities applied on all user wallets. The platform’s solution practically zeroes out the possibility of miners opposing ADA token burning.

Cardano’s PoB application was meant to be launched after the completion of the Alonzo series, which took place on Sept. 12. Hoskinson noted that the new application would engage new developers of the Cardano ecosystem and be ideal training for them. The tech entrepreneur even offered the best developer a reward in the form of an NFT.

Earlier on, Hoskinson was strongly in opposition to a token burning feature for the Cardano network. As CNF reported, Hoskinson said token burning was synonymous with “grabbing someone’s wife,” or siphoning gas out of other people’s cars for your own. Indignant with the suggestion, he said it would only benefit those looking to make a little extra cash then move on to something else more hyped.

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