Crypto Startups Are Destroying Millions of Coins

Publié le by Coindesk | Publié le

To that end, burning tokens, or destroying the cryptographic keys to these assets so they can't ever be recovered, has proven to be a selling point for investors, with ICO white papers finding projects promising they will destroy new tokens as they return to the issuer as earnings.

Take Switzerland-based Eidoo, which just announced that it was burning 1 percent of the total supply of the EDO tokens it created when it did its ICO in November.

Its latest blog post reads: "The excellent news is that we will destroy 920,000.00 EDO tokens starting from August 31st. This means that we are going to permanently remove one percent of the total supply of EDO tokens."

For Eidoo, this means it earned the tokens it created back as revenue from helping startups to run ICOs on its app.

"Burning 50 percent of our revenue is not really creating any loss for the company itself, but it is creating value for the entire EDO token holders."

After its $27.9 million ICO in November left a little over 9 percent of the tokens designated for the sale unsold, it burned them, as it had promised to do.

Eidoo's upcoming burn won't be the most significant instance in recent memory, as crypto exchanges that have launched their own tokens have most readily embraced the model.

The Binance token has been used to lower the cost of transactions for users, helping to bring more people onto the platform, as Mohamed Fouda explained in a recent Medium post about why exchanges are launching tokens.

KuCoin is using 10 percent of its profits each quarter to buy back and burn its own tokens.

"The way a given token works defines its very nature. Regulators themselves are already doing a good job trying to define the different categories of tokens which are being used today," Tomasicchio wrote.