The Stellar Development Foundation (SDF), a non-profit entity established in 2014 to support the ongoing development of the open-source Stellar protocol, has burned 55 billion of its XLM tokens, which accounts for half of the digital currency’s circulating supply.
In #Mexico City for the #meridian conference on #Stellar, blockchain technology & Mobil Money. Looking forward to sharing a panel with experts tomorrow @StellarOrg @samconnerone @RoshanConnects pic.twitter.com/g3EVOHjXwH
— Shakib Noori (@shakibnoori) November 4, 2019
Denelle Dixon, CEO and executive director at the SDF, confirmed during the Stellar Meridian conference on November 4 that the organization burned the large amount of XLM tokens.
T minus 30 minutes until SDF CEO and Executive Director @DenelleDixon delivers an important message for the #Stellar community, live from #Meridian in Mexico City!
Tune in here: https://t.co/H8HRkpEIK1
— Stellar @ Meridian (@StellarOrg) November 4, 2019
There were 105 billion in outstanding XLM tokens, with around 20 billion of them in circulation. Following the recent burn, the supply has been reduced to only 50 billion.
While delivering a presentation to around 200 attendees, Dixon remarked:
“We didn’t start by wanting to burn. We started by asking, ‘What do we need?’ As much as we wanted to use the lumens (XLM) that we held, it was very hard to get them into the market.”
The SDF felt it was better to estimate how many of the lumens it might use over the next 10-year period and calibrate the token supply to that particular number.
“To derive a plan from an arbitrary number serves no purpose.”
The SDF’s decision was greeted warmly by the attendees, as many of them may have purchased XLM tokens. One person in the room actually stood up and requested that everyone give Dixon a round of applause for making such a smart decision.
Following the announcement of the token burn, XLM surged around 14%, to $0.08, according to data from Nomics.
In statements shared with Coindesk, Dixon noted that she was unable to predict how crypto industry participants would react to the news.
“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.”
The SDF now has around 30 billion lumens, separated into several different buckets. For instance, there’s reportedly 12 billion XLM allocated for direct development fund (previously referred to as “operations”), to support the non-profit entity.
In terms of “ecosystem support,” the SDF has around 2 billion lumens left, out of which 1 billion will be used for currency support, and the other 1 billion is kept for infrastructure-related grants.
Stellar also has 10 billion XLM allocated towards various investments, with 2 billion lumens for newly-launched products, and the remaining 8 billion lumens for its enterprise development fund.
The SDF also has 6 billion XLM under user acquisition, with 2 billion for marketing Stellar-related initiatives and the remaining 4 billion lumens set aside for in-app promotions.
The XLM supply is now fixed, after the crypto’s community of token holders decided (through a vote) to discontinue inflation on October 28.
Stellar’s official blog post stated:
“SDF will not burn any additional lumens.”
An official statement on Stellar.org reads:
“Stellar isn’t mined, so the lumens now in public hands are there because we’ve worked hard to get them there over the last four years. As for the other two allocations, in time and after a lot of thought, we’ve come to realize they’re too large. SDF can be leaner and do the work it was created to do using fewer lumens. Over the years we’ve also seen that giveaways and airdrops have diminishing effects, especially in the outsized amounts our original plan was designed to support. So a smaller public-facing program would have just as much impact. The network and community around Stellar are now robust enough to allow SDF to carry less weight, too–we’re just a piece of a much larger whole, and the funds we steward should reflect that.”
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Author: Omar Faridi