Developers behind Floki Inu, the Shiba Inu dog breed-themed project, have floated a governance proposal to burn nearly $55 million of its namesake FLOKI tokens and reduce a tax levied on each transaction.
Burning tokens is a way of reducing supply, which subsequently adds value to each token as long as the level of demand remains the same. The Floki team hopes to position the project as serious decentralized finance (DeFi) contender. “Floki's latest DAO vote makes it clear that Floki is more than just a memecoin,” B, a Floki core team member told CoinDesk, referring to a decentralized autonomous organization.
“Floki has demonstrated a strong focus on utility and fundamentals: through the mainnet release of our FlokiFi Locker protocol and the first major testnet release of our metaverse game Valhalla in a bear market,” the core team member added.
The proposal also pointed out security risks associated with bridges as another rationale. Last year alone saw over $2 billion lost or stolen from cross-chain bridges, as CoinDesk reported.
“More exploits and data have emerged to show how much of a threat cross-chain bridges could pose, especially if they hold a significant amount of a token’s supply,” the proposal stated.
“In Floki’s case, an exploit on our main cross-chain bridge would have a catastrophic impact on the project since this bridge currently holds 55.7% of what FLOKI’s total circulating supply should be. This is a lot of tokens, and that’s more than enough to drain the project’s liquidity pools and essentially destroy the project if exploited,” they added.
If this proposal passes, some 4.97 trillion FLOKI tokens in the Floki bridge will be burnt while the self-imposed buy and sell tax on each transaction would be reduced to 0.3%. The bridge would also be permanently disabled.
At writing time on Friday, an overwhelming 99% of all voters were in support of the newly floated proposal, the governance forum shows.
Bridges refer to a blockchain-based tool that allows users to transfer tokens between different networks.
The Floki bridge
Floki initially issued its token on Ethereum with a total supply of 10 trillion tokens before eventually expanding to the faster and cheaper BNB Chain in 2021, after community requests.
The team had to launch another contract on the BNB Chain with its own total supply of 10 trillion tokens. However, this required a cross-chain bridge to ensure the FLOKI total circulating supply at any given time never exceed a total supply of 10 trillion tokens and to allow for users to transfer their FLOKI from Ethereum to BNB Chain and vice versa.
At the time, the team used 600 billion tokens from its treasury on Ethereum and BNB Chain to provide the initial funds for the bridge.
Since then, most holders locked their FLOKI tokens on Ethereum and transferred those out on BNB Chain. “As a result of this, while the majority of the supply is still on the [Ethereum] chain there is now such a balance that the absence of a bridge would not threaten the stability of project,” developers wrote in the proposal.
FLOKI remained nominally changed over the past 24 hours, data from CoinGecko show. The tokens have appreciated 6% in the past week.