November 5, 2019, | AtoZ Markets – Stellar’s native token XLM registered fresh gains on Tuesday as its founders decided to wipe out half of the coin's market supply.
The Stellar Development Foundation announced yesterday that it has burned 55 billion XLM tokens. Earlier, the total supply of XLM was 105 billion, out of which 20 billion were in circulation. The foundation’s CEO Denelle Dixon stated that they removed 5 billion XLM from their operating fund and 50 billion XLM from their airdrop program.
XLMUSD Price Surges
The surprising announcement sent the price of XLM soaring from around $0.07 to a high of $0.087. Since hitting that high, the price of Stellar declined a little to trade back down to $0.080. Currently, Stellar is the 10th biggest cryptocurrency by market capitalization. The XLMUSD pair is up over 64% from its 2019 low of $0.054 on September 25th.
At a current price of $0.080 per token, the value of the burned tokens is nearly $4.7 billion.
The upside tick nevertheless came after a depressive 2019. XLM earlier plunged by more than 80 percent against BTC, establishing a year-to-date low of 556 sats on September 13. The Stellar token rebounded only after Bitcoin’s uptrend halted near the $14,000 level in July, showing that the gains came from traders’ hedging strategies instead of solid fundamentals.
Why Stellar Burnt XLM Tokens
The sudden-burn led critics – mostly followers of the XLM rival groups – to speak ill of SDF. Many said that Dixon & Co. was running out of good news so they merely planned to create one. Leo Cheng, the co-founder & CEO of Machi X, even said the XLM is useless as a utility token and burning half the supply of something that’s “worth zero still makes it zero.”
What does everyone think is the reason for the #XLM burn?
— Mr. B XRP (@XrpMr) November 5, 2019
Let’s hear it folks....
Ready, set, go!
However, SDF clarified in its announcement that the reason it was pulling the plug on 55 billion XLM tokens was simple: they didn’t need them. Excerpts from their statement:
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 […] 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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