Astar Proposes $38 Million Token Burn to Improve Tokenomics

Bittime - Blockchain network Astar proposed burning$38 million worth of ASTR (tokenomics) and drive the growth of its ecosystem. This article discusses the short-term and long-term impacts of token burns, the burn process and mechanisms, the reasons behind it, and the zkEVM that Astar launched.

Short Term and Long Term Impact of Burning Astar Tokens

Maarten Henskens, head of the Astar Foundation, explained that this token burning will have a positive impact in the short and long term. "In the short term, burning large amounts of ASTR tokens would reduce inflationary pressures and potentially increase the token's market value," Henskens wrote. "This immediate impact could increase investor confidence and strengthen the appeal of staking rewards."

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"In the long term, this move contributes to a more sustainable token economy by fixing early-stage inflation issues and adjusting the total token supply to realistic market conditions," he added.

Process and Mechanism of Burning Astar Tokens

This token burning proposal will go through a transparent and democratic process. First, the Astar Foundation will open a three-week panel discussion to allow the Astar community to provide feedback and input on the proposal.

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Following the panel discussion, voting will be held throughout the week to determine the fate of 350 million ASTR tokens, representing 5% of the total initial supply of these tokens. The tokens come from Astar Foundation reserves.

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If the proposal is approved, the tokens will be permanently burned from circulation. This will reduce the number of ASTR tokens in circulation, thereby potentially increasing their value. Staking rewards paid to ASTR token holders will also be adjusted to reflect changes in the supply of these tokens.

Reason Behind Astar Token Burning

The reserve of 350 million ASTR tokens was initially allocated for the Astar parachain slot on Polkadot. However, the upcoming Polkadot network update dubbed “Agile Coretime” will remove the parachain system funded through crowd loan auctions from the Polkadot ecosystem.

By burning tokens that no longer have a primary function, Astar can ensure that the supply of ASTR tokens remains aligned with the needs and goals of its projects.

zkEVM Integration and the Future of Astar

Apart from proposing token burning, Astar also continues to innovate by launching the zkEVM platform last March. zkEVM is a zero-knowledge based Layer-2 blockchain that enables cross-chain transactions between the Astar and Polygon blockchains.

This zkEVM integration is expected to increase the scalability and privacy of transactions on Astar, as well as open new opportunities for collaboration and interoperability with other blockchains.

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