Token Burns Can Destroy Value

We don't want artificial manufactured value for the current user base, we want growth and a fair distribution to everyone that partakes in the system.

The aim of most individuals in Crypto is to make profit and achieve success but despite that as well requires we to see progress occuring in the crypto world to benefit from it.

If they are burnt for no reason, then this makes sense I guess. But if they are burnt in some sort of utility or value proposition, then that surely must result in an increase in value?

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Quite some ETH has been burned and the numbers are not that much up... Where's $15,000 ETH sir?

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Yes, I am one of those people who thought that burning coins was a great benefit...you destroyed my faith).

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Your post (and image) reminded me of a similar post I wrote two years ago when people wanted to burn the pre-mine. It just never made sense to me.

https://peakd.com/hive-173737/@sepracore/burning-the-ninjamined-stake-would-be-lighting-fire-to-usd30-000-000-in-market-cap-let-s-talk-about-it

This isn’t exactly related to your post, but my idea back then was to just go ahead and print the next X number of years of Hive inflation and put it into a distribution account that no one holds the keys to. Inflation would then be distributed from that account. The net result of how much Hive would be in technical circulation would be the same as our current model, but Hive’s market cap would sky rocket with minor market moves because this accounts Hive would be part of that calculation. This would allow people to be able to say, “Hive is a top X” blockchain, which does matter to some people more than others.

I don’t think we will actually do it or should but it was an interesting thought experiment.

Reminder: Inflation is crypto's killer function.

Be careful this will get you kicked out of the Bitcoin Maxis fan club.

You read my mind with this post. It is amazing how we can be on the same wavelength. I wrote down this concept as my post for tonight. Perhaps I will wait a few days to allow this one to settle in.

Either way, you nailed it. Burning money is a stupid idea. Even if you frame most crypto akin to stock, do we not see companies do capital raises by selling shares. Of course, if the company is shit, it does not good, same as with shitty token projects.

However, if Amazon or Tesla did an equity raise, nobody would bat an eye since those companies are growing and expanding.

Projects need to start incorporating business building ideas. That is what leads to success.

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But inflating it surely lowers the price? If we would raise BTC supply to 42 million all of a sudden, it would have to tank no? But I guess you would say that it would long term create more value because there is greater distribution?

Well... all that happens is that FIRE gets extracted from the LP and burned for whatever reward is being offered. In other words, all that happens is that FIRE tokens are extracted from the LP and the governance token loses value because it requires more governance tokens to attain the same amount of exit liquidity.

Clearly admitting there that demand for Governance Token increase.

There is no benefit in this case. Extracting liquidity from the market is not helpful because FIRE tokens are pegged to HIVE.

So you're arguing that because its pegged to hive, burning it is not beneficial at all because... It's pegged to hive? Huh?

OOPS!

What would happen if a crypto network was extremely divided and then one side came into power and simply destroyed all the tokens of the other side? This is a token burn as well, but it's also theft and permanently tarnishes the reputation of the network. Just because a massive amount of tokens got burned doesn't mean value is going to go up.

Absolutely absurd example.

I suppose what I'm saying here at the base-case is that nobody is paying attention to the other side of the equation. Yes, lowering supply can increase the token price, but it can also lower demand more than the supply was lowered, resulting in a net loss.

How absolutely absurd! You give it one set of principles, and then go to invalidate with no reasoning or explanation, why and how it works in EXACTLY THE OPPOSITE WAY. lolol!

This is why reducing yields on AMM yield farming networks is dangerous. Sure, you lowered inflation, that's great. But you also just massively reduced the reward, incentive, and demand to buy and stake the token in the first phardly

Absolutely nonsense and absurdity!

The ability to allocate inflation exactly where we want it based on uncrackable intelligent code reinforced by hundreds/thousands of servers around the world is the entire value proposition of crypto. The only reason to not allocate inflation to a certain area is if allocating inflation to that area becomes a net loss to the network. It isn't that difficult to allocate inflation to places where more value is created (demand) than dilution generated (supply).

Vague Nonsense. Proof: every single inflationary Currency, ever. You talk about Stability, but you have no idea of Bound Input Bound Output currency, and you treat stores of value in turn as depreciating shit, absolutely despising scarcity, in your nonsense stability abundance mindset. By the one virtue you're a complete idiot in regards to reality of economies, and markets, you probably haven't sold shit your entire life, but I think you've speculated extensively, and by the other virtue you're so full of shit that I think you're hardly capable of appreciating abundance, empty that cup once in a while.

On a very real fundamental level, burning tokens is an artificial scarcity tactic derived from the legacy economy that will eventually be proven as a toxic way of attempting to bring value to the network. We don't want artificial manufactured value for the current user base, we want growth and a fair distribution to everyone that partakes in the system.

LOL! Very Real Fundamental UltraBasement Level, burning tokens and artificial scarcity are a Toxic PROVEN way of only attempting to bring value to the network.

Toxic. Lol!

We don't want artificial manufactured value for the current user base, we want growth and a fair distribution to everyone that partakes in the system.

Certified Organic Moron.

I agree with you and burning the tokens itself doesn't do much for the network besides pump prices up temporarily. However, it is true that the supply does constantly grow so there still has to be some value the network has to add for it to stay at the same price.

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I don’t still understand why you will just destroy money even though projects like bnb keep burning more money all the time. I don’t believe is the best thing to do

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I think that's the most untrue statement i've ever heard in crypto nor does the data support it.. I can give a few examples.. So bitcoin over the course of it's existence has for the most part historically went up. HIve has historically went down, lol. Bitcoin MYK has historically went up and seems impossible to go down to it's lowest point.. Hive has.. what bitcoin and bitcoin myk have in common is their deflationary quality.. now i'm not saying you don't need more than just deflation. However the data supports most people treat crypto as a store of vlaue over a payment system or coin.. So why would an industry that values scarcity and sov.. not value token burns it doesn't even make any sense what you saying. hive performance wise is terrible. what if i don't wanna do all the blogging and spend a ton of time here to make a few extra bucks.. that's not the best system.

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Burn luna, sure it will fix things :V

Burning does not help at all when you're still printing, and besides all, "fake scarcity" does not solve the real issue: the lack of value behind a token.

Let's take Luna for example, it used to "fix" a problem, to be useful, and it had a system to avoid being abused, it had... like past tense, the Shet went down and all of it hit the fan and made a complete mess over everyone, a Ducking river of blood... And all because it no longer had a USE, it became a luxury instead of a commodity.

Crypto are not necessary, they are modern commodities, something to replace the already corrupted and useless banking system, but somehow, someday, it became about "BEING" that same system, and people found the ways, to imitate banking with stacking(Long term savings), governance and other things that just imitated the old ways.

So not long after it came... We started a pseudo stock market on the cripto exchanges, to the point we all believe the thing that worked on the stock, will work on the tokens, but gotta say something a lot of people will call me crazy for saying: Is not.

Stock market in fact doesn't work properly, is a patch up economy, something derived from the chaos, and imitating it is no use, if Luna token get "fused" in the new luna, and 5 luna tokens become 1 lunextoken2, it will still be 5 luna anyway, just a new name... These methods that resemblance the stock market are useless. Because all these are the sins we were trying to escape from in first place...

Anyway, the hell if I know, I'm not an economist, heck, I don't even have enough hive presence to be able to speak up about it.

From a logical point of view... token burning can ideally increase the value of a token if the demand remains pretty much the same as before. So with fewer tokens, and the SAME demand, sell orders get filled quickly than before, so that's way it can grows. But like you said this is not a absolute rule.
Stay well bye :)

Yes, lowering supply can increase the token price, but it can also lower demand more than the supply was lowered, resulting in a net loss. This is why reducing yields on AMM yield farming networks is dangerous. Sure, you lowered inflation, that's great. But you also just massively reduced the reward, incentive, and demand to buy and stake the token in the first place.

Pasting this paragraph to serve as my reference to remind me of the logic behind the relationship between token burns and demand.

The ability to allocate inflation exactly where we want it based on uncrackable intelligent code reinforced by hundreds/thousands of servers around the world is the entire value proposition of crypto.

Inflation + code + servers = value

On a very real fundamental level, burning tokens is an artificial scarcity tactic derived from the legacy economy that will eventually be proven as a toxic way of attempting to bring value to the network.

Two entirely different sets of presuppositions. One is based on abundance and the other on scarcity. I am now getting what I first heard from taskmaster about the suitableness of this idea of abundance in digital space.

Crypto is all about the wide distribution of not only tokens but also power. We accomplish this by embracing an abundance mindset; not one rooted in corporate artificial scarcity.

Again, a great way to capture the value proposition of cryptocurrency in understandable statements. It's nice to see how token and power distribution are related to this idea of abundance.

The above four quoted paragraphs capture for me the entire argument of the article. I will be needing this for review since I am still in the process of digesting these new ideas.

Thanks!

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A 3 minute reading time, bro are you ok?

Hey, you cleared up a misconception I had, but I also have another question.

What if 60% of the circulating supply was blocked forever in an account from which nothing can ever be withdrawn, would that help?

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5 years this has been happening to me, it started here, around people that are still here. Homeland security has done nothing at all, they are not here to protect us. Dont we pay them to stop shit like this? The NSA, CIA, FBI, Police and our Government has done nothing. Just like they did with the Havana Syndrome, nothing. Patriot Act my ass. The American government is completely incompetent. The NSA should be taken over by the military and contained Immediately for investigation. I bet we can get to the sources of V2K and RNM then. https://peakd.com/gangstalking/@acousticpulses/electronic-terrorism-and-gaslighting--if-you-downvote-this-post-you-are-part-of-the-problem

It's hard to imagine that people think it's a simple as burning tokens.

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In gaming we have what is called "money sinks", they usually work as ways to balance out inflation.
They give value to a way by which we spend money out of the system and it usually is monitored to see if the same money that comes in also goes out, keeping in mind that
Hive tried to copy games and let's be reminded that games are not perfect per happened but the theory behind them theoretically is, games especially nowadays are made with developer and publisher profit in mind sadly.