The THORChain developer team has published a community proposal to burn 60 million RUNE tokens in the protocol’s Standby Reserve fund. The tokens are valued at around $300 million at the current market price.
According to the proposal description, the token burning aims to free up capacity for more loans on the THORChain platform. The remaining tokens could become more valuable by reducing the supply of RUNE tokens.
The developers claim this would enable THORChain to onboard an additional $100 million in security for loans, equivalent to buying $50 million worth of RUNE tokens at the current 200% security ratio.
Some statements concerning the proposal may be considered controversial within the THORChain community. Although some members have attempted to develop such queries concerning how burning tokens increases lending power, others have been unwilling to support a theoretic approach.
The development team has responded by claiming that wiping 60 million tokens could see the RUNE token price rise on the theory of scarcity. They deem that this move would help to strengthen the position of THORChain as the globe’s deepest BTC pool.
The proposal continues to foster discussion as THORChain participants weigh the potential risks and rewards associated with the suggested token burning.