What Happened: Cryptocurrency exchange Crypto.com’s native token CRO has rallied by over 70% in the past 24-hours, and its trading volume is up by 877%.
The cryptocurrency’s price skyrocketed after the company’s announcement confirmed a massive token burn ahead of its mainnet launch.
Crypto.com said it would destroy 70 billion of its CRO tokens, in what it describes as the largest token burn in the history of crypto markets.
Why It Matters: The cryptocurrency exchange stated that the token burn was an important step to fully “decentralize its network."
“The purpose of these burns is to ensure network security by not giving too much of an advantage to early adopters as preparations are being made for the March 25th Crypto.org Chain mainnet," a spokesperson for Crypto.com told Benzinga.
59.6 billion CRO tokens will be burned today, and the remaining 10.4 tokens will be locked in a smart contract on a schedule to be burned monthly.
According to the exchange, this will increase the level of circulating supply of CRO from the current 24% to over 80%.
Typically, the goal of token burning is to permanently remove a certain quantity of a token from the circulating supply to slow down inflation/influence a token’s price.
“There is not a direct correlation between the price increase and token burns, but one can induce that when the supply is decreased, the existing tokens become more valuable,” a representative of Crypto.com concluded.
What Else: Besides these changes in CRO’s tokenomics, the platform is launching the Crypto.org Chain blockchain on the mainnet on March 25.
The blockchain will serve as infrastructure for users to create payment networks, NFTs (non-fungible tokens), and DeFi (decentralized finance) applications.
“We believe that the world needs a fully decentralized, open-source, public chain with high speed and low fees.”, said Crypto.com in a blog post.
Image: Markus Winkler via Unsplash
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