Burning tokens for a crypto project is nothing new. Many resort to this to support the course of the native coin. But the Cryptosnake play-to-earn team took it to a whole new level.
What is token burning
Scheduled burning of cryptocurrencies means sending a certain amount of cryptocurrencies to address zero. Thus, the tokens are irretrievably destroyed.
The process can be compared to the usual money burning. Many economists, such as Stephen Landsburg, talk about the feasibility of regular currency burning to improve citizens’ welfare. Economists believe that reducing the currency in circulation while maintaining the volume of goods and services in the economy makes all the holders of this currency richer.
This mechanic refers to the balance of supply and demand. The lower the supply, the higher the demand, and vice versa. By burning dollars, you can reduce their supply in the market, thereby making dollars a little more valuable. So the destruction of money is a kind of charity.
But, of course, on a macroeconomic scale, this will not have a significant effect. In addition, few of the Central Banks decide on this. Many countries have actually abandoned the policy of burning the currency. And this is one of the reasons why dollars, euros and other currencies depreciate by several percent every year.
But in the cryptocurrency market, token burning is carried out, and everywhere. For example, Binance used 20% of its profits to buy back and burn BNB tokens quarterly until 2022. Now, thanks to the Bruno algorithm, combustion is automatic. Other projects related to cryptocurrency adhere to a similar policy. This allows you to keep the cryptocurrency exchange rate against the fiat dollar.
SNK Burning Fest
In Binance’s example, 20% of profits is not that much when compared to the total turnover of BNB. As for the Cryptosnake game, the project team plans to burn 200 of the 280+ million SNK tokens. This is more than 70% of the turnover — a huge amount even by the standards of the crypto market.
Thus, the team plans to rehabilitate the token rate, which has decreased as a result of the sale of coins by private investors. Today 1 SNK = $0.0022.
In essence, the team is sacrificing possible profits in favor of the development of the game. At today’s exchange rate, 200 million SNK = about $440,000. Cryptosnake are ready to burn this money to make their players richer and enable players to earn more.
The first stage of Burning Fest began simultaneously with the start of sales of new gaming NFT artifacts. Game artifacts help to strengthen the snake or open up new opportunities in the game that are not available to ordinary players. All SNK tokens collected from artifact sales are sent to address zero.
As far as we know, Cryptosnake plans to continue burning until the 200,000,000 SNKs will be destroyed. The confirmation of token burning can be seen on BSCsan — all transactions on the blockchain are transparent. The data shows that 2,220,125 SNKs have already been burned in the first day.
The coin went up after the news. The Coinmarketcap chart shows that in the first half day after the announcement of Burning Fest, the SNK token grew by 9%. This is the largest daily increase in the last month. As the next tokens are burned, the rate will probably further strengthen. Although, of course, it is impossible to know because the price depends on many factors.
In any case, the burning of several hundred thousand dollars in favor of the players cannot go unnoticed. Such an act will definitely strengthen the reputation of the game and attract new players.
Official sources:
Cryptosnake.game website
Cryptosnake on Discord (project news, communication, streams, competitions)