Cardano’s Founder Take On the Plan to Burn $500M from Cardano’s Treasury
As Cardano enters the Voltaire era with on-chain governance, the debate over how to manage the treasury funds has come to the forefront. One proposal under discussion is the burning of ADA tokens, which has drawn strong objection from Cardano’s founder, Charles Hoskinson.
Burn Proposal
The proposal to burn ADA tokens from the treasury aims to reduce the token supply and potentially increase its market value. Proponents argue that this would create scarcity, potentially driving up demand and boosting ADA’s price, which currently stands at around $0.3166.
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Hoskinson Takes On the Proposed Burn
Hoskinson has emphasized that burning ADA from the treasury would essentially deplete valuable resources from the community. He pointed out that the treasury funds are not pre-minted tokens, but rather accumulated through a tax on block production and transactions. According to Hoskinson, the treasury represents the collective efforts of everyone involved in the Cardano ecosystem, including ADA holders and stake pool operators. Therefore, burning these funds would constitute theft from these contributors.
While expressing his strong opposition to burning the tokens, Hoskinson pointed out that the community, now empowered by on-chain governance, should democratically debate and vote on this proposal. He highlighted that one of the goals of a community-written constitution is to enable collective discussions on significant issues and decisions.
Community Member Responses
The broader Cardano community has shown mixed reactions to the burn proposal, with some expressing skepticism about its long-term benefits. Strong opposition has been voiced by individuals such as DRep Jaromir Tesar, who warned against the potential negative impact of burning tokens, highlighting the opportunity cost of not using the treasury funds to finance beneficial ecosystem projects and initiatives.
In contrast to burning tokens, some community members, like software developer Szilágyi Gábor, have proposed locking a portion of the treasury for one to two years. This approach would provide the community with time to adapt to on-chain governance and reduce the risk of rushed or ill-informed decisions.
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