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Gate.io, a leading global cryptocurrency exchange, has published its Q1 2023 burn report for GateToken (GT), the native digital currency of the GateChain blockchain and the exchange token for Gate.io. Each quarter, a specific portion of GateTokens undergoes a burning process, permanently eliminating them from circulation. Shortly, an automatic burn function will supplant the existing manual method.
GT tokens are burned as a supply control method, intending to oppose the effects of inflation-caused devaluation. This is similar to Bitcoin and Ethereum, which both have different mechanisms for controlling the supply of their respective native cryptocurrencies. For Bitcoin, supply control is achieved through its 21 million max supply cap and halvings that reduce issuance. In contrast, Ethereum uses a burn mechanism that takes a portion of transaction fees and removes those tokens from circulation.
As outlined in a recent burn report, around 2 million GT tokens were sent to the burn address and forever removed from the circulating supply. This accounts for roughly 2% of the circulating supply during the burn. About half of all GT’s total circulating supply has been burned to date, or approximately 160 million GT tokens.
GT tokens are currently burned through a manual process known as a ‘buyback and burn,’ with a certain portion allocated toward the burn each quarter. As for the benefits for GT holders, these burns can add positive pressure on the markets through buybacks and a gradual increase in scarcity through permanent supply reduction.
It was recently announced that GateToken would switch to an automatic burning mechanism some time in 2023. This new mechanism will be similar to Ethereum’s, where a certain portion of the gas fees from each transaction is automatically burned.
GateToken, and its native blockchain GateChain, have continually undergone extensive upgrades over the past several years, preparing both for anticipated increased performance needs and decentralization expectations for Web3. An intrinsic supply control mechanism is a part of upgrades to bring greater decentralization to GateToken in preparation for its integral role in Gate.io’s upcoming decentralized Web3 ecosystem.
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