Klaytn Plans to Burn 5.28 Billion KLAY to Rebalance Ecosystem Funds

The Klaytn team has proposed KGP-6 to the Klaytn Governance Council (GC) to optimize KLAY tokenomics for a more sustainable and verifiable token economy. The proposal was passed with a unanimous vote of 26 out of 31 GC members. The initiative is expected to coincide with the Kore hardfork in early Q2.

The current KLAY tokenomics have a total supply of approximately 11 billion KLAY, of which 3.073 billion KLAY is currently in circulation. Current emissions have been reduced to 6.4 KLAY being issued per block, totaling approximately 200 million KLAY annually. Over 75 million KLAY has been burned to date through strategic buybacks and the burning of gas fees.

Source: Klaytn Foundation

The proposed KLAY tokenomics will initially burn and remove 5.28 billion KLAY that has not been used in the last 3 years and 8 months. An additional 2 billion KLAY will be burned and removed from supply in 3 years if no use case is found in collaboration with Klaytn’s Governance Council (GC) and community. The Klaytn Growth Fund (KGF) and Klaytn Improvement Reserve (KIR) will merge and be re-established as the Klaytn Community Fund (KCF), while a new operational fund, the Klaytn Foundation Fund (KFF) will be established.

The initiative aims to establish KLAY as a deflationary asset in the long term. The team plans to support the growth of KLAY demand while managing KLAY supply by implementing management models that will allow more visibility into token emissions.

The proposal’s passing is expected to be followed by an initial burn of 5.28 billion KLAY and rebalancing of ecosystem funds that will coincide with the upcoming Kore hardfork in early Q2. The Klaytn team is optimistic that the initiative will result in a more sustainable and secure token economy, which will further drive the growth of KLAY.

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