Zilliqa (ZIL) burn sees 3 million coins removed from circulation
- The Zilliqa developers are keeping over 3 million ZIL tokens aside to increase more demand for the token.
- The tokens are not completely destroyed but kept aside for recyclable use in the future.
- The price of ZIL token has grown slightly since the developers introduced burning for the crypto asset.
Since the Zilliqa network executed its token burning, more than 3 million Zilliqa coins (ZIL) have been taken out of circulation. The move is a deliberate one to make the coin a bit scarce and more valuable.
Amrit Kummer, president of Zilliqa, updated the ZIL community via Twitter about the shrink in the token’s circulation. He added that the total value of ZIL tokens withdrawn from circulation amounts to $500,000, based on the current value of the token.
Concept of the ZIL coin burn
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As with other types of crypto assets, a date is usually set aside for what is called coin burning. The idea is to reduce the number of tokens in circulation. It is believed that if the tokens are made scarce, it will increase the worth of the coins since demand will outpace supply.
This systematically leads to an increase in the price of the token. The same concept has been applied to the ZIL token burn, but a slightly different method.
Zilliqa taking a slightly different approach
By definition, a coin burn is when a certain number of a digital coin’s circulating supply is destroyed when the funds are sent to an unretrievable blockchain address. Other crypto-asset developers carry out this exercise from time to time. Sometimes the activity is carried out at a specific time every year.
One such example is the Binance Coin (BNB), which aims to reduce the total circulating BNB coin from its 200 million ICO volume to 100 million each quarter of the year.
However, in Zilliqa’s case, the ZIL coins set to be taken out from circulation are generally sourced from transaction fees.
Also, unlike other types of token burn where the tokens are destroyed, the ZIL tokens are not destroyed.
The coins are taken to a special address where they are locked but may be reusable in the future. They are kept for recycling when the need arises.