Charles Hoskinson, the founder of Cardano, has recently expressed his opposition to burning the blockchain network’s treasury tokens, which amount to over 1.5 billion ADA, worth approximately $500 million. In a social media post on X on September 5, Hoskinson emphasized that these treasury assets were not simply preprinted tokens but were generated through block production and transactions.
Hoskinson argued that burning these assets would essentially equate to theft from Stake Pool Operators (SPOs) and ADA holders, as the treasury funds were contributed by individuals involved in building blocks and engaging in economic activities. He stated, “The entire treasury comes from people building blocks and economic activity. You are effectively stealing from every SPO and ADA holder if you burn the treasury.”
These comments from Hoskinson come at a time when there are increasing calls within the Cardano community to burn the 1.5 billion ADA tokens in the treasury following the recent implementation of decentralized governance on the network. With the completion of the first phase of the Chang hard fork on September 1, Cardano has made significant progress towards achieving full self-governance, making it the first layer-1 blockchain to incorporate a token-based governance system.
In light of these developments, the Cardano community has begun exploring ways to leverage its newly acquired governance powers. A community member, Big Pey, recently initiated a discussion on the potential burning of treasury assets, questioning whether the ADA community would vote to burn all of the ADA or consider alternative uses for the funds.
The proposal to burn the tokens has elicited mixed reactions within the community. While some view burning the tokens as a positive step that could potentially boost ADA’s price, others caution against the potential negative consequences of such a move. Jaromír Tesař, a decentralized representative (DRep) on the network, expressed his belief that burning the assets would be a “terrible mistake” and suggested that the funds could be better utilized to support Cardano’s development.
Tesař proposed several alternative uses for the treasury funds, such as launching additional Catalyst Funds, providing liquidity in DeFi, accelerating the development of scalability technologies, facilitating the deployment of stablecoins like USDC and USDT on Cardano, and investing in marketing efforts.
In conclusion, the debate surrounding the burning of Cardano’s treasury tokens reflects the diverse perspectives within the community on how best to utilize these funds to support the network’s growth and development. As Cardano continues to evolve and expand its governance capabilities, stakeholders will need to carefully consider the implications of their decisions on the network’s long-term sustainability and success.