The community behind Polkadot, the $6.3 billion blockchain founded by Gavin Wood, has just moved to cap the total amount of tokens the network will ever dish out.
On Sunday, Polkadot DAO, the community stewarding the network, executed a proposal to limit the cryptocurrency’s total supply to 2.1 billion.
The measure passed with an 81% approval among voting participants.
Polkadot’s coin supply is currently at 1.5 billion DOT.
The move tapers the mechanism that has been issuing 120 million new DOT tokens each year and codes scarcity into the blockchain’s coin supply.
Scarcity is a favoured narrative among crypto traders and is one of the strengths attributed to Bitcoin by its proponents. The argument is that tokens with high inflation dilute the value of investor holdings.
Other blockchains like BNB and Shiba Inu regularly burn their own tokens to reduce the total supply and conceivably make the tokens more valuable. Burns permanently remove tokens from supply.
DOT downturn
On Monday, DOT traded at $4.19, a 6% decline in the last 24 hours.
But, that’s in step with Monday’s broader market downturn as Bitcoin is down 1%, while Ethereum and XRP have both shed more than 3%.
Still, DOT has bled 93% from its all-time high of $4.46 achieved in November 2021.
Meanwhile, major cryptocurrencies, such as Bitcoin and Ethereum, have recently set new price records.
DOT’s token collapse is only part of the problems for the struggling blockchain.
Revamping Polkadot
Billed as an Ethereum competitor and designed by Gavin Wood, a co-creator of the much-vaunted rival, Polkadot has underperformed.
Ethereum is the largest DeFi blockchain with more than $132 billion in investor funds across several protocols.
Meanwhile, Polkadot and its parachains, subsidiary blockchains that run the same code as Polkadot, only amount to about $423 million in DeFi investor funds.
Last summer, Wood unveiled a plan to revamp the blockchain with a stablecoin and a reduction in the project’s security spend.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. Got a tip? Please contact him at [email protected].
