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On February 22, the Klaytn team presented to the Klaytn Governance Council (GC), recommendations (KGP-6) for optimizing the KLAY tokenomics to ensure a more sustainable and verifiable token economy. According to the already approved plan, 5.28 billion KLAY is to be burned, which is about half of the total number of coins in circulation. This event will also coincide with the Kore hardfork. What does this mean, and how will it affect Klaytn and the price of KLAY?
Klaytn, South Korea’s leading public open-source blockchain for the metaverse, play-to-earn (P2E) gaming, NFTs, and creator economies, launched in June 2019. It is currently expanding globally from its international base in Singapore. KLAY is a native blockchain digital asset that ensures the operation and security of the Klaytn protocol.
Klaytn (KLAY) ranks 60th in the CoinMarketCap ranking with a market capitalization of $886 million, ahead of popular tokens such as Maker (MKR) and Optimism (OP).
After the upgrade and burn announcements, the token price briefly climbed to $0.31, but now it’s down to $0.29. The trading volume during the last 24 hours rose 90.06% to $157,483,590. KLAY’s current price is 93% below the historic high of $4.38 set on April 2, 2021.
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The proposal, titled KGP-6, was approved on February 28 unanimously by the 26 participating members of the 31-member GC:
During the burning process, tokens are removed from circulation, reducing the number of coins in use. They are sent to a wallet address that can only receive tokens. Burning usually has a positive effect on the price of the asset, making it more valuable through deflation.
The v1.10.0 (Kore) was released in late 2022. It contains a hard fork upgrade that results in backward-incompatible changes. The 5.28 billion KLAY burn will coincide with hard fork completion.
Klaytn has two networks: Baobab and Cypress, and they serve different purposes. Baobab is the public testnet for Klaytn. Cypress is the mainnet in which the Governance Council (GC) runs consensus.
All Baobab/Cypress nodes must be updated to v1.10.0 or higher before the target block number. For Baobab the process was completed in January 2023 and for Cypress the event is scheduled for March (to be announced in the next release (v1.10.x).
The hard fork contains an implementation of the network voting method (KIP-81), a new GC reward structure (KIP-82), and changes to the Ethereum virtual machine (EVM). More details are here.
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