Earlier this month, the Stellar Development Foundation (SDF) announced that it had cut down available Stellar Lumens (XLM) by half, burning at least 55 million tokens.
At the time, several dissenting reactions poured in as expected, about the decision to do that, and its possible effects on the XLM community. Now, Ethereum co-founder and founder of Cardano Charles Hoskinson, has weighed in on the burn, describing it as unnecessary.
In a recent Ask-Me-Anything (AMA) session Hoskinson spoke about several issues, including the old wave of initial coin offerings (ICOs) and the Stellar burn, comparing it with Cardano’s ADA. According to Hoskinson, burns are pointless and no ADA can just be burned by Cardano:
“Burns never work. They are market manipulation on the short term for speculators, at the expense of the future of the protocol; and in our case, it would require us to steal ADA from people because there’s no giant pile of ADA that’s unallocated.”
Speaking specifically about Stellar, Hoskinson said that the burn was valueless, suggesting that the burnt assets could have found much better use, instead of a very short-lived market price appreciation that has since been lost.
“It’s basically saying, I can’t figure out what to do with this big pile of money, so I’m just gonna set it on fire to make money more scarce, to give a small gift to everybody. It’s insanity!”
According to him, all the money burnt could easily have been used for protocol and community development.
Hoskinson also spoke about ICOs. He explained that at the time when they were popular, there was a lot of funding which resulted in very huge market caps and “everybody got rich.” A lot of these projects, according to him, were “scam projects” and were clearly not worth all the money that was being thrown at it.
Regardless, the projects were still valued at billions of dollars. He further explained that because of all the money being pumped in, a lot of “unrealistic expectations” were created without taking into proper consideration, the sheer amount of time and energy needed for growth to take place.
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