Klaytn to burn half of total token supply on April 17

Klaytn office in Singapore / Photo credit: Klaytn

South Korean blockchain firm Klaytn will burn approximately half of its Klay token supply on Monday, April 17, at block number 119,750,400. These tokens will be destroyed at around midnight Singapore time on that day.

The 5.281 billion tokens that will be removed come from Klaytn’s 7.281 billion Klay reserve, which were minted during the launch of the firm’s mainnet in 2019 to fund the expansion of its ecosystem.

The remaining 2 billion tokens in the reserve will be retained to fund future ecosystem opportunities. However, these will also be burned within three years if said opportunities are not secured.

At current prices, the tokens that will be burned on Monday amount to US$1.3 billion – equivalent to the GDP of a small country.

The proportion of the reserve with respect to the total circulating supply of Klay was too high compared to other blockchains, explains Sam Sangmin Seo, head of the Klaytn Foundation and one of its three representative directors.

“We wanted to remove the potential risk of shocking the market by releasing more tokens,” he continues, adding that this was also the main concern from potential investors and developers.

Klaytn underwent rebranding early last year when it announced plans for global expansion and a new mandate to become the blockchain of choice for metaverse and game developers.

Klaytn graduates from Kakao incubator

News of the token burn was first released in South Korea on March 14. This came with an announcement that the Klaytn Foundation was officially graduating from Krust Universe, a subsidiary of internet conglomerate Kakao that functions as an incubator for projects that have the potential for international growth.

Both Krust Universe and Klaytn Foundation were incorporated in Singapore in 2021.

While Kakao is no longer involved in the day-to-day operations of Klaytn, it retains a significant interest in the business direction of the blockchain. Five of Kakao’s subsidiaries sit in Klaytn’s 30-member governance council.

One of these subsidiaries, blockchain development company GroundX – the original developer of Klaytn – remains a key player within the Klaytn ecosystem even though it is no longer operating the mainnet.

GroundX is developing Klaytn’s crypto wallet Klip and the blockchain’s API service. It is also focusing on real-world applications of NFTs this year.

Seo says that the aim is for Klaytn to eventually become fully permissionless and decentralized. He stresses that the two concepts must be distinguished.

Business expansion efforts