In the world of cryptocurrencies, scarcity is a concept that holds immense value. Scarcity can drive demand, increase the perceived value of a digital asset, and provide a sense of rarity that attracts investors. One way to achieve this scarcity in the crypto space is by reducing the token supply. In this blog post, we’ll explore the idea of reducing a token supply from 500 million to 100 million tokens and the potential benefits it can bring.
The supply reduction will go through BHero DAO and voting will be available for 2 weeks starting today.
You can start voting: by clicking here
Voting start: October 27th, 12:00 UTC
Voting end: November 10th, 12:00 UTC
Scarcity is an economic principle that suggests limited availability can increase the perceived value of an asset. This concept has been proven time and time again in the world of physical assets like gold, art, and vintage collectibles. It also holds true in the digital realm, where cryptocurrencies strive to mimic these real-world economic principles.
Here are some compelling reasons why reducing the token supply to 100 million tokens can be advantageous:
Increased Perceived Value
Reducing the token supply can make each token more valuable. When there are fewer tokens in circulation, each one becomes more scarce and, as a result, more valuable. Investors and users are more likely to perceive these tokens as valuable assets.
Enhanced Store of Value
Cryptocurrencies are often compared to digital gold, a store of value that can hedge against inflation and economic instability. By reducing the token supply, a cryptocurrency can better fulfil this role by creating a sense of scarcity, similar to the finite quantity of gold in the world.
Reduced Inflationary Pressure
Tokens with an unlimited or high inflation rate can face challenges with maintaining long-term value. By reducing the token supply, a cryptocurrency can mitigate inflationary pressure, ensuring that the value remains relatively stable over time.
Attraction of Institutional Investors
Institutional investors often seek assets with predictable and stable values. A reduced token supply can make a cryptocurrency more attractive to these investors, potentially leading to increased adoption and investment.
Many investors are drawn to assets with a sense of rarity and scarcity. A reduced token supply can make a cryptocurrency more appealing to speculators and traders, potentially increasing trading volumes and liquidity.
All unvested token buffers (the buffers that contain tokens that are still locked based on the vesting schedule), including the team’s buffer, will go through the BHAT burning process. An exception will be made for the private sale tokens buffer (bonded to SAFTs contracts) and the public sale tokens (which have already vested at TGE).
1. By the end of Q1 2024, we plan to reduce the supply to 200 million tokens, and by the end of Q2 2024, the supply should tend towards 100 million tokens.
2. Additionally, the overall inflation will be reduced in both the Staking and Metabonding programs in accordance with the new Tokenomics plan. If the voting passes, the Metabonding program will be reduced to 1M BHAT tokens for the 2nd year of the program (the remaining rewards will be only for the remaining 7 months between November 15th 2023 – June 15th 2024).
3. The new supply of 100M will be reached by burning the unvested tokens and making buybacks from the market and burning them.
4. The new xExchange Metastaking APR for BHAT staking will be reduced to 5%.
As the crypto space continues to evolve, achieving the right balance between scarcity and utility will be key to the long-term success of BHAT. Scarcity, when used wisely, can be a valuable asset in the ever-expanding world of digital currencies.