Polkaswap recently burned 22 million tokens in a move that set the decentralized exchange (DEX) on the path of increased scarcity for its native token. What are its effects and why is it in the news?
Polkaswap is the native token of SORAMITSU a company that handles blockchain maintenance for governments, companies and universities. The company is run by a team of professionals, of which Makoto Takeyida is the CEO and Ryu Okada is the Chairman. Its DEX is similar to Uniswap except that it is built on Polkadot and has its interchain advantage.
Polkaswap otherwise known as PSWAP is a token whose sole purpose is to create liquidity. The platform which was built on the Polkadot blockchain has the advantage of interoperability which is a Polkadot hallmark.
More than 22M #PSWAP tokens have been burnt! 🔥
🔮 With this useful tool the community will have a better oversight of PSWAP supply movement!
— Polkaswap (@polkaswap) October 8, 2021
Token burning is a system employed by developers of digital currency to limit the over-circulation of the Crypto during a given period thereby reducing inflation. By burning some of its tokens, Polkaswap is limiting its token supply in the interest of the holders of PSWAP. The effects of this burning is to maintain scarcity of the digital currency and increase the worth of the coin. An increase of a digital currency in the blockchain will give rise to inflation and decrease in value due to an increase in supply.
The decision made by Polkaswap to burn its 22 million tokens is a good step and its in keeping with its purpose of maintaining liquidity as a market maker DEX, while increasing scarcity and long term investment gain. Beyond burning of the token, there are expectations that the news would stimulate the PWAP market and catalyze higher price for the token which presently trades at $0.05 per unit and with a rank of 3327 according to its market capitalization of $214,444,065.