Astar Network Burns 5% of Supply, ASTR Price Surges
Astar Network, a multi-chain smart contract platform, has announced the permanent removal of tokens originally allocated for past Polkadot parachain auctions.
Astar Network Burns 5% of Supply, ASTR Price Surges. Image: Decrypt
Astar Network has decided to burn 350 million ASTR tokens, equivalent to 5% of its total supply, following a recent governance vote.
Governance Voting Results, screenshot from astargov.com
These tokens were initially set aside for parachain auctions, a venture cut short by Polkadot. The 350 million tokens fetched 70 million ASTR as rewards and will now be moved into the community treasury.
Token burning events typically signal price increases by reducing supply in the market. Memecoins like Floki Inu (FLOKI) and Binance's BNB have conducted multiple token burns in the past year, boosting token prices by as much as 70% and 140%.
ASTR initially surged nearly 10% post-burn announcement but has since corrected. Trading volume has also exceeded $50 million, marking an 84% increase from the previous day.
1-hour chart of ASTR/USDT pair on Binance as of 09:40 AM on July 3, 2024
Astar Network was once a prominent Polkadot parachain and was the third project to win an auction. However, after a prolonged period without progress, Astar shifted focus to developing its own Layer-2 solutions.
In September 2023, Astar Network partnered with Polygon to build zkEVM layer-2. By March this year, Astar Network furthered its integration efforts with Polygon's AggLayer, aiming to connect different blockchains using zero-knowledge proof and providing unified liquidity. Additionally, Astar has collaborated with Japanese tech giant Sony for its Web3 incubation program.
Amid controversy, Polkadot's parent ecosystem has faced scrutiny over its expenditure in the first half of 2024. Operational costs totaled $87 million, with $37 million allocated to marketing, advertising, sponsorship, media, and event organization. Revenue in the first half was reported at only 171,696 DOT, a decrease of nearly one-third compared to H2 2024.
