Klaytn felt the effects of the cryptocurrency market. However, a new governance proposal is enhancing the community's confidence and bullishness.
On October 23, Klaytn, a public blockchain with a metaverse and gaming focus, published a governance proposal to lower its block rewards.
An official release states that the new Q3 updates sent to the Klaytn Governance Council (GC) aim to maximize the KLAY token issuance level through a governance proposal that reduces block rewards by one-third.
The reduction attempts to solve the present macromarket volatility that has caused the failure of numerous projects and bankrupted numerous crypto firms.
“The current macroeconomic landscape is causing unprecedented volatility in the crypto markets, and the current level of token emissions is not optimal in facilitating value accrual for KLAY.”
In What Form Would Tokenomics Take if the Proposal Were to be Accepted?
Block rewards per Klaytn would decrease from 9.6 to 6.4 KLAY, with 50% going to the GC, 40% going to the Klaytn Growth Fund (KGF), and 10% going to the Klaytn Improvement Reserve.
The anticipated reduction was determined by comparing the demand for the tokens to their current circulation rate. By lowering KLAY inflation, the team hopes to attract more new investors, increase its competitiveness, and maintain the long-term viability of Klaytn's tokenomics.
On October 20 of last year, KLAY/USDT was listed on the spot market by Singapore-based cryptocurrency exchange Phemex. The token's price rose by 26% the following day, from $0.12 (the price's annual low) to $0.15.
As Cryptotato noted, despite the crypto winter and the market slump, crypto game projects and platforms focused on the metaverse are experiencing greater popularity and investment development. Additionally, to support this emerging market, approximately $4 billion has already been invested in cryptocurrency games, metaverses, and incubators as of 2022.
Moon: Klaytn's Next Destination
Following news of the new token reduction proposal on October 23, the KLAY governance token gained 106% from $0.1387 to a peak of $0.2865. The cryptocurrency is currently trading at $0.1865, up 34.64% on a daily basis.
Although the initiative has not yet received approval, the price hike is a positive indication of the community's support and confidence. Given that the token has lost more than 97% of its value since reaching an all-time high of $4.40 on October 9, 2021, it is also a welcome change for the token.
Because of this, Klaytn said that the easiest option to restore the project's financial viability is to "modify the number of KLAY coined", taking into consideration the present requirements for the development of the ecosystem and the actual market demand.
In order to adopt new ideas and consensus methods that will be more advantageous to the project in the long run, they even suggested that the supply be decreased to 2/3 of the existing incentives.