Gala Games announced this week that it has removed or “burned” almost 21 billion GALA tokens after completing its V2 token airdrop—more than $637 million worth at the time of the burns—from its own reserves in an effort to reduce concerns surrounding a possible “dump and exit” scenario.
“The tokens we hold we have received as ecosystem rewards over the last several years,” the Gala Games team wrote in a blog post. “While they have always been tokens we were to use to fund the growth and curation of the ecosystem, we know that many people see them as a fundamental risk to the overall tokenomics of the project.”
In short, Gala Games believes that the massive token burn will help reduce concern among holders who may worry that the company could sell off mass amounts of its token—a move which could lead to a decline in price.
Gala detailed its approach to the burn in the post, noting that it had already planned to burn 2 billion GALA tokens as part of its “2023 Vision Paper” for the year. Another 3.96 billion tokens were then burned, which Gala Games said was “equivalent to the total revenue in GALA we have ever received.”
The additional and largest burn of 15 billion tokens represents Gala’s response to community concerns over the noted “dump and exit” possibility. Gala pointed to on-chain Ethereum network transactions for each part of the overall token burn, and wrote in the post that it represented $660 million worth of tokens. According to CoinGecko data, the tokens were collectively worth approximately $637 million at the time of the burns.
Gala Games—the publisher behind Web3 games like Mirandus, Grit, and The Walking Dead: Empires—also burned the tokens with its future in mind, the firm’s President of Blockchain Jason Brink told Decrypt in a message.
“At a fundamental level, we believe that if the ecosystem is going to work and be sustainable in the long-term, we need to be able to live off the rewards we receive from the ecosystem as well—not have a gigantic pile of GALA we could dip into whenever,” Brink said.
The executive added that post-burn, Gala’s own treasury is now “almost completely eliminated.”
“It also means that rewards for Founders Node operators will go up roughly 4x because the halving is supply-based,” Brink added of the rewards for those who operate Gala nodes, which validate crypto transactions for the network.
Just an update on the $GALA v2 upgrade.
The upgraded $GALA has been received by 158,560 addresses, with 82,047 remaining.
Every address with more than 315 $GALA has received their v2.
— Jason Brink aka BitBender (@BitBenderBrink) May 17, 2023
Brink shared Wednesday that nearly 160,000 different wallets received upgraded tokens as the firm finalizes the contract upgrade and deprecates its old token.
Earlier this month, Brink confirmed that Gala is sending new GALA “V2” tokens to holders of GALA “V1” tokens, because various technical upgrades were made possible via a reissuance of the token. Major U.S. crypto exchange Coinbase made a public announcement that it would not support or facilitate the Gala V2 airdrop—but did not share a reason as to why.