Japanese dApp and layer-two solution Astar Network's developers suggest burning 350 million ASTR tokens, valued at $38 million, to enhance the tokenomics. Maarten Henskens, head of Astar Foundation, explains that this move aims to reduce inflationary pressures and potentially increase the token's market value in the short term. The proposed burning of tokens is expected to boost investor confidence and improve staking rewards' attractiveness. In the long term, this strategy aims to establish a more sustainable token economy by addressing early-stage inflation issues and adjusting the total token supply to align with realistic market conditions.

Astar's Genesis Token Allocation Plan

The proposal involves initiating a three-week open panel discussion to allow community members to provide feedback on the foundation's plan. Subsequently, a week-long community vote will decide the fate of the 350 million ASTR tokens, constituting 5% of the initial supply, from the foundation's reserves. If approved, the tokens will be burned, and staking rewards redistributed.

Initially set aside during Astar's launch on Polkadot's parachain side chains, the 350 million ASTR reserve faces changes due to the upcoming Polkadot network upgrade called "Agile Coretime," which will eliminate the parachain system funded through crowd loan auctions.

One user praised the burning proposal for acting as a deflationary mechanism and repurposing tokens initially designated for an almost obsolete purpose like Parachain leasing. The reduction in circulating tokens is anticipated to positively impact the Total Value Locked (TVL) and stakers, benefitting the economy.

In March, Astar introduced its zkEVM platform, a zero-knowledge layer-2 chain facilitating cross-chain transactions between the Astar and Polygon blockchains. This integration is facilitated by AggLayer, a protocol enabling multichain smart contracts through aggregate zero-knowledge proofs, making the chains appear seamlessly merged for end-users.

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