TON Foundation proposes burning 50% of validator rewards

The TON Foundation proposed introducing a burn mechanism that would destroy 50% of all transaction fees on the TON network.

This is a similar strategy to Ethereum’s EIP-1559 upgrade, which saw a massive reduction in Ethereum’s network inflation because the burn amounts have been so large. Only this proposed burn will have a much smaller impact on TON’s level of inflation because transaction fees are dwarfed by the network’s staking rewards.

“In the short term, the deflationary impact may seem modest, estimated at roughly 350-400 Toncoin daily, given a daily issuance rate of 71,000 Toncoin,” said Kirill Emelyanenko, a core lead developer at TON Foundation. “However, as the network volume grows, this number has the potential to increase significantly, leading to visible deflation in both the total and circulating supply.”

If the burn mechanism is implemented, when a user makes a transaction on the network, a portion of those tokens would be burned, with the remaining going to the validator as usual. The validator will also continue to receive staking rewards for helping to run the network.

The TON Foundation proposed that the burn mechanism be set at 50%, but Emelyanenko noted that this would be subject to the decision of the validators and its community.

The proposal will need to get approved by the majority of TON validators to be enacted. It has already been passed to the validators and discussions are underway.

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