Proposed CRO Burning in the Cronos PoS Community

Official burning procedure involves allocating tokens to the Pool Community and burning periodically through a governance proposal.
CRO burning will be initiated when the Pool Community reaches 50 million CROs, marking a milestone for a more balanced economic model.
Two long-term strategies considered: threshold-triggered burn based on Pool Community balance, or burn governed by quarterly schedule.

In an exciting milestone for the Cronos PoS chain, the inaugural CRO burn is looming, marking a crucial step in token inflation management. This initiative, originating from a governance proposal in May, seeks to implement a burning mechanism aimed at reducing the overall rate of CRO token inflation. To better understand this proposal, we explore its background, the official burning procedure, and the long-term strategies that the Cronos PoS community is considering.

Get ready for the #CROburn as the community pool inches towards 50M CRO on the Cronos PoS chain!

Learn about the burn process & upcoming choices:
https://t.co/lDmpkoXNOd

#CROFam, your insights matter – join the discussion here: https://t.co/1AQfUGMLLn

— Cronos (@cronos_chain) November 27, 2023

Controlling CRO Inflation

In May, the Cronos PoS chain, formerly known as Crypto.org, adopted a fundamental governance proposal. The main objective was to curb CRO token inflation, and to achieve this, a burning mechanism was introduced. This approach involves allocating a portion of the tokens generated through future inflation to a “Community Pool,” which are periodically burned. This strategic measure seeks to control the supply of tokens and establish a more balanced and resilient economy for Cronos PoS.

Official Burning Procedure Explained

The central focus of the burning process is on step 5 of the token economic cycle, as discussed above. This step involves allocating part of the tokens generated through emissions to a Community Pool, followed by a periodic burn. The execution of this burn requires the initiation of a governance proposal called “community pool spend.”

The allocated funds can be transferred to a “dead” address, an address that no one controls (e.g., cro1qqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqtcgxmv), effectively reducing the supply of available tokens and completing a burn cycle.

Source: cronos-pos.org

when to burn?

The proposal calls for the initiation of CRO burning when the Pool Community reaches the 50 million CRO mark. Reaching this target will not only be a pivotal moment in the improvement of the protocol, but will also serve as an indication of a more balanced and resilient token economic model for Cronos PoS.

This inaugural CRO burn is not simply a one-time event; it is the first step in a broader, long-term strategy. Looking ahead, the Cronos PoS community is exploring two possible approaches to implement future burns in a sustainable manner.

Options for Future CRO Burns

Threshold Triggered Burn: Under this model, whenever the CRO balance in the Community Pool reaches a specified amount, e.g. 25 million CROs, a burn event will be triggered. This approach ensures that the burn responds to the token accumulation rate, directly impacting the circulating supply dynamically.

Calendar-Governed Burn: Alternatively, a time-based approach is considered, where burns occur at quarterly intervals, regardless of the amount of CRO accumulated in the Community Pool. This approach would provide a predictable and consistent burn schedule, which could facilitate anticipation for both token holders and market analysts.

Each option has its merits, and the choice between them will determine how the Cronos PoS chain will manage its token supply going forward. The community looks forward to users’ input and active participation in decision-making, encouraging them to share their opinions on the Cronos Discord server or on GitHub.

Looking Towards the Future

The success of this inaugural CRO burn is positioned as a milestone in the mission to optimize the token economy of the Cronos PoS chain. However, this achievement does not mark the end, but rather a starting point for further exploration.

After addressing supply-side factors, the focus turns to demand-side mechanisms. Network growth and expansion not only lay the groundwork for reducing inflation, but may also point us down a deflationary path, bringing us closer to the vision of an “ultra-sound” CRO.

Source: CRO community Burn Proposal – Explainer Article

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