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Published Mar 29, 2022
By Qredo Team

Qredo burns 40M tokens to mint validator NFTs

Qredonians,

Today we completed the first QRDO burn in preparation for minting the first set of Validator NFTs.

Here's what you need to know:

The first QRDO burn

The burn has permanently removed 40M QRDO (the equivalent of approximately $100M) from the total supply of Qredo Tokens.

What is a token burn?

Despite the name, burning doesn't involve dousing tokens in gasoline and setting them ablaze. Burning is simply destroying tokens, which is usually achieved by sending them to an
inaccessible address from which they can never be recovered. In this instance, we are invoking the burn function on the QRDO smart contract.  

The 40M burned tokens were taken from the allocation for initial validators. These tokens were not in circulation, but they would have been once unlocked.

In place of the tokens, we will later be minting 40 commemorative NFTs to be issued to the first set of validators as we take the next steps on our pathway to decentralization.

This set of limited edition NFTs will be known as the Equinox Collection.

The Qredo NFT validator model

Qredo has pioneered a new validator model based on NFTs.

To become eligible to process transactions on Qredo Network, validators must send a set number of QRDO tokens to a burn contract.

In return, they are issued with an NFT — a unique non-fungible token that represents an amount of QRDO that has been burned, and acts as a ticket giving holders the right to act as a validator.

When a validator decides to stop supporting the network, they can simply sell the NFT to another prospective validator.

This model has two big benefits:

  1. Avoids sudden sell pressure

    Normally on proof of stake blockchains, validators leaving the network are in possession of a large amount of tokens. These tokens can then be sold directly at market, creating downward pressure on the price. Qredo avoids this by replacing the staked tokens with an NFT that can be traded without impacting QRDO.

  2. Reduces QRDO supply

    As the network becomes more decentralized and more validators join, the supply of QRDO will decrease — creating a deflationary effect. 

QRDO's deflationary shift

This burn is the first big step towards making QRDO deflationary, and is one of many supply-reducing mechanisms that will be implemented over the next few months in response to community demand.

These include:

  • Doubled vesting periods

  • Network fees paid with $QRDO (and burned)

  • Captive insurance fund

  • More validator NFT burn events

To learn more about upcoming changes to QRDO tokenomics, read our March 2022 update from Qredo COO Josh Goodbody.