Huobi predicted that 90% of the FTX Users’ Debt (FUD) will burn following an unheard-of price increase.
The price spike was much more extreme than Huobi or DebtDAO anticipated.
Burning FUD tokens presents issues with its ownership and tokenomics.
The native token of the Render Network, a decentralised GPU supplier based on Ethereum to link 3D artists with node operators who have free GPUs needed to process renders, is called Render Token (RNDR).
The contentious FTX Users’ Debt (FUD) asserts that it will aid in FTX users’ asset recovery. The narrative has seen a significant price increase, and because of this, its success may also be its downfall. Its issuer’s most recent request to burn the tokens raises concerns regarding the token ownership structure.
The Huobi exchange revealed that its issuer would burn 90% of the FUD supply after listing the token on Sunday. The rumoured FUD token issuer, DebtDAO, would destroy 18 million tokens. The current token supply represented by this is 90%.
According to Huobi, the burn event will take place on Tuesday, February 7. “FUD assets owned by users, pending orders, and order placing capabilities will not be affected” during that time, according to Huobi.
There are concerns about FUD token ownership following the planned burning. A token holder burns their tokens by sending them to a burn wallet, where they become unrecoverable.
Who Controls Over 90% of FUD?
What if someone doesn’t already own 90% of a token? How can they send 90% of any tokens to a burn wallet?
It’s interesting to see that DebtDAO did not provide this update. The unidentified organisation, which only had a Twitter account and an email address for contact, made no updates. They opted to interact through Huobi instead, an exchange that featured the coin the day after it first emerged.
Only the Tron blockchain and the Huobi exchange are home to the FUD token. The contentious cryptocurrency tycoon Justin Sun is in charge of both Tron and Huobi.
Reasons to Burn 90% of FUD Tokens According to Huobi
the unanticipated increase in the token’s price would cause the burn to take place. The FTX token would give its holders the right to make claims against FTX, according to the issuer DebtDAO.
“FUD creditors have the first right to enforce their claims on FTX debt since it is the most economically advantageous and prioritised FTX debt on the network. At the right moment, DebtDAO will make the contract or notarized documentation of the debt public, according to a statement.
According to Huobi, each token would grant users access to one to five dollars’ worth of FTX claims. The issue is that the token spiked to $110 not long after the Huobi listing. The price of FUD is presently $67.
Only the Tron blockchain and the Huobi exchange are home to the FUD token. The contentious cryptocurrency tycoon Justin Sun is in charge of both Tron and Huobi.
On the other hand
Investors may be surprised to learn that the FUD token did not respond as strongly to the burn news. The token increased sharply from $63 to $70 before levelling off around $67.
Why It’s Important
Serious concerns about the motivations behind the FUD token’s introduction and listing have been raised.
