Altcoins Talks - Cryptocurrency Forum
Cryptocurrency Ecosystem => Meme Coins => Topic started by: BitHunter on May 28, 2024, 11:16:23 PM
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Hey guys, can I say we are in the memecoin season or Solana season? Either way there seems to be a lot of Solana memecoins lately and they are actually doing well... Considering...
Although I have followed CatWifHat from its early days in late December last year, there is something I couldn't wrap my head around. I haven't particularly bordered to ask either cause I was accumulating without selling.
My curiosity is, since 4% of $CWIF are automatically burned from every on-chain transaction, will this defensive mechanism automatically create scarcity by reducing supply and increase value...?
If yes, what are the possible drawbacks?
If no, what is the possible aim of this?
Lastly, are they the only memecoin using this logic?
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My curiosity is, since 4% of $CWIF are automatically burned from every on-chain transaction, will this defensive mechanism automatically create scarcity by reducing supply and increase value...?
Generally speaking, with less in supply the price of a coin may increase, that is assuming that other factors are also working well accordingly because no matter if the supply is so low but the market is taking a coin to be just another shitcoin then it would be hard to prop it up higher. This is actually a very basic thing in the world of cryptocurrency and in fact anywhere in almost all industries in the world...with lesser supply a commodity can be more valuable and its price will be surging. And talking on drawbacks, I see no disadvantage with this burning of some of the supply and that is the reason why many coins even the established ones are also using burning to drive more value to their platforms...in fact there is nothing new to it and I know many new projects can also be applying this thing to their circulating supply as well.
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My curiosity is, since 4% of $CWIF are automatically burned from every on-chain transaction, will this defensive mechanism automatically create scarcity by reducing supply and increase value...?
Generally speaking, with less in supply the price of a coin may increase, that is assuming that other factors are also working well accordingly because no matter if the supply is so low but the market is taking a coin to be just another shitcoin then it would be hard to prop it up higher. This is actually a very basic thing in the world of cryptocurrency and in fact anywhere in almost all industries in the world...with lesser supply a commodity can be more valuable and its price will be surging. And talking on drawbacks, I see no disadvantage with this burning of some of the supply and that is the reason why many coins even the established ones are also using burning to drive more value to their platforms...in fact there is nothing new to it and I know many new projects can also be applying this thing to their circulating supply as well.
thanks for putting things in perspective. I probably have to look into the blueprint of more tokens to get more experience but your pointers will be a good guide!
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If demand can be stable and always rise, it will probably become a valuable token and become increasingly valuable... yes, everyone's hopes are like that... but the reality in the market for tokens with your burning mechanism doesn't always end well... there are some coins or tokens which are routinely burned to reduce supply, but because demand tends to fall constantly, this makes them no longer attractive.
We can see whether the token is becoming more valuable or becoming trash by looking at the hype and the level of demand. therefore burning is not necessarily the main reason a token will become more expensive over time.
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My curiosity is, since 4% of $CWIF are automatically burned from every on-chain transaction, will this defensive mechanism automatically create scarcity by reducing supply and increase value...?
Scarcity alone can't drive the price up, you need demand to offset supply!
You can a have a coin burning its supply, but at the same time if people sell each day $1000 and only buy $100 you will still have the price going down as there is a cash outflow happening there. It's all a game of numbers!
And yeah, there is a disadvantage, you're basically taxing usage, which leads to people holding and less spending, so lees burning altogether alongside fewer transfers and adoption.
If we had a way to create value out of nothing and keep that value with no effort we wouldn't be here now!
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My curiosity is, since 4% of $CWIF are automatically burned from every on-chain transaction, will this defensive mechanism automatically create scarcity by reducing supply and increase value...?
The meme-coin you have mentioned that's total supply is about 34.99Trillion and that was huge, in this case may 4% burning system on-chain transaction could be made some positive impact on the price but if the project are not like that potential then maybe be even the automatic burning system they didn't make pump. So it could be worth when the project has also potential backbone.
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If you are talking about Supply and Demand in the economy, you would know that supply and demand are related in terms of how much is in the economy and how much is being supplied.
So imagine a shortage of supply. If the price goes up since the supply is low already, then that's the natural way it increases in price. But if there is too much, the price lessens.
It's different IMO with meme coins because they are memes. It should be dependent on who wants to be part of it.