A proposal seeking reduction in block rewards was announced by Klaytn on October 23.
An official statement from the metaverse and gamefi-centric public blockchain states that the new Q3 updates sent to the Klaytn Governance Council (GC) aim to adjust the KLAY token issuance level through a proposal that reduces block rewards by one-third.
The cut attempts to solve the present macromarket volatility that has caused the failure of numerous projects and bankrupted numerous crypto firms.
Block rewards would decrease from 9.6 to 6.4 KLAY, with 50%, 40% and 10% going to the GC, the Klaytn Growth Fund (KGF) and the Klaytn Improvement Reserve, respectively.
The reduction was determined by comparing the demand to the current token circulation. By lowering KLAY inflation, the team hopes to attract more investors, increase its competitiveness, and maintain the long-term health of Klaytn’s tokenomics.
On October 20 last year, KLAY/USDT secured listing on the spot market by Singapore-based cryptocurrency exchange Phemex. The token rose from £0.11 to £0.13 the following day for a 26% rise.
Despite a crypto bear amrket, crypto game projects and platforms focused on the metaverse are experiencing greater adoption and investment. Additionally, to support this new industry, about £3.54 billion has already been spent in metaverses, crypto games and incubators as of 2022.
Following the reduction proposal announcement on October 23, the KLAY governance token rose from £0.12 to a high of £0.25 for a 106% increase. The token is changing hands for £0.17, representing a daily growth of 34.64% at press time.
While the proposal has not yet received approval, the price hike is a positive indication of the community’s support and confidence. It is also a welcome change for the token, which has lost more than 97% of its value since reaching an all-time high of £3.90 on October 9 last year.
Klaytn stated that the ideal option to restore the project’s financial viability is to “adjust the amount of KLAY minted,” taking into consideration the current requirements for the ecosystem and the actual market demand.
In order to adopt new proposals and consensus methods to improve the project in the long run, the supply reduction to 2/3 of the current rewards was also under consideration.