A Bold Stance Against Speculation
On October 20, Uniswap’s founder Hayden Adams took a decisive step by burning 99% of the HayCoin (HAY) supply. This massive burn was prompted by Adams’ growing concerns over price speculation, which had escalated significantly over the preceding days. The announcement of this move was made on X, a platform previously known as Twitter.
Backstory of HayCoin
HayCoin was initiated by Adams as a test token five years ago, well before Uniswap’s decentralized protocol saw the light of day. A minuscule test liquidity pool was created with a small portion of the HAY total supply, while over 99.9% of HAY tokens remained in Adams’ wallet. Surprisingly, a few weeks prior to the burning event, the token began trading in the six-figure range, mimicking the behavior of a memecoin.
Adams expressed his astonishment at the token’s sudden surge in popularity and trading activity, describing the situation as “weird” and attributing it to the peculiar dynamics of the cryptocurrency market.
The $650 Billion Burn
Approximately $650 billion worth of HAY tokens were incinerated in a bid to stifle the rising speculative trading. Adams highlighted his discomfort with owning nearly the entire supply of a token that was being memeified and speculated upon. The move to burn the enormous sum in his wallet was aimed at disassociating himself from the memecoin-like behavior surrounding HayCoin.
The aftermath of the token burning witnessed a drastic surge in the HAY token’s price, registering a staggering 235% increase within 24 hours post-burn, as per CoinGecko data. The act of burning, which essentially removes tokens from circulation, had an inflationary effect on the HAY price due to the reduced number of available units.
Mixed Reactions on X
Adams’ audacious move sparked a mixed bag of reactions on X. While the price impact was apparent, some users highlighted the potential tax implications of such a massive token disposal. The speculative tax liability, assuming a zero cost basis, was estimated to be around $128 billion in long-term capital gains.
On the flip side, a segment of the community suggested that a more philanthropic approach could have been adopted. They posited that selling the tokens and donating the proceeds could have served a charitable cause, thereby generating a positive impact beyond the crypto sphere.