DebtDAO, a decentralized autonomous organization focused on debt management, announced its plan to burn 18 million FTX user debt tokens.
The decision to burn the tokens results from a demand frenzy for the debt tokens causing a shortage in the market. DebtDAO aims to maintain its ecosystem’s stability and ensure a fair distribution of debt tokens to its users.
Burning the tokens is a step towards preserving the integrity of DebtDAO and reinforcing its commitment to transparency and fairness. Volatile price swings, controversies, high trading volumes, and a plan to permanently destroy most of the supply have surrounded FTX User Debt (FUD) tokens due to the excessive excitement of crypto traders.
On Feb. 7 morning, FUD was trading for $65 on the Huobi exchange after reaching a peak of $113 earlier in the week. Its trading began at just 50 cents on Feb. 4. However, DebtDAO announced that it would issue more tokens when FTX confirms its debt and distribute them through airdrops to FUD token holders, giving them the first claim to the debt.
Last week, Justin Sun, founder of Tron and Huobi, tweeted an explanation of the token offering. He stated that the FUD token offers creditors a higher level of liquidity by enabling them to trade their FTX debt on the open market.
Sun confirmed this through a contract from DebtDAO, mentioning that the debt amount is in the tens of millions of dollars.
DebtDAO came out with a new type of digital asset called a Bond Token. They say it’s to represent the money owed to creditors of FTX. There’s a total of 20 million of these tokens, known as FUD, and they each have a worth of $1. The FUD tokens add up to about $100 million, which makes up 2% of FTX’s total debt.