Barely a couple of days after mogul productions announced its supernova, a term describing its monthly token burn, the platform executed its first token burn event that took a total of 50,000 $stars tokens out of circulation.
Token burning are a fairly common events in the crypto space, and I believe at some point, you might have heard it; for instance, the binance quarterly burn or FTT token burn. Token burn is an event in which some amounts of a platform’s token are permanently taken out of circulating supply. At mogul productions, this event is uniquely termed Supernova and will occur every third Friday of the month.
In mogul’s own description,
“A super nova is a powerful and luminous explosion of a star at the end of its life”
Different Blockchain platforms with token burn adopt different practices in burning their tokens. While some directly buy their own platform tokens from the market for the burning, others use other means like burning certain or all of the tokens used as gas or fees on their platform. This later model is adopted mogul supernova
What’s The Essence Of Token Burn?
The ultimate goal of token burning is to reduce the total supply of such token by permanently removing some quantities of it from circulating supply. These events indirectly influence price of the tokens in the market as they make the token scarcer in time, hence increase in its value.
At times, the price effect from token burn(s) may not be immediately noticeable, especially on the short term. On the long run however, there’s bound to be some major surge in the value of such tokens due to continuous burning that result in scarcity of the assets in comparison to demand.
How Does Supernova Occur?
It is not possible to physically burn a digital asset like cryptocurrency. What happens during burn events is that the tokens for burning are transferred into some frozen private address{burn address) where they cannot be accessed by anyone.
Mogul $stars earmarked for burning will be periodically sent to designated burn address(es). the $stars in this address(es) can never be recovered, because there are no private keys that correspond to the addresses. And that’s as good as saying those $stars are no longer in existence.
Following the announcement and due to popular demand, mogul had its first monthly supernova last Friday, the 20th of August 2021, being the third Friday of the month of August. 50,000 $stars tokens realized earlier from submissions of movie scripts to the platform were burnt during the event. You can view the transaction here on etherscan.io.
Where Do The $Stars Tokens Come From?
Fees from script submissions
Mogul is a decentralized film financing platform bringing together movie creators, fans, and financier. Creators in need of funding from mogul are required to submit their scripts to the platform with some amount of its $stars token as fees. 50% of these fees are earmarked for burning while 50 stay with the platform.
Tokens from purchase nfts from the nft marketplace (coming next month)
Proceeds from sale mogul nft items would be split on a 50–50 basis and one half would be subjected to mogul supernova event.
What’s In This For Mogul And Its Community?(Benefits Of The Supernova)
Increase in $stars value
Supernova is a deflationary mechanism aimed at reducing $stars circulating supply and bringing both immediate and long term positive impact on price of $stars tokens. However, this impact would be best felt with increased demand for the $stars token which is in any case assured with the upcoming mogul nft market that would predominantly make use of $stars tokens for transactions.
Continual supernova will inevitably result in scarcity of $stars which by law of economics would imply increase in price as demand for the asset would become higher than available supply. It’s about the forces of demand and supply at play.
Helps stabilize $stars value
The monthly supernova will take out excess amount of $stars from market. This will help stabilize the price of stars in a sense. However, this doesn’t mean we will never again witness a drop in the price of $stars. Rather, the price would hopefully hover within a fair range until more use cases are implemented which would help take the token value to desired destination.
It boosts investors’ confidence
For mogul investors especially those who bought during their token sale event, the supernova brings renewed confidence in the project. After the major hiccup at launch of the token which was engineered by bad actors in the defi space and saw $stars value tumbling greatly against expectations, the burning is a step to ensure that investors’ funds do not fluctuate further by curbing over-circulation of the token. This way, those investors can get to a break-even of their investments within a reasonable time. Their assets will become more valuable with time as the token becomes scarcer.
An incentive to all $stars holders
Supernova is a way of indirect incentive to $stars holders to keep holding their tokens bearing in mind it is bound to increase in value over time - especially with more use cases in the pipelines.
From all indications, the monthly supernova will be one of the major catalysts for the growth of $stars token and mogul platform at large. Reducing $stars supply while at the same time giving it more use cases is a sure way to boost its value, and this would be clearly perceived sooner than later with the nft marketplace scheduled for launch next month.
Incidentally, the first supernova conducted last Friday marked the second time $stars tokens were officially burnt since inception of the platform, the first being after the Rob Prior Proof of origin event where 50% of the 1.5 million stars realized from the nft auction ‘reign of money’ were destroyed.
We await more supernovas and the value it will bring to $stars in coming days.
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