After the news that Gala would be implementing a new “Pay-by-Burn” mechanism, the community was, ironically, ablaze with questions.
On January 13, Gala Chairman participated in Blockchain Advertising Explanation of the burn payment mechanism. However, BitBinder’s explanation was met with more confusion, with users questioning the burning and knife operations involved.
In response to the confusion, BitBender demonstrated the payment-by-burn mechanism with an extension Analogy using plantswater and flasks. However, despite its efforts, BitBender’s explanation raised more questions than answers.
In order to better understand the Pay-by-Burn mechanism, DailyCoin spoke with BitBender in an exclusive interview to better understand the mechanism, learn about Gala’s short-term and long-term goals, and more.
BitBender saw that the crypto community usually has a lot of misconceptions surrounding token burning.
“When a contract burns tokens, it cuts off tokens from the total supply, or the circulating supply, and not the max supply as most people misconceive,”
Burning tokens is a process that requires the use of a burned wallet address — a “dead” address with no known private keys, effectively making it inaccessible.
During the process, coins are removed from the circulating supply, either by the issuer or the community via incentives. These tokens are sent to the specified copy address, where they are inaccessible, and thus become unusable. Usually, this mechanism creates scarcity as part of the deflationary model.
The expert explained the payment by burning
Speaking about the new Gala Games mechanism, BitBender explained:
Gala’s Pay-by-Burn burn mechanism is similar to the one used in Ethereum,” he began, “the GALA collected from purchases on the platform will be sent to a burn address for it to be never used again.”
One aspect of the innovation that amazed the community was the intent behind it, and BitBender had the answer:
The quantity of the GALA burnt would be distributed to GALA founder nodes to incentivize owners to keep running nodes for longer.”
Under the current Gala model, the daily rewards for Founders Contract are halved annually in July. Therefore, the rewards for running an enterprise node for 20 years in the future will be greatly reduced and may not be an incentive for the node operator, thus exposing the ecosystem to a long-term sustainability problem.
The pay-by-burn mechanism is Gala’s answer. By distributing rewards over time across the continuous and sustainable process, contract operators will be incentivized to maintain their contract.
The pay-by-burn mechanism is expected to play an important role in the ecosystem. When asked about the Gala’s short-term and long-term goals, Bitbender shared:
“Gala is simultaneously working on a range of exciting projects, which will be announced soon in a roadmap update.”
The Head of Blockchain added:
“This crypto winter might not be like other crypto winters. While prices have decreased, I believe that projects in the web3 space have continually been building, which is why I think the winter is over.”
As the blockchain sectors continue to grow, the issue of sustainability will become an increasingly prominent discussion. The new Gala mechanism proves that the platform is ready to innovate and find new ways to reward its users while strengthening its foundations to enhance the continuity of its mechanisms.