Gala Games is one of the premier Web3 gaming ecosystems and one that has had a lot to report on recently. In a surprising move, Gala Games has burned $660m — 15 billion $GALA — and here’s why.
To catch you up on (some) of the last 6 weeks of Gala news: It started in early April with the announcement of a Huobi and Gala partnership to compensate those affected by the pNetwork issue with over $50m earmarked for the effort. Then, we had the start of the third annual May Mayhem, with lots of game alphas and events to sink your teeth into.
However, in a major move for the ecosystem, Gala announced the launch of the V2 token, rendering the V1 version obsolete — and this is pertinent to the latest announcement. Although the token is remaining ERC-20, the contract has been upgraded and improved future upgradability, security, and most relevantly, burn mechanisms.
Gala Games Burns $660M (15 Billion) GALA Token
In an announcement post, they outlined their first actions since the move from V1 to V2 of the $GALA token. Firstly, they burned nearly four billion $GALA, followed shortly after by the burning of 15 billion. So, why has Gala Games torched this many of its own token? Well, the “specter of potential exit scams” as they call it. That is, Gala Games held such a significant portion of their own token, it made many uneasy.
There is a fascinating case of this exact problem going too far. You may remember my aggressive coining of the term “rug slip” — an accidental but catastrophic result of mismanagement. The effects resemble a rug pull, but a rug slip lacks malicious intent. CryptoMines was the project that prompted the term and in a way that highlights what Gala is trying to avoid: the developers of the game held too much of the token and FUD set in among the community, causing CryptoMines’ token to lose 99% of its value overnight.
Instead of letting the FUD toward Gala Games spiral out of control, the company took drastic measures and burned “the vast majority of our reserves in $GALA.” There is a two-billion $GALA wallet as a strategic reserve and can be seen on-chain, but Gala plans to run off of the daily ecosystem rewards.
Therefore, we have decided to fully neutralize the ‘dump and exit’ scenario. You can’t dump and exit scam unless you have tokens to dump. By burning nearly the entirety of our reserves, we hope to extinguish this fear and return focus to the node network.
— Gala Games
Ultimately, this is an inspiring move and demonstrates the faith Gala Games has in what it is building. Whether there will be long-term tokenomics ramifications remains to be seen, but I would hope that this decision was not made without considerable forethought. The markets did react positively to this news and $GALA climbed around 15% at best, before correcting and now sits just over a 4% rise in the last seven days. Though it’s important to remember that this wasn’t intended as a market-moving event, but rather a bold declaration of intent from those behind one of Web3 gaming’s most important organizations.