Uniswap founder Hayden Adams shocked the cryptocurrency community when he recently announced on X (formerly Twitter) that he burned 99% of the HayCoin (HAY) supply. This drastic decision was made due to Adams’ concerns about the excessive price speculation surrounding the token in recent days.
Five years ago, Adams deployed the HAY token for testing purposes before the launch of the decentralized protocol, Uniswap. During that time, he created a small test liquidity pool using a tiny fraction of the total supply, while keeping more than 99.9% of the HAY tokens in his wallet. However, the unexpected surge in trading activity of the token as a “memecoin” in the six-figure range caught Adams off guard.
In his post, Adams expressed his surprise at the unusual behavior surrounding HAY, stating, “Over the years, a few people have noticed it and bought it as a joke or for the novelty of it. Was extremely surprised to see people buying and selling significant dollar amounts this past week, treating it like a memecoin. Crypto can be weird sometimes.”
To address his discomfort of owning almost the entire supply of a token that was being memed and speculated on, Adams decided to burn the full amount of HAY tokens in his wallet, which was valued at an astronomical $650 billion. When a token is burned, it is permanently removed from circulation, leading to a decrease in available units and potentially causing inflationary effects on the token’s price.
While the immediate impact of Adams’ decision on the HAY price was significant, with the token trading at $2,392,640, a notable increase of over 235% in the past 24 hours according to CoinGecko, it also raised some concerns. Users pointed out that token burning could potentially be considered a taxable event. One user noted, “Assuming a cost basis of $0, a ~$650 billion disposal gives rise to ~$128 billion long-term capital gains liability.” Additionally, some suggested that Adams could have sold the tokens before burning them and donated the profits.
Adams’ actions have sparked discussions within the crypto community about the ethical and legal implications of such decisions. While he intended to address the price speculation and dissociate his profile picture from the token, the consequences and potential tax liabilities should not be overlooked. This incident serves as a reminder that the crypto industry is still evolving, and its participants must navigate uncertainties and challenges responsibly.
With the majority of the HAY token supply burned, its future remains uncertain. The reduced supply may result in increased scarcity and potentially drive up the price. However, the unexpected turn of events surrounding HAY has left investors puzzled and cautious. It remains to be seen how the market will react to this unforeseen development.
Hayden Adams’ decision to burn 99% of the HAY token supply has had a significant impact on both the token’s price and the cryptocurrency community. This move highlights the need for careful consideration of the consequences before making drastic decisions in the rapidly evolving crypto space. The aftermath of this incident will undoubtedly shape discussions and influence future actions within the industry.