Cream Finance completed a massive token burn, causing the price of CREAM to soar by 130% in the process. After looking at several options, the DeFi lending and borrowing platform C.R.E.A.M. Finance announced its plans to burn 67% of all the CREAM tokens. This means that they have permanently melted 6 million CREAM tokens from their total supply.
The Great CREAM Melt
The team explained in an official blog post, that everyone agreed a token burn was necessary for the future growth of the project. As a result, the discussion was about which token allocation to burn.
This burn will include 100% of the “governance” tokens and 7.5% of the Seed tokens. We believe that this action will provide greater certainty to the current token holders while creating a stronger foundation for the long-term success of the project.
After speaking to their seed investors, Cream Finance decided to burn 100% of all governance tokens and 7.5% of all the Seed Tokens.
In return for agreeing to the token burn, seed investors received an accelerated vesting period of 1 year in the form of monthly vesting.
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Note, that the development team also had this opportunity to accelerate their vesting but they all refused. Undoubtedly, investors will be happy to see long term belief in the project from the devs.
Okay, what about the price?
A token burn of this size has never been seen before. If there is a lack of confidence in the project’s fundamentals it could cause a huge loss of market capitalization. Alternatively, the price of each token will increase to the point of the current market cap with the new total supply.
For CREAM it looks like the token burn has been taken very positively by traders, as prices immediately went up. Immediately after the news broke the token price spiked from $70 to $165, an increase of 134%.