Uniswap founder Hayden Adams burned 99% of the HayCoin (HAY) supply on Oct. 20, according to an announcement on X (formerly Twitter). The majority of the tokens have been removed from circulation due to Adams’ concerns about price speculation over the previous days.
Adams deployed the HAY token for testing five years ago, before the launch of the decentralized protocol Uniswap. He created a small test liquidity pool with a tiny fraction of the total supply and kept over 99.9% of HAY tokens in his wallet. Just a few weeks ago, the token was trading like a memecoin in the six-figure range:
“Over the years, a few people have noticed it and bought it as a joke/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.“
Five years ago, before the launch of Uniswap v1, I deployed a token called HayCoin to use for testing. This was back when gas was so cheap that mainnet could be used as as a testnet. After the launch of v1, I created a small test liquidity pool with a tiny fraction of the total…
— hayden.eth (@haydenzadams) October 20, 2023
According to Adam’s post, about $650 billion worth of HAY tokens were burned. The Uniswap’s founder dubbed price speculation as “silly,” noting that he does not want his profile picture associated with the token:
“Ultimately, I’m uncomfortable owning almost the entire supply (~99.99%) of a token that people are memeing and speculating on, so I decided to burn the full amount in my wallet (”valued” at an absurd ~$650b).“
When a token is burned, it is permanently removed from circulation. But it also creates inflationary effects on their price since it decreases the amount of available units. At the time of writing, the HAY token is traded at $2,392,640, up over 235% in the past 24 hours, according to CoinGecko.
Adam’s move raised a few eyebrows on X. Aside from the impact on the HAY price, users pointed out that the token burning could be considered a taxable event. “Assuming a cost basis of $0, a ~$650 billion disposal gives rise to ~$128 billion long-term capital gains liability,” wrote a user.
Others suggested that Adams could have sold the tokens before burning them and donated the profits.