A new cryptocurrency project, called Destroyer DAO, is attempting to clean up the cryptocurrency space. Through an interesting combination of two distinct features, proof-of-burn, and a DAO, the new project hopes to destroy valueless “shitcoins.”
Too Many “Shitcoins”
With the tagline “Burn shitcoins and create a unified shitcoin ecosystem”, DestroyerDAO is an ambitious project. Led by currently anonymous developers, DestroyerDAO works on the premise that there are a significant number of altcoins that are either valueless, scams or are no longer being used.
The cryptocurrency market is inundated with new projects on a constant basis. During the initial coin offerings (ICO( craze of 2017, there was a new project announcing itself daily. Whilst some of these projects were legitimate and aimed to fill a gap in the market, many were simply a tool for the developers to capitalize on the market conditions to create a profit for themselves.
Unfortunately, because the ICO craze coincided with the bitcoin rally, the sector attracted a large number of novices through the spotlight continuously shone on the space by mainstream media. There was a large number of people, especially crypto newbies, who inadvertently found themselves participating in ICOs, which were purely money-making projects for the developers.
Additionally, because of the unregulated nature of the cryptocurrency sector, it is difficult to bring any of the perpetrators to justice. The onus remains on the investors to lick their wounds and consider their contributions to the would-be project as a loss. Some attempt to trade their useless tokens on exchanges. However, the unfortunate reality is that many of these tokens are either unlisted on most of the exchanges. On the other hand, the tokens may be listed but are at a price that is too low to justify a trade.
The term ‘shitcoin’ is a colloquialism popular in the cryptocurrency sector. While there is no definite metric by which to measure a shitcoin by, they generally refer to coins that have a poor valuation and a suspicious development team, which does not seem to have done the necessary work to provide proper technical information on their project.
Additionally, if a project does not have an active community and poor transaction volumes or market capitalization despite participating in the space for a while, it is most likely a shitcoin.
Lastly, if the coin does not demonstrate any innovative technical features or upgrades on existing technology and simple regurgitates already working technology, it is a shitcoin.
While most can agree on what constitutes a shitcoin, differences abound over which cryptocurrencies actually fit the bill. However, the DestroyerDAO project believes they have found a way to clean up the industry while reducing the likelihood of future shitcoins.
One “Shitcoin” To Rule Them All
The DestroyerDAO is a decentralized autonomous organization which will create new tokens when users burn units of what they consider to be shitcoins. A DAO was first seen on the Ethereum blockchain in 2016. Designed to raise funds for the project, the DAO raised over $100 million in investment until some of that was all stolen through a hack.
While software-ruled DAOs took a hit in terms of public perception following the hack on the Ethereum blockchain, a number of projects have employed the innovation with no major issues to report. The DestroyerDAO has decided on this approach because they require a system which will automatically create the DAO’s tokens in exchange for the burnt shitcoins.
The project is reminiscent of the Counterparty project which started out by requiring would-be investors to destroy their bitcoin in order to create digital asset native to the project. In a striking new method, which eventually came to be known as proof-of-burn, Counterparty created its native digital asset, XCP, by sending bitcoin to an address which was provably unspendable. Investors received their XCP in proportion to how much bitcoin they burnt.
Speaking on the Ledger Status Podcast, ‘Not Craig Wright’ one of the developers of the DestroyerDAO, confirmed they have borrowed from Counterparty in how they plan to mint new units of their native digital asset. The native digital asset of the DestroyerDAO will have the ticker GFY and will also be created as users add more applications to the DestroyerDAO ecosystem, as is specified in the software underlying the autonomous organization.
‘Not Craig Wright’ further explains that the end goal of the project is to have a platform where the cryptocurrency space can definitely confirm that a token is a shit coin. Because it is a decentralized organization with a democratic governance system, tokens will be nominated for a burn after which the community votes on them. However, the project developers believe that the project will grow to where the listing of a token on the platform will point to a lack of faith in the project as a whole.
The developers believe that the DestroyerDAO will help give people a voice while protecting any of those who are hoping to contribute to an ICO or buy a token but are in the research phase. If would-be investors see the project listed on the platform, then the user can have an inkling to problems in the future and is forewarned. Additionally, because the project aims to have a large number of users, then the people who burn their tokens in exchange for GFY would gain access to a token with actual value in the marketplace.
“The hope is to create a balance within the ecosystem that prevents the future creation of scammy projects by providing signals and consequences ahead of time. Our hope is investors will ultimately ask, will this new token overvalue the DestroyerDAO token.”
The project also aims to create an ecosystem for tokens with little usage and no value. They plan to hold competitions for the best applications to be deployed within the DestroyerDAO ecosystem. Winners will gain monthly reimbursements from the DestroyerDAO smart contract. The project is shooting for 10,000 signups before it begins any actual preparations. Because it will be deployed on the Ethereum blockchain, it will focus on ERC-20 tokens, to begin with.
While the DestroyerDAO project seems interesting and the idea of cleansing the crypto ecosystem of shitcoins sounds very appealing, the anonymity of its the developers combined with the sarcastic and nonchalant tone of the website (the link to the white paper goes to a gif and the ticker is GFY), seems to fit in the parameters of what could constitute a shitcoin more than an actual cryptocurrency project that anyone should take seriously.
Should the project deliver on its mission, however, it could turn into an interesting venture that could help to raise the quality of the altcoin market.