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KuCoin Shares (KCS), the native token of the Hong Kong-based cryptocurrency exchange, KuCoin, jumped in value on Sunday following the completion of its first-ever quarterly KCS token burn which, by inference, divulged a tidy profit for KuCoin in 1Q18.

Per their announcement, the young crypto exchange company confirmed (and proved) the completion of their inaugural KCS burn event. As their whitepaper stipulates, given that KuCoin recognised a profitable quarter, they were required to devote 10 percent of these profits to buying KCS tokens on the open market (i.e., buyback), before subsequently burning them.

Indicative of a rewarding quarter, KuCoin burned 312,499.5 KCS tokens on Sunday. Given the above requirements laid out in their whitepaper, we can deduce that the exchange recognised a quarterly profit of over 3.1 million KCS which, in fiat, represents ~US$7 million (assuming $2.25 valuation of KCS).

This result came after KuCoin failed to realise a profit in 4Q17 (their inaugural quarter – having launched last September). Per Sunday’s announcement, the team put this down to intentionally high spending on both software and hardware. Of course, this implies that KuCoin spent big on wages; hurting their bottom line for the short-run as they looked to assert themselves in the lucrative crypto-exchange space for the coming years.

Why buy KCS tokens, only to then destroy them? Executing a buyback and burn results in a decreased total supply of a given cryptocurrency. This rewards existing holders, for the virtual tokens they own are instantly made more valuable, ceteris paribus, thanks to the burn increasing the economic scarcity of remaining tokens. Some other notables in the cryptosphere that perform routine burns are Iconomi (ICN), Maker (MKR), and Binance Coin (BNB).

Sunday also saw KuCoin delist Confido (CFD); what many consider the first major ICO-related scam. Indeed, last November, Confido’s “developers” abruptly called off the pursuit of their proposed project not long after having successfully raised swindled US$375,000 from ICO participants. 

KuCoin fell victim to widespread criticism for having listed $CFD in the first place. This sparked doubts over how diligently “the people’s exchange” actually vetted crypto start-ups before proceeding to list their digital coin/token.

Redeeming at least some of their damaged reputation, KuCoin dug into their own funds in order to reimburse their customers affected by the Confido scam.

At the time of writing, KuCoin Shares (KCS) is up 12 percent over the past 24 hours (per Live Coin Watch), and has improved to currently be the 59th most valued cryptocurrency (by market cap).

Image From Shutterstock

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