Here’s Why LSK Jumped Over 300% Today Despite Lisk Chain Shutdown

Lisk, an on-chain platform that makes decentralized applications (dApps) more accessible, has come under the radar of most crypto users.

Its native LSK token has experienced an impressive rally, rising more than 300% within 24 hours. The surge is surprising, especially considering that the project’s native blockchain is preparing to shut down after years of operation. 

The main question is why traders are buying a token linked to a blockchain that is about to shut down. The answer seems to focus less on the future of the Lisk Chain and more on what will happen to LSK after it shuts down.

As of this writing, CoinGecko reports LSK’s price at approximately $0.99, with the token still displaying an extraordinary daily gain.

Lisk Shuts Down Chain

Lisk is set to shut down its blockchain on October 31, marking a significant transition for the project. The team is moving away from its own network to explore a new direction. However, this change does not imply that LSK will become worthless or disappear.

Notably, the token now has a version on Ethereum, allowing holders to transfer their tokens from the Lisk Chain before it goes offline. Existing holders can still participate in the token’s ecosystem, provided they complete the migration early.

Meanwhile, holders who leave their tokens on the Lisk Chain risk losing access once transactions can no longer occur. However, LSK held on Ethereum can still be traded normally. With the deadline approaching, the looming shutdown of the blockchain is generating increased interest in the token, which is expected to continue.

Proposed 100M LSK Burn Adds Fuel to Rally

A significant development that fuels the surge is a proposal from the Lisk DAO to permanently burn 100 million LSK from its treasury. If approved, this would reduce the total supply of tokens from 400 million to about 300 million, representing a decrease of roughly 25%. This potential reduction is attracting attention from traders who see it as a way to create scarcity.

However, the burn has yet to take place. This means investors are trading based on what they expect rather than on a confirmed change in supply.

Additionally, activity in derivatives markets may be making the price increase even more pronounced than the initial reason. As LSK’s price rises, short sellers are losing money and facing liquidations, which means they have to buy back tokens.

These forced purchases can drive prices up further, attracting more momentum traders to an already fast-moving market.