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Gala Games is rolling out an upgraded GALA token on May 15 via an airdrop to existing holders—but major exchange Coinbase says that it won’t support the Web3 gaming startup's move.
Coinbase announced this week that it will disable trading on May 12 for the GALA token (Gala V1) and will not let holders receive the new airdropped token (V2), nor does it currently plan to provide any way to swap the tokens after the fact.
Holders on Coinbase will still be able to withdraw their V1 tokens to a self-custodied or hardware wallet after the V2 token goes live, but they won’t be able to do much else with those V1 assets after the May 15 drop. In order for Coinbase users to convert their old Gala tokens, they’ll have to move their Gala V1 to a wallet before May 15 and wait to receive the new token.
On May 15, 2023, @GoGalaGames will deprecate the existing Gala V1 and issue Gala V2 under a new contract address.
What does this mean for you? Read more in the thread 👇https://t.co/RlFz5GuuqZ
— Coinbase Assets 🛡️ (@CoinbaseAssets) May 3, 2023
Gala has advised holders who have Gala V1 in a liquidity pool or held in smart contracts to withdraw their tokens in order to ensure receipt of the new token. After May 15, Gala V1 will have “no support or usability," the firm said.
Why is this happening? From Gala’s perspective, the token upgrade was an important and necessary step for the cryptocurrency. The new token’s smart contract—which contains the code that powers things like tokens, NFT projects, and decentralized apps—will offer “enhanced burn mechanisms, security enhancements, and future upgradeability,” according to a Gala blog post.
Gala Games’ President of Blockchain Jason Brink explained on Twitter that Gala’s token has evolved over the years, first existing as an Ethereum ERC-1155 token which then had to be reissued via the ERC-20 token standard when the team decided that it needed to improve its capabilities.
“As time has moved forward, we have identified other improvements that can be made to that token,” Brink said of the ERC-20 token, Gala V1. “Unfortunately, that isn't how the original contract works and it cannot be upgraded. The only solution is to do what we did the first time—deprecate the old contract and token, deploy a new contract, and use that instead.”
Little bit of context on the $GALA v2 deployment coming on May 15th.
Time for a bit of a history lesson! Back in the early days of @GoGalaGames, we had originally built $GALA as an ERC-1155 token on the same contract most of the @TownStarGame tokens are on. However, we quickly…
— Jason Brink aka BitBender (@BitBenderBrink) May 4, 2023
Brink wrote that he’s unsure why Coinbase won’t be supporting Gala’s new iteration, but he suspects that it is due to the issuance method appearing like an "airdrop" of bonus tokens rather than replacement ones.
Brink argued that Gala’s V2 issuance isn’t a traditional airdrop, per se, because Gala isn’t trying to give its holders freebies or extra goodies for owning their old token. Instead, Gala said that it’s simply doing what has to be done to upgrade the contract. In this case, it consists of moving to a new smart contract and sending Gala V1 holders the identical amount of tokens through the new Gala V2 contract.
The Gala V2 release is technically an airdrop, as tokens will automatically be sent to self-custody wallets holding the V1 tokens, although Gala has refrained from using that particular terminology. Gala's blog post about the launch refers to it as a "drop" (not "airdrop"), while Brink used the term "deployment" in his tweet thread.
When Decrypt asked Coinbase via email why it’s not supporting Gala V2, a representative said that the exchange had “nothing to add,” and pointed to its published tweet thread. But the thread doesn't offer a clear explanation of why.
Brink remains optimistic that Coinbase will ultimately reconsider following the Web3 gaming startup’s additional explanation of its approach.
“It is my hope that once there is a little bit of clarity, they will decide to support the V2 token,” Brink added.
While Coinbase just reported a 22% revenue bump compared to the previous quarter, the exchange is still facing a number of regulatory and legal challenges. Coinbase’s caution around token issuance comes as the exchange faces increased regulatory scrutiny from the U.S. Securities and Exchange Commission (SEC).
The exchange announced this week that it is shutting down its “Bitcoin Borrow” lending service, which it claims is unrelated to its SEC battle. Coinbase was also sued this week for allegedly violating the Illinois Biometric Information Privacy Act due to its collection of user data, plus an ex-Coinbase product manager pleaded guilty to criminal charges of insider trading earlier this year.