Commendations are one of Destiny's most underused currencies — and with the launch of House of Wolves, the game's upcoming expansion, they won't be used at all, Bungie revealed today.
When House of Wolves launches, Destiny's 1.2.0 update will phase out Commendations, no longer requiring them to purchase weapons and gear from vendors. If you've got a ton stockpiled, they haven't completely lost their value; you can use them from your inventory to gain reputation for a specific faction. A GIF included in today's Bungie Weekly Update shows an exchange rate of 250 Reputation points for each Commendation you burn.
In the current version of the game, Commendations are earned by ranking up your reputation levels with the game's various factions, and can be exchanged — along with other currencies — for vendor gear. Dedicated players who knock out their Bounties every day have saved up a stockpile with nowhere to spend them, hence the phasing out.