DXD Burn #0 - How much should we burn? 🔥

dxDAO
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#1

At the time of writing this topic the is a DXD Circulating Supply is roughly 66k from a Total Supply of 149k. If we take in count the Token Distribution Stats and remove the DXD vesting contract
DXD balance.

The DXdao tresury has ~30k total value in ETH and ~14M USD total value in USD, compound of:

  • 21500 ETH
  • 17000 DXD
  • 3750 DMG
  • and more…

This mean that a 17% of the DXD pre-minted tokens (100k in total) created from DXtrust had already been vested to DXdao, the tokens will continue to be vested to DXdao for 2 and half more years.

This means that DXdao holds a 25% of the circulating supply of DXD at the moment.

For real! We are talking about pre-minted tokens, created from nothing, anything we do with them will have a huge impact on the DXD economy. It is on us to decide how long do we wanna hold them.

What is it clear is that the more of this tokens that leaves the dxdao tresury the worse is going to be for DXD holders that spend money in purchasing their tokens, it will dilute the appreciation of the precious DXD of the DXD holders that helped us raised our treasury, no bueno, right?

LETS BURN DXD !

When we submitted the configuration to be used for DXtrust I was worried about the extremely high amount (in my opinion) that we set for DXD pre minted tokens, but we didnt knew that much about what we were going to do with them and how much money we were going to raise, so it kinda make sense at the time for me after talking with my colleagues about it.

I think is pretty clear that we have A LOT of DXD, more than we need and here we have a good opportunity as DXdao organization to show DXD holders how much we care to have a healthy and stable token distribution.

In a week I will be creating a proposal to do the first DXD burn, it depends on how the discussion goes here on how much Im going to propose to burn.

If you submit your vote please give a short explanation about why you choose that amount.

  • 100 DXD = 0.1 % of pre-minted tokens.
  • 500 DXD = 0.5 % of pre-minted tokens.
  • 1000 DXD = 1 % of pre-minted tokens.
  • 5000 DXD = 5 % of pre-minted tokens.
  • 10000 DXD = 10 % of pre-minted tokens.

0 voters

4 Likes
Governance discussion, Nov 18, 2020
DXdao Month(ish) in Review Oct/Nov 2020
#2

I voted for 1% of pre-minted tokens, that would be 2% of the current circulating tokens, I would Ideally do more but I think it would be wise to start with a low number, that is a still a nice amount of money, worth 15000 USD right now.

2 Likes
#3

@AugustoL I don’t see a 0% option. It would be good to add one to make the poll less biased.

2 Likes
#4

I cant change the pool now, but if you want to vote for 0% you can just add a comment, at the moment of closing I will take that in count.

#5

The question/argument is still the same, but to clarify, I think the DXD numbers currently are:

Total DXD 148,974
DXD held in DXdao treasury 17,067 (while 82,737 DXD still locked)
DXD held by Market 49,169

So if we say that Total Circulating Supply of DXD includes the DXD held by DXdao Treasury, the Total Circulating Supply of DXD is 66,236

And so DXdao currently holding 17,067 DXD is 25.7% of the Total Circulating Supply.

Slightly less than posted above.

But please still… Go Out and Vote!!!

1 Like
#6

good point raised, this is +1 from me,

2 Likes
#7

I would also be for a 0% option. Don’t see how a burn would make sense or who we would be benefitting. There is so much we could actually do with that capital - creating incentives for our products for example.

1 Like
#8

Be aware that is DXD that was pre-minted, it has no ETH as collateral like the DXD that was minted form the DXTrust. So I would advise use as less as possible form that funds ans we can in order to have a more “collateralized” supply against ETH.

It is like printed money or inflation, the more you put in circulation without an established market and demand for it the more it will hurt your economy.

1 Like
#9

Good point, but this Austrian school of thinking has not had much success in crypto so far and all these food farming tokens showcased that it can help bootstrap adoption greatly, while also pushing the price up. Crypto is not very rational in that regard.

2 Likes
#10

Voted for 1%.

I think it would send a good signal at this point without hindering our future options in any material respect.

1 Like
#11

I like this discussion.

Currently, the situation seems to be:

  • DXdao is mainly/only using DXD it holds to pay compensation to DXdao full-time and part-time contributors (in this case, it is also currently being locked up for 2 years duration with a 1 year cliff). The benefit of this is quite powerful - it is a very direct method to get incentives aligned between many REP holders (who are earning REP and DXD) and DXD holders. With this system in place, REP holders (new and old) have a high incentive to work hard to get DXD price higher (through revenue generation and other means possible). In this case, I believe DXD holders are in favor of this alignment, and the 2yr vesting feature is VERY important to this.

  • DXdao does not have a current plan to use DXD for liquidity or action incentives. However, this could be a very good tool in the tool box. Many worry about paying out DXD incentives and having “farmers” dump these DXD. If ALL DXD that goes out of the DXdao treasury has a 2 year vesting period, does that make it a much better tool? Probably. If so, I think it makes sense to use the DAO’s DXD holdings for incentive programs rather than BURN it and send it down the river.

The real unanswered question is: Can DXdao use the DXD it holds to create more long-term value in the ecosystem than the burning of that DXD would increase long-term value of DXD???

Would love to hear your answers!

#12

I voted for .1% burn. In my opinion this is valuable only as a signal that burning DXD is possible and to demonstrate DXdao is monitoring and actively thinking about its treasury.

I think we have bigger questions to answer like:

  • What are appropriate uses of the premint? Worker incentives, liquidity provision, and liquidity incentives are use cases here.
  • How does the DXD in the DXdao treasury relate to revenue generation? When is it appropriate to raise new capital with DXD from the treasury and how? How does this relate to the bonding curve?

I think it would be interesting to see these questions addressed with the DXtrust Research Team that will shortly be set up to address the bonding curve questions per this proposal: https://alchemy.daostack.io/dao/0x519b70055af55a007110b4ff99b0ea33071c720a/proposal/0x345c61404124dc39358f43a6fc89f0727e25fbb395b10d6b74085a3fd2b59f8e

2 Likes
#13

Maybe it is my fault, but coming into DXdao I kinda just assumed that as DXD holders start to see revenue come through, the DXD held in the treasury was basically a simple way to ensure that DXdao can capture a significant part of that revenue to fund future growth/operations.

That, to me, is the obvious best way to use the DXD strategically on the long time-frame. We retain it and it keeps paying dividends, in time making the DAO self-sustainable without relying on the bond curve (although we can still raise additional funds here - but dilution may be a negative at that stage especially if revenue growth is exponential but the curve is still linear).

99% of all shorter term incentive schemes are just that… schemes. If someone can come up with a consistent, scalable and proftable way for us to give DXD away I am all ears. But in my head I will weigh those proposals up against potentially waving goodbye to years and years of revenue dividend down the line.

3 Likes
#14

Thanks everyone for participating!

I created the proposal to execute the first DXD burn, for 0.5%, despite 0.1% being the winner the option with 10% came super close and we had a bunch of votes in between, so I thought 0.5% is a good value that represents the overall sentiment and takes all votes in count in some way.

I received good feedback from my colleagues on the dxdao calls that the topic was lacking information about how DXD mint/burn can continue happening in the continuous fundraising process.
I will write an explanatory post to lay down the options and actions that DXtrust smart contract offer us so everyone can be aware of all the tools and actions at our disposal regarding our precious DXD, I hope to have it ready for this weekend, cheers.

#15

I plan to vote against this proposal. Burning DXD is a powerful tool that can be used to manage the DXdao economy, but I have not heard any reason why we should do it now.

Experimentation is important but we don’t have any clear goals or objectives, other than demonstrating the technical capability to burn DXD. This would set a precedent that may hinder future use of the DXD pre-mint.

A couple other reasons/related thoughts

  • We should experiment with how to use DXD more, not burn it.
  • There are already restraints on how DXdao can use the DXD pre-mint, as we’ve seen with Swapr. I worry that this will further constrain what the DXD can be used for. Instead, I agree with @JohnKelleher that we should be discussing what we can do with the premint and how does DXD in DXdao treasury relate to revenue generation.
  • There is not consensus in the community. Several replies on this thread requested a 0% option and there did not seem to be much enthusiasm when it was discussed on last Wednesday’s governance call. IMO, we should reach soft consensus before moving to a formal proposal.

Happy to discuss further on the Governance call tomorrow.

3 Likes
Governance discussion Nov 25, 16:00 UTC
#16

While I did vote in favor of a minor burn, I can totally agree with Powers arguments too and they do seem more important than the burn.

If 0.1% won, I’d probably stick with that for proposal, and then see if it gets voted through?

#17

I’m mostly with @Powers where I also have not seen a good enough reason to do the burn other than demonstrating the technical capability of doing so, and that is not really a good enough reason to spend time on this.

I also agree with @HeyChristopher in that there is a lot we can do with this capital and that crypto is not very rational with this kind of thing. An inflated market cap due to larger token supply gives us more eyeballs, etc.

If we want show our technical prowess, so be it. All I hope is that we don’t waste too much time on this, instead of focusing on bringing real innovation to AMM’s, prediction markets, and governance, amongst other things.

1 Like
#18

This proposal is available to vote on now:

It is set to expire in less than 5 days. The proposal currently has 0.31% in FOR and 11.45% AGAINST