[RFC] - Proposal to burn $wMemo tokens
- Introduce a token burn mechanism (burns treasury wMEMO, obtained from price floor buybacks)
- Make no changes
[RFC] - Proposal to burn $wMemo Tokens
Introduce a wMEMO token burn mechanism to increase $wMemo price / treasury backing price and to increase wMemo holders’ market share after the burn.
Proposal to burn $wMemo Tokens
The goal of this RFC is to develop a WIP on burning wMEMO.
The RFC will focus on two parts to achieve WIP maturity:
Introduce burning mechanism to establish the source of wMEMO to be burned.
Discuss and pick a burning schedule
If necessary adjust the burning mechanism before moving to a WIP.
1.Token Burn Mechanism:
1. Price Floor Burn
Wonderland’s wMEMO token are backed by treasury assets. This creates a minimum backed price of wMEMO. If the token falls below this price, the treasury starts buying back wMEMO, protecting the price floor from dropping severely below the treasury backing.
A price floor burn would periodically burn the wMEMO which have been bought back from the open market, according to the burn schedule.
2. Burn Schedules
Discuss and vote on a burn schedule:
- Annual Burn Schedule
- Periodic Burn Schedule
- Initial+periodic burn
2.1 Annual Burn Schedule
The total amount of wMEMO that is eligible to be burned from price floor maintenance will be calculated.
Afterwards a 12 month burn schedule will be created with the option of quarterly changes.
2.2 Periodic Burn Schedule
A threshold will be determined which once its met, allows the treasurer to burn wMEMO tokens.
2.3 Initial burn + periodic burns
This burn schedule will start off with an initial burn of the wMEMO received from maintaining the backing price. Afterwards periodic burns of wMEMO received from protecting the backing price will be performed at the discretion of the treasurer.
Given the mechanics of Wonderland, burning tokens doesn’t necessarily have the effect people assume it does.
First, burning tokens won’t raise the backing per token. DAO-held wMEMO isn’t part of the denominator when calculating backing per wMEMO, therefore, burning them won’t raise the backing price.
Second, if the price of wMEMO returns to a significant premium to backing, the wMEMO held by the DAO can be sold back into the market to raise additional capital. If the currently held wMEMO are burned, future capital raises would have to be dilutive.
We ask to incorporate to the vote the option of:
AirDrops to 3.3 holders on a consistent basis.
It would make Wonderland the best project to navigate the bear market (I don’t care about the price, I sleep well because I keep accumulating wMemos and I can see it grow) and it would give real power to the most loyal when the market is bullish. Let’s build it, not burn it.
I can’t think of a better way to attract many new investors and incentivize long term commitment.
As well as feeling like we are part of something bigger than ourselves, the Frog Nation.
What do you think?
@kbanna @Syn @NalX @Sonny
I agree. I believe the current capped supply of wMEMO is 17,250 and I’m not sure what the exact number of wMEMO is that was bought back?
It would be great to allocate a certain % of the bought back wMEMO to long term holders and it could be done weekly or monthly for a pre-determined number of weeks or months. To incentivise holding, anyone who sells is no longer eligible for these specific airdrops anymore.
We need some sort of reward for long-term holding and I think the combo of burning and airdrops will be highly appreciated by the community of loyal investors.
@Syn @Carli @NalX @Sonny
As per the previous discussion, I think the option of an airdrop in combination with a burn should be added as an option for vote.
There were quite a few posts about an airdrop option in that discussion and it appeared to have a positive engagement, so I won’t re-iterate the points again. All I will say is I think it would create a more sustainable burn and be better for the protocol by keeping more long-holders invested; without them, we would not still be here following the mass liquidations and manipulation events.
In short: Use a percentage to reward long-term holders through an airdrop, and burn the remainding amount through an initial and periodic burn.
@kbanna @Carli @adamg6284
I’d suggest redistributing the wMemo to holders in a form which is autostaked for revenue share and locked for a substantial period of time.
Does documentation exist on what will happen if WMEMO is burned. I see people commenting it wont affect the price (strange it wouldn’t), if that’s the case I don’t see the purpose of burning it? If you do decide are drops, you need to be careful of big companies or Vulture capitalists coming in and buying lots of WMEMO to just get airdrops for a year to then dump everything causing another liquidation spiral. This needs to be thought out thoroughly with safeguards for example: A limit on how much can be sold daily of your total portfolio. But even that could annoy people as you don’t have full access to your funds
Based on the initial discussion and the current RFC, it is not clear what the advantage of burning VS not burning really is.
The airdrop component has also been raised multiple time, it could be a voting option.
In the current state, there is not enough information on why this is a good thing for me to support this vote.
Tons of reply have been written in the previous topic, and I think that lot of people are thinking at the short term. We are in a downtrend period for all the crypto market, there is great FUD and I can understand why someone want to see a little green in an ocean of red. But this is just a very fast little candy that in the long term will be negligible and maybe hurting move.
Here the first problem: everyone is different and my long/short term idea could be very different fromm yours.
For me the option of burning (especially option 1) is just for short term people, and there are a lot of post saying that long term holder, for now, are not rewarded enough. So this option will be bad for long term holders again.
In addition, with all this market manipulation clearly acting, we are risking to be in the same point of today without any benefit.
The treasury will be damage from this burn, just for a minimal appreciation of price. We want to act like a VC, but we also are going against that idea by taking the opposite path.
I want remember that we took a simple choice just few weeks ago: give to Sifu full control on the treasury’s management. I’m not here to see just passively what will happen, but we have and incredible teams, and I’m willing to invest more for great long term return than price appreciation today.
There are also few good idea in the recents post, so I recommend to read the full thread, not only the main post, and after decide.
Every choice we take is important for the future of this project. We have to choose wisely.
Have a great day
Should the burn dates be randomized in order to mitigate whale manipulation/ gaming the system?
Rather than burning, I would suggest airdrop to current wMEMO holders.
- wMEMO price increases
- Backing price doesn’t take wMEMO in treasury in account anyways so backing remains same.
- Treasury cannot sell wMEMO bought at a later date once price is up to generate capital. May need to issue more.
- Revitalize frog nation spirit resulting in users restaking that airdropped amount
- Airdrop hype brings new users to platform to stake and receive airdrop, increasing demand, in turn boosting wMEMO price.
- wMEMO is still in circulation and any bought by treasury also appreciates in price.
- Airdrop hunters may just dump wMEMO after they have received airdrop, selling would still bring fees back to treasury.
I have read statements by other people above. Here are my observations (food for thought):
- Firstly, we have reached below backing recently but I don’t think this will happen again in future (as we’ll get more established) and if so, would be a rare occasion. So, there might not be much point in being excessive bothered here. Idea of sending buy-back tokens to long-term hodlers might also be tedious task to implement. (BTW I personally have never sold my wMEMO).
- I feel that including this burn mechanism will impart a psychological effect that if you try getting price closer to backing or selling when price is closer to backing, your wMEMO could essentially be burnt.
- Buy-back increases the backing by little as it doesn’t (& doesn’t need to) happen at exact backing price. But IMO, benefit is very little when selling at good premium. Supposing there are 18000 wMEMO at circulation with backing of $50k per coin, and 600 wMEMO are sold by people below backing then instead of burning, if they are sold later for 100k, we would have our backing increased to atleast
$(18000 * 50 + 600 * 50)k/18000 ≈ $51.6k. So, selling at premium later seems to (seemingly as their might be mistake in my calculation) increase the backing more. But, again, this threshold of at what point/premium wMEMO can be sold is something IMO if thought is at best left to free-will of Sifu. Also, what if we don’t have good enough premium in future? So, this choice might bring additional complications on compromise of simplicity.
So unless there is some good argument/idea or change in circumstances, I think i’ll vote for burn as it is clear & easy to implement but since this is first time, we can start by burning only part of it and leaving rest with treasury manager Sifu.
I need to add a little more.
I think that the current pool’s choice are a little bit unfair.
The second choice is a little bit “strict”, let’s say “hard to choose”.
Currently we are in a market rule by FUD, and say “make no change” could become a very hard choice to make for who can’t see a long-term upside in this moment.
As I wrote before, there are multiple good ideas we can work on, and definitely we are going to make some changes in the near future.
So it’s not just or we burn now or we stay where we are passively. Keep that in mind.
I agree that a change needs to be made, but I am more in favor of selling the buybacks as non-dilutive bonds when the price has risen again. there is a very solid idea to sell these bonds at a 10% discount which then redistribute the money back in to the treasury. That way funds can still be used to create more money rather than destroying it
Frogs, pay attention to what this token burning really means. It is not equivalent to token burns on other protocols/projects/coins. Token burning here actually harms wonderland’s growth potential and your long-term earnings!
Burning is a bad idea and only hurts the future of wonderland. It only helps those who are looking to get that initial price action bump so they can sell out. Is this really the cohort we want to assist while robbing the long-termers of profits and growth?
For the frogs that are in for the longevity of the project, keeping the tokens in the treasury maximizes our future growth and earning potential.
If you want to hold long term and see wonderland grow, DO NOT BURN.
If you want to get a cute little price action bump so you can sell sooner than later, burning may help you.
Lastly, we recently voted to keep Sifu as the treasury manager. Why not continue allowing him make decisions that best serve all of us and Wonderland? Allow him to do his work and his process. We either trust him, or we don’t. Let’s not try to have it both ways, that only complicated things and ties his hands.
As some others have mentioned, simply burning might not be the best option. I think it would make more sense to distribute the buybacks to long term holders. the holders would still profit through accumulating more of it and the token would raise in value because there will be less circulating and combine that with future revenue yielding, it would be very desirable to just hold it, further increasing its value, just as many thought they were initially doing with the time token compounding. I get that burning would decrease the supply and in theory have a similar effect but I think a time released wmemo token distribution to long term share holders would make more sense because it would discourage a mass dump since you’re accumulating the wmemo by holding so it would make less sense to just sell off.
Why not add the option for a locked, staked airdrop for long term holders? They can’t sell so no sell pressure, yet they are satisfied because they get the well deserved extra revenue share to compensate for the immense loss that the stopped rebases and drop caused. Also, all these are still in wmemo, even now that staking time and compounding effect no longer has any advantage. More wmemo in the hands of loyal holders, great motivation for other people to buy and stake as well.
Many people suggested the airdrop and the longer you hold the more you get. This will take a lot of time to implement so this will delay the development speed of the team. We should stop thinking increase the quantity of your wMemo but start thinking about after the burn your current wMemo percentage will be increased since the total amount of wMemo will be less. In this way, you will earn more after we move to the rev share.
There is no WHY and HOW a burn would be beneficial …
Only the WHAT is explain : let’s burn !!!
So I’ll vote : no.
Burn away. Wonderland can just start minting again to get back to the current amount of wmemo after the burn. I suppose this at least adds more assets to the treasury. I don’t think this move is that interesting either way.