Thanks for the proposal, Pablo.
Now, let’s dive into this.
From my personal perspective, i see token burns as a last resort to not finding actual utility.
Burning tokens does not provide utility to a token, services do.
Right now, trading fees (0.30% off every trade) are being distributed as follows:
- 0.25% to liquidity providers
- 0.05% to Volt stakers
If we were to implement burning vaults, one of the above mentioned is going to lose out.
Regarding the staking mechanism, it has been pointed out in the Q3&Q4 Community update that the current one will be replaced by Curve’s vote escrow model. We expect veVolt to be ready to deploy in the upcoming weeks, if the community agrees on it.
I don’t know how the author of the image came to a conclusion there are bluechip yield possibilities with a daily ROI of 0.3% (that’s an APR of 109.5% (365% APR = 1% daily ROI). Also, 0.3% daily ROI is definitely not a “humble” profit. As far as i know, there are no bluechip DeFi strategies on the Fuse Network yielding 100%+ APR.
Our plan is to add as many DeFi strategies as possible (lending, predictions, raffles, possibly leveraged trading etc.) during the upcoming weeks and months.
Let’s add numbers to the equasion;
- the average daily volume on Voltage is ~$30k (based on calculations i made, Voltage had a monthy volume of ~ $920k)
- $30000 * 0.003 = $90 in fees daily
- hypothetically, if the daily volume remains ~$30k, that’s $90 in fees, if we were to send 0.2% (66.6666% off the 0.30% trading fees) to the burning vault (without calculating rewards), that’s $60 worth of Volt burnt daily, or $21900 per year and that’s 0.006% of the supply per year. If we want to achieve something with token burns, this number should at least 100x, which means volume should increase equally. Hypothetically, and if the math is right. Someone better at math than me can check and correct me if wrong.
If we were to take $10k worth of fees, put them in a DeFi strategy, let’s use Fuse staking as an example, we would earn/burn this amount of rewards (which have to first be used to buyback Volt which will be burnt):
- Fuse staking yields ~15% APR or 0.041% daily
- 10000 * 1.00041 = $4.1/day
- 365 * 4.1 = $1496.5 or 0.00042% of the total supply per year being burned.
You can play with numbers however you want, the outcome is always the same: burning tokens can not outpace sell pressure, at least not in this case. Why? See below.
Volt’s current inflation rate is 16.9% and it’s dropping over time as the emission schedule is gradually slowing down. If you want to tackle the inflation rate, you would have to burn an equal amount of tokens percentage-wise compared to the annual inflation rate. That is, if no utility/service is there for users to hold the token and refrain from selling.
It seems to me that you did not understand the system, it works and very well, the inflationary and unlimited token is burned, with which the farming is paid, not $volt
Could be, i’m not always right (unlike my gf who is ).
But do help me there, refer to what i wrote and correct the parts where i was wrong, or which are not really important.
I’m not really sure to what token you’re referring to when you say “inflationary and unlimited”.
How i understand this is, we would send a majority of the trading fees to DeFi strategies which would yield rewards we sell for Volt we later burn. Is that right?
i am also interested in getting some clarification on this, the wording i find a bit confusing on your proposal. @pablorosatti i am here to help if you need assistance with wording your proposal a bit differently.
If you look closely at the table, what is bought and burned is not VOLT, it would not make sense, since it is paid in “dex token”.
In addition, I was thinking, that it could be done that when the DEX Token has a green candle, the reward is self-composed, when it has a red candle, it burns.