VIP-4: Burn a % of the Volt bought back from DEX fees

DEX fees are used to market buy Volt and distribute to stakers.

Even though the market buy is increasing buy pressure it does not counteract the massive sell pressure from farming rewards.

I propose 50% of the bought Volt is BURNT, the other 50% distributed to stakers as currently done.

This will make volt deflationary based on DEX usage. More DEX usage, more Burn rate.

Just as EIP1559 makes ETH deflationary via network usage, so Volt will be deflationary by DEX usage.

Stakers will continue to stake for 2 reasons:

  1. Get Volt rewards
  2. Volt is increasing in scarcity and therefore becoming more valuable.

BUY pressure is created - deflationary tokens increase in value and buying Volt from the market increases it’s value. Double win.

Limits to max BURN rate could be set to protect the protocol - a max % of that days FDV valuation.

7 Likes

This is a good idea.
Can you add a poll?

@Elvis.Voltage Want to get the correct figures before posting a Poll - please correct if wrong.

From docs:
" 0.05% of the .3% fee that we take on each swap using our DEX is converted from the token in which the fee was collected into VOLT and then sent to the xVOLT staking pool"

Which is:

Voltage gets 0.3% trading volume as fees from the DEX.

Of these fees 1/6th (0.05% of the trading volume) are used to buy Volt from the market and distribute to staked Volt holders.

Therefore the proposal is to:

BURN 50% of the bought Volt, and distribute the other 50% to stakers in the same way as it now happens.

This would equate to:

0.025% trading volume used to buy Volt and burn it.
0.025% trading volume used to buy Volt and distribute to Volt stakers.

2 Likes

I would support this idea… IMO something needs to be done to make volt token more attractive to current and future investors… With the voltage validator: what is being done with those rewards,can a portion of those be used to add to this idea?

This proposal is based on the misconception that increasing scarcity also increases value. It doesn’t.

Using ETH for comparison isn’t correct either, the difference in utility is huge, and there’s actual demand, which is the real driver of value.

Where exactly does the buy pressure come from? Just from the token being deflationary? Without adding further utility, any increase in demand would be purely speculative.

How exactly is cutting the APY into half supposed to help with the motivation to hold? The APY as it is, doesn’t offset the present loss of value.

1 Like

The info is correct, you’re good to post a poll.

The proposal isn’t going to solve the current lack of Volt utility. It also won’t change Volt into some super attractive token from the start.

What it does is reposition Volt as an asset to acquire and hold, rather than dump.

Reducing max supply does increase value, that’s just how it works. Obviously, at the current token emmission rates and current market conditions it won’t make much immediate difference, but the change will have long term beneficial effects and make Volt more attractive and valuable over time.

The APY from staking will be reduced, but this is partially offset by the increasing value of Volt for all holders. The whole ecosystem benefits from reducing supply, not just stakers.

Additionally:

  1. High APYs promote dumping and simply reduce the value of a token - the higher the APY the more dumping, the less value in the token, the more likely to dump = downward death spiral.
  2. High APYs don’t offset the reduction in value in the token created by the high APY emissions (as above). It’s better to have a lower APY with a token that is fundamentally gaining value, that is what this proposal to burn will create.
1 Like

Please vote so we can judge community sentiment on this proposal.

The proposal is as described in the original post - to BURN 50% of the Volt bought from DEX fees, of which 100% are currently given to Volt stakers.

  • YES - I agree with the proposal.
  • NO - I DO NOT agree with the proposal.

0 voters

3 Likes

So why not just emit 50% tokens less instead of emitting them to burn them ?

The DEX fees are used to buy Volt from the market.

Making the APY smaller still doesn’t give a reason to hold Volt. A smaller APY in isolation would also be less attractive to holders and promote dumping.

There has to be a reason to hold Volt and reducing max supply is it. With a reducing supply just holding Volt will mean an increase in value. Staking APY is an added bonus, so doesn’t need to be as high as previously to be attractive.

Relating the burn rate to DEX fees is nice as the value of Volt increases with the use of the DEX. It’s a great ecosystem relationship between users and value.

It’s also a great marketing tool - probably unique in the DEX space??

So it would also reduce the benefit to stake and burn a token doesn’t automatically increase valuation, that’s just a marketing trick.
It won’t make it deflationary if it emits more than it burns.
All of this should have been thought before launching this token instead of trying to save it from bad initial design.

There is limited benefit in staking if the token is falling in value continuously. There’s a decreasing return from staking and a big reduction in the value of held tokens.

Burning the tokens will make the overall max supply deflationary, not the current supply. Volt is given out across most farms, not just staking, so the burn will have only a small effect on total emission rate. There won’t necessarily be a significant impact on token value straight away, but it does set the tokenomics in the right direction where Volt becomes a desirable asset to hold, and hold early.

Marketing is an important part of crypto and users like to know the assets they are investing in will acquire value over time. Making Volt deflationary is part of that story, and it is also an attractive and interesting and eco-system centric proposition to have the burn rate linked to the use of the Dex.

Full disclosure, about 90% of my Volt tokens are staked. So, this is something that directly effects me, and I think will benefit the whole Voltage ecosystem and bring more value to Volt over time.

Why use the rewards of the long-term holders? If you use the rewards of those who don’t intend to hold anyway, you get a double effect - you’ll get your burn and they’ll have less to dump.

I’m both a farmer and a staker, but I see no reason why this should be done on the stakers’ side. I personally won’t be motivated to keep adding to my Volt stack, I’ll use the new rewards to add to my LPs instead.

Farming rewards, as far as I know, are not bought from the market but distributed from the reserve wallet.

This proposal is about what to do with Volt bought from the market with DEX fees.


Adding to LPs is a good way to earn Volt and support the DEX. If this proposal makes more people do that, as well as strengthening the long term token value, then it will have a positive impact on the ecosystem.

How exactly does dumping the Volt rewards for other tokens help strengthen the value?

Of the 0.30% swap fees Voltage is charging, distribute the fees in the following order; 0.25% to liquidity providers, and 0.05% to Volt stakers.

https://snapshot.org/#/voltagefinance.eth/proposal/0xc14edb67a154d21829423e0f984fa7e4c14657726579e7919c85646a219e16f8

Please start another topic for that proposal.

That’s not a new proposal, that’s VIP-1, and that’s how the fees are distributed.

Yes. I assumed you are suggesting changing it?