PowerIndex is about to be launched, opening the door to marketing efforts which will bring new potential investors to inspect the PowerPool ecosystem and tokenomics. This is the time to consider reducing the current high ratio between the current market valuation (~12M$) to the diluted valuation (>200M$) by burning part of the community treasury tokens.
Abstract :
New crypto investors inspect a potential investment by inspecting the project fundamentals, team, community and tokenomics. The market to diluted valuation ratio is one of the tokenomics components. If that ratio is too high, it can prevent a potential investor to participate in the project due to the fear of being diluted too much when large amount of new tokens will be minted and dumped.
The community treasury tokens should provide the community incentives to reach different goals in order to grow the PowerPool ecosystem. However, since PowerPool is a new ecosystem and unknown to many crypto investors, the USD valuation of each CVP token has great effect of these incentives.
Motivation :
In case we burn some of the community treasury tokens we get lower market valuation to diluted valuation ratio which will be more attractive to new investors. They will more likely to buy, hodl CVP and participate in the PowerUniverse tools so that we maximize the USD valuation of each CVP token. In this situation we can achieve the same community goals with the treasury because each token is worth more USD.
In case we don’t burn any token, less investors will buy, hodl CVP and participate in the PowerUniverse tools so each token will be worth lower value in USD terms. We will need to hand over more tokens from the treasury to achieve the community goals, diluting the current CVP hodlers.
Specification :
This proposal will determine whether the community support burning part of the community treasury tokens and what percentage of it should be burnt:
"In case we burn some of the community treasury tokens we get lower market valuation to diluted valuation ratio which will be more attractive to new investors. They will more likely to buy, hodl CVP and participate in the PowerUniverse tools so that we maximize the USD valuation of each CVP token. In this situation we can achieve the same community goals with the treasury because each token is worth more USD.
In case we don’t burn any token, less investors will buy, hodl CVP and participate in the PowerUniverse tools so each token will be worth lower value in USD terms. We will need to hand over more tokens from the treasury to achieve the community goals, diluting the current CVP hodlers."
is there any real world example you can share of this burn strategy and positive out come?
Those treasury tokens should be used as incentives for actions like LM rewards, marketing and testing efforts, etc. As I wrote, too much of uncirculated supply might be intimidating for newcomers to consider investing or even researching the project from the first place.
It is hard to find another equivalent example because the current market cap to diluted cap ratio is so large. However, other crypto projects like Kyber Network and Cream Finance using some sort of burn strategies to support their projects:
I don’t know the details off the top of my head and what the effect was, but I do know that Harvest.finance did something similar. They, 2 (?) months ago, drastically reduced the total number of tokens that would come in to existence.
Imo it is all about the value creating mechanism: there are so many ways to generate profits that simple pump cuz of token burn is unnecessary.
About newcomers: if they decide to come to the projects just by checkind diluted valuatuion, than there are gonna be those who will decide to avoid project if dlution cap gonna be not 200 mln but 150 mln
for exapmle. So? Burn more?)
Also tokens will be burnt, price will pump and again u have huge cap.
So this way to get newcomers is not a way IMO. It`s better to check that you can get so many value holding CVP/PIPT, taking part in governance, LM, trading etc that there is no need to reduce supply.
So, short summary:
You will not get “educated” newcomers cuz of reducing supply - it will attract speculators, price will pump and that`s all
I think the idea of tokenburn is a good one in general, many crypto projects utilize it to deflate their token on a regular basis, however we need to discuss and calculate the impact better.
First of all, the token distribution chart @CryptoSignalz provided is outdated.
Secondly, the main goal is to attract investors into the PowerIndex, so we need to align the goals here.
Thirdly, we need to come up with a better model and try to calculate what exactly would we get in exchange for burning a certain amount of tokens.
Dont mind to burn a part of the community pool (only in case you mean the 70+ mn pool, not the tiny one which was planned to be used for active participants rewards), but
just don’t see the numbers proving your statement.
the chart you posted on the token schedule is outdated.
don’t think its a good timing for this proposal atm - should be discussed in research topic first of all and I would suggest to properly benchmark the best practices (happy to help with this btw)
If we spend another month on this discussion, the token burn will still positively affect the price (don’t see any rush here - the rush would help only in case one want to put all the news in the same day to get hype and sell CVPs on the peak levels imo)
So yeah, overall looks like a lot of criticism in my comment, but as I said above:
Lets put all the necessary numbers together (token schedule, benchmarking)
Lets start it in research topic to polish before putting as a proposal
I am happy to help, though I believe there are some more tactically and strategically important proposals we should discuss in coming weeks
Also as a shortcut we can circulate an updated token schedule everywhere so the people understand what the real distribution looks like and there is no risk of CVP value dillution (happy to help with it - have it off-the-shelf, just need to update a bit)
Just need time and some inputs from the team to update the current LM program part.
Happy to share, well, actually I believe it would be great to include in the PIPT voting discussion so all the community members would be on the same page with the token distribution schedule
I didn’t mean to rush things, just to bring awareness to the issue which isn’t neglectable imho. Two of my friends have raised these concerns to me after I’ve suggested them to research about the PowerPool project and I think they won’t be the only ones.
I’m happy with the idea of making the upcoming token distribution more transparent and further discuss this issue in the research channel so I don’t intend to raise this proposal for a vote atm.
hm, sorry if I got it incorrectly but for me it looked like you proposed to decide before/in parallel with the PI voting (which is very soon)
The proposed token burn not only implies the burn itself, but also implies pretty significant adjustments to all other token schedules (especially LM program)
Please see a more or less relevant token distribution schedule below (I also posted it in Proposal 6 discussion with several possible scenarios)
I ll slightly update it according to the current LM program schedule and we will use it to get everyone on the same page on the upcoming PI voting.
Speaking shortly - 50% of TTS to be distributed in the next 3 years (<10% in 1yr / ~30% in 2yr and ~10% in 3yr)
But please don’t forget we need to have a dry powder for LM programs for new PIPT ecosystem products (like other indexes etc)
