Proposal 22: BANANA Token Hard Cap

Context/Background

Over the past few weeks, the ApeSwap community has been enthusiastically discussing the next steps for our beloved BANANA’s tokenomics. This conversation has not been for the faint of heart, with a multitude of different opinions & ideas on what exactly is the next best step for the DAO.

As a result, we started more seriously considering the most frequent suggestions via a discussion in Commonwealth on August 23rd, posing two key questions:

1. Should we institute a hard cap on BANANA?
2. If so, what is the right number?

After thousands of thread views, and hundreds of apes voicing their opinions across Commonwealth, Twitter, Telegram, and Discord, we are ready to put the main takeaways from that thread to a vote.

Summary

ApeSwap is proposing to introduce a hard cap (or “Total Supply") to the BANANA token. This simply means that the figure voted upon in this proposal would represent the limit on BANANA ever to be minted (see the multiple choice section). This includes the sum of all BANANA in circulation on BNB Chain, and any BANANA burned** (about 32.8M BANANA as of this proposal).**

This means the final number will be measured by the Total Supply of tokens on the official ApeSwapFinance BANANA token contract on BNB Chain, which can be found here: https://bscscan.com/token/0x603c7f932ed1fc6575303d8fb018fdcbb0f39a95

It is important to note that due to how bridging works, it may appear that there are more tokens minted than the voted on **hard cap, **if you total up the BANANA supply across all chains. This is invalid due to the fact that any given BANANA token cannot be unlocked simultaneously on more than one chain. For the Total Supply, ALWAYS reference the BANANA token on BNB Chain.

BANANA emissions are an essential part of the ApeSwap ecosystem. Without them, the ApeSwap DAO could not effectively operate, TVL would evaporate, APRs would shrink, and contributors wouldn’t have skin in the game. For these reasons, it is incredibly important to not deprecate emissions immediately. Instead of “ripping off the bandage”, a more gradual approach to reducing the amount of BANANA emitted per block is hypothesized to help the transition to a less inflationary - or even deflationary - token.

At this time, ApeSwap is not proposing specific reduction plans. Instead, we will be following up with the community to evaluate multiple emissions proposals as related to the new hard cap. What we can assume is that the lower the hard cap, the faster we'll have to reduce emissions.

This is for a range of reasons. For instance, ApeSwap is planning to use lessons learned from the complementary proposal with Gauntlet to give us better insight into adjusting emissions in future phases. If you are curious about potential emissions projections, we encourage you to read the official discussion thread in Commonwealth.

Motivation

The motivation for this proposal stems from ApeSwap’s dedication to build a sustainable DeFi protocol. After feedback, research, and theorizing across the community and DAO, along with new innovations in the DeFi space, ApeSwap believes there is a sustainable path forward without the need for the BANANA token to be inflationary, indefinitely.

Throughout the last few months of discussions, at times the community has questioned the approach to start with exclusively a hard cap, instead of a larger tokenomic overhaul. This is for a range of reasons. First, without a solidified hard cap, it’s difficult to effectively gauge emission reduction plans & trajectories to reach the final state of BANANA’s tokenomics.

Additionally, this approach assesses the community appetite to move towards a deflationary token model. Over the past year, emissions and inflation have been a contentious topic, and this provides an actionable first step to addressing those continued concerns.

Assuming one of the hard cap options passes, the discussion will transition to tangibly reducing emissions & hitting the hard cap over a given period of time. This decision to not be inflationary forever is an important one, and is a necessary step to determine a new emissions schedule.

Finally, if one of the hard cap options passes, the BANANA token will have a fully diluted valuation, which is something BANANA has historically lacked given the uncapped supply of the token. This helps both existing and new token holders evaluate the token model in a more holistic manner without the uncertainty of an endless supply.

Ranked Choice Voting Options

Each voter may rank the different choices in any order. Votes are initially counted for each voter's number one choice. If a candidate has more than half of the vote based on number one choices, that choice wins. If not, then the choice with the fewest number one votes is eliminated. Voters who had chosen the defeated choice as number one now have their number two choice counted as number one choice. The process continues over multiple rounds until a choice has more than half the votes.

The calculation of the results stops when one choice has more than 50% of the votes. Some options will show up as if they had not received any votes because they were eliminated in the ranked-choice voting process. source

• Option 1: 280M BANANA Hardcap: If this option passes, then the total supply of BANANA based on the BNB Chain token contract will be no greater than 280,000,000 BANANA tokens
• Option 2: 333M BANANA Hardcap: If this option passes, then the total supply of BANANA based on the BNB Chain token contract will be no greater than 333,000,000 BANANA tokens
• Option 3: 420M BANANA Hardcap: If this option passes, then the total supply of BANANA based on the BNB Chain token contract will be no greater than 420,000,000 BANANA tokens
• Option 4: 550M BANANA Hardcap: If this option passes, then the total supply of BANANA based on the BNB Chain token contract will be no greater than 550,000,000 BANANA tokens
• Option 5: NO BANANA Hardcap: If this option passes, then the BANANA token will remain uncapped and inflationary unless changed by a future governance proposal.