Proposal for 30M $BFR Token Burn, trading Pool Implementation, and Supply Cap at 50M BFR

Proposal:

30M $BFR Token Burn, BFR Trading Pool (Partial Fee Burn), Max Supply Cap of 50M BFR

Background:

This proposal outlines the implementation of a deflationary mechanism for the $BFR token through supply reduction, burn protocol initiation, and a hard supply cap.

We propose several measures to strengthen the role of the $BFR token as the core asset of the Buffer ecosystem & reduce the dilution of supply through inflation.

1 - Burn community allocation to reduce $BFR Total supply

A total of 25M $BFR tokens (community allocation)* representing 25% of the total supply will be unlocked on June 4th, 2023, after a 6-month cliff.

Vesting contract: 0x63B045c2c53Eb7732341a96a496DF1Cf423E11bA

We propose the following approach to reduce future uncertainty and remove the overhang of a large portion of tokens flowing into circulation:

• Burning of 20,000,000 BFR tokens post unlock (06.04.2023)

• Burning of the remaining 5,000,000 BFR from the community allocation and 5,000,000 from the POL allocation** reserved for burning upon reaching a set milestone***.

Contract: 0x5558CD6480A63601EC780D8f40FD7cD97dea48a7

Milestone: 10M in total volume generated on Buffer Finance and 20,000 BFR token holders.

2 - Implementing a sink into Buffer Finance i.e. fees that lead to the token being destroyed/burned.

We propose to establish $BFR-based trading pools for all Buffer products wherein:

a) 50% of fees accrued from $BFR trading is burned

b) 50% allocated to LBFR Loyalty Program rewards to incentivize trading volume

The $BFR for the counterparty will be sourced directly from the treasury, creating a closed loop that ensures the platform's sustainability and enhances value for stakeholders.

This chart shows the calculated fees generated and the amount that would be burned for each trading volume based on a 15% fee rate. The burn amount is determined by halving the total fees generated, in line with the proposed mechanism of burning 50% of fees accrued from $BFR trading. Any alterations to fee usage are contingent on community governance and can be affected through BIP voting.

3- In order to ensure the economic sustainability of the platform under the widest possible variety of circumstances, we also propose a maximum circulating supply of 50M for $BFR.

Motivation:

The $BFR supply of 100,000,000 & original emission schedule was intended to provide a secure long-term runway for project funding and incentives for LPs & stakers

Buffer has proven itself as a robust yield-generating platform that can prosper without requiring significant long-term token emissions.

The token is meant to be a scarce multi-utility asset, representing stakeholdership in the ecosystem and granting access to the yield generated by a wide range of products under the Buffer Finance brand.

Protecting current stakeholders and long-term supporters from inflation and putting $BFR on a path toward long-term deflation is the core motivation behind the proposed measures.

Especially the implementation of $BFR-based trading and the burning of 50% of the accrued fee introduces a sink that allows for constant deflationary pressure while providing novel utility and a source for trader incentives via the Loyalty System that scales with the growth of platform usage.

References:

• BFR token allocation and contract: https://docs.google.com/spreadsheets/d/13s8r6hIBhQnPDt-Hlyqi1eQeAS_quEjKi1WHkShX3SA/edit?usp=sharing

• Buffer Tokenomics: https://buffer-finance.medium.com/bfr-tokenomics-a52b4ecc4817