This proposal is authored by cateatpeanut.

Objectives

Since BitDAO's launch in July 2021, we have explored various strategies, and received datapoints from community feedback, price performance, and observations of other crypto projects. To optimize BitDAO's long-term prosperity and competitiveness within a dynamic crypto industry, it is imperative that we periodically review BitDAO structuring.

This proposal is intended to address the following key issues that arose from feedback and observations:

1. The lack of focus of the BitDAO strategy and narratives - the community has supported a variety of initiatives and pilot programs, including: the initial and ongoing Bybit Contribution, venture investments, broad mandate ecosystem initiatives, and core product development led by Mantle and various ad hoc projects. This multi-strategy approach lacks competitive strength, and it is preferred that BitDAO looks for its own long term vision with clear focus of strategies and resources.

2. The unpredictable nature of the $BIT circulating supply (due to the dynamic Bybit Contribution).

3. The concentration of $BIT token holdings.

This proposal aims to take first steps to deal with the above issues through simple adjustments to existing mechanisms. The intended result is: a focus on product and user growth (instead of treasury growth); a focus on BitDAO initiatives instead of Bybit; increased the stability and predictability of $BIT tokenomics; and decentralization of $BIT holdings and governance.

Proposal

By voting "Yes" on this proposal, you are in favor of:

1. Modifying the Bybit Contribution from a dynamic exchange-linked-amount to a fixed-schedule-amount over 48 months, starting at 120M $BIT per month and halving every 12 months (total 2.7B units).

2. Retaining the Bybit Contribution $BIT in the BitDAO Treasury instead of immediately burning. The burn may be restarted via a subsequent BitDAO proposal.

New Bybit Contribution Schedule

|Period|$BIT per Month|Total $BIT tokens| | --- | ---: | ---: | |First 12 months [1]|120,000,000|1,440,000,000| |Next 12 months|60,000,000|720,000,000| |Next 12 months|30,000,000|360,000,000| |Next 12 months|15,000,000|180,000,000| |||2,700,000,000|

Notes:

[1] The first contribution under the new schedule shall be 2023 April 20th, in replacement of the contribution under the old model.

Analysis and Commentary

Fixed-Schedule Contribution

The existing Bybit Contribution depends on the dynamic trading volume. Modifying this to a fixed schedule brings the following benefits:

1. Focus $BIT tokenomics on BitDAO initiatives such as the development and adoption of core $BIT products (e.g. Mantle), instead of Bybit performance.

2. Focus BitDAO on products and user growth, instead of treasury growth.

   • While treasury resources are critical for development and longevity, BitDAO prosperity is primarily accelerated and sustainable through product and user adoption.

3. Decouple the economic and legal exposures of BitDAO and Bybit.

   • Reduce the likelihood of $BIT being viewed as a "Centralized Exchange Token" or "Bybit Token".

   • Reduce risk from future regulations around Centralized Exchange Tokens.

   • Pave the way for $BIT to be listed on other centralized exchanges (which may view Bybit as a competitor).

4. Increase the predictability of $BIT tokenomics.

   • More predictable $BIT circulating supply.

   • Easier to benchmark $BIT to other tokens.

5. Improve the decentralization of $BIT holdings and governance.

   • Each future contribution tranche furthers the decentralization of $BIT holdings, from Bybit-owned to community-owned-and-distributed via the BitDAO Treasury.

Bybit's Support for BitDAO Products

Bybit has contributed more than $600M USDC/USDT and 177k ETH to the BitDAO treasury (see Treasury Monitor Analytics). This level of resources is sufficient to support the development of BitDAO products. There is a high standard for approving new initiatives, as we should ensure deployment of BitDAO resources has a direct impact on long-term BitDAO prosperity.

That being said, Bybit remains an important sponsor and partner to the BitDAO community. BitDAO will continue to partner with Bybit in terms of technology development and product adoption, particularly in the areas of product ideation, bootstrapping product development, $BIT integration, user integration, and product distribution. We believe such support will create more value for the BitDAO community.

As an example, the early stages of Mantle development was funded by Bybit until the recent Mantle budget proposal under BitDAO. Mantle will use $BIT as native token (versus having its own token), and be BitDAO governed and accountable (see BIP-19 Budget Proposal, Mantle Ecofund Proposal, and Mantle zkEVM Discussions).

After completion of the 2.7B $BIT fixed-schedule contribution, Bybit will likely remain the largest holder of $BIT and be incentivized in BitDAO's success (see wallet holdings).

Tokenomic Impact

The resultant supply impact of this proposal is that the circulating supply of $BIT (defined as outside of the BitDAO Treasury and Burn address) will be reduced from approximately 6.0 bln units (3.3bln treasury, 0.7 bln burned) to 3.3 bln units (6.0 bln treasury, 0.7 bln burned). This represents a 1.8x boost of BitDAO economics and governance voting power for all existing $BIT holders.

Note: the circulating supply of $BIT will be increased from any distributions and issuance from BitDAO Treasury (approved by future BIPs), and decreased via any approved burn, $BIT token sinks designed into core products, or BIT purchase programs.