! (See the pinned mod comment before voting)

Current situation

Currently, every round, 850,000 Donuts are allocated for rewarding posts and comments within r/EthTrader. But the actual number of distributed Donuts is usually a little lower than this amount, which leaves us a surplus that stays in the treasury. For reference, over the past 3 rounds, the total amount of undistributed DONUT (from the 850K) was:

• Round 147: 103,250 DONUT
• Round 146: 157,320 DONUT
• Round 145: 63,850 DONUT

Following the logic of this proposal, in total 324,420 Donuts could've been burned over the last 3 rounds alone.

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Problem

At the moment, DONUT has a high annual inflation rate. We mint 20,880,000 new Donuts per year.

Treasury funds are strategically allocated now, and we generate some revenue from advertising / LP fees / collabs.

The problem is the number of tokens burned every year is still low relative to inflation.

Leaving these undistributed tokens unburned means additional supply will stay in circulation without being put to effective use. Over time, this might negatively impact the token’s long-term value, and from a supply & demand perspective, this is not a great scenario.

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Solution

To counter inflation, I propose burning the undistributed Donuts at the end of every round, by sending them to the burn address (0xdead) on Arbitrum One.

For those who are curious about the technical aspects of this proposal, this would be implemented by adding a step in the distribution pipeline that:

1. Takes the total allocated amount (850,000 DONUT).
2. Subtracts the total actually distributed from the round summary.
3. Sends the remaining Donuts to the burn address on Arbitrum One.

We would be making sure the 850,000 Donuts allocated for distribution are actually and effectively used, either as rewards to our users or as burns to reduce supply.

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Advantages

• The most obvious advantage is deflationary pressure. Burning undistributed Donuts directly reduces circulating supply, which will help counterbalance inflation.
• This would be good for tokenomics. More burn mechanisms improves the economic model and can support DONUT’s value as well.
• This is pretty easy to do, the implementation requires only an extra step in the distribution process, making it pretty straightforward.
• This doesn't affect any user rewards or other strategic fund allocations, as treasury reserves remain healthy. If anything, the value of the holders' Donuts will tend to appreciate.

Disadvantages

• Less Donuts will sit in the treasury every month, however these tokens are considered "leftovers".
• If revenue sources drop, we would probably need to readjust treasury allocations for the sake of sustainability.

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Conclusion

If we implement this burn mechanism, we will remove excess supply from circulation while ensuring that the full distribution allocation is efficiently used.

Considering the current revenue streams, and treasury reserves and allocations, this change isn't a risk to sustainability and instead improves DONUT’s tokenomics.

If this ETIP passes, it will come into effect in the next distribution.