Depreciate veKOI to a More Sustainable and Growth-Oriented Token Economy

Summary This proposal outlines a strategic shift from veKOI rewards to a more flexible, growth-driven model through significant token burns and enhanced single-token governance. The objective is to remove artificial growth limitations, align community interests, and strengthen the token's market position.

Motivation Recent experiences and market reactions have demonstrated that veKOI rewards, while intended to stabilize and incentivize holding, have not only failed to achieve desired outcomes but have also contributed to a significant drop in token value. This has been compounded by broader market conditions and the specific dynamics of the zkSync ecosystem.

New Strategy

1. Token Burn: Propose burning up to 20% of the total KOI supply, including unswapped tokens from the Mute phase and tokens bought back in recent buybacks. This will reduce overhead on token supply and increase financial flexibility.

2. Subsidizing Rewards: Acknowledge that recent efforts to subsidize veKOI have not yielded the expected benefits, demonstrating a need to shift away from this model.

3. Roadmap and Growth Focus: Reiterate the core goals of increasing user base and TVL, clarifying that direct token value increase may not always correlate with TVL growth. The roadmap remains focused on these metrics rather than short-term token price increases.

4. Market Purchases and Financial Health: Highlight recent market purchases by the team and address misconceptions about the project’s profitability. Emphasize that a healthy project revenue and balance sheet are essential for long-term token value growth.

Expected Benefits ● Streamlined Token Economics: By moving away from lockup-based rewards and focusing on a single-token governance model, the project can more effectively unite the holder base and streamline value propositions.

● Enhanced Flexibility and Resilience: Reducing token supply and shifting focus from dividends to strategic growth initiatives will place the project in a stronger position to adapt to market and chain dynamics.

Implementation Details ● Immediate Execution: Upon approval, begin the process of token swaps for locked veKOI holders, ensuring no financial losses.

● Communication and Transparency: Maintain open lines of communication with the community, providing detailed updates and rationale behind strategic decisions.

Risks & Considerations ● Community Response: Prepare for initial resistance from parts of the community, especially those heavily invested in the veKOI model.

● Market Reaction: Monitor the token market closely post-announcement to manage any negative short-term impacts effectively.

Voting & Execution Plan ● Detailed discussion and feedback sessions before the vote. ● If approved, a phased implementation beginning with token burns and the discontinuation of veKOI rewards. A veKOI to Koi token swap mechanism will also be integrated into the UI to allow for veKOI holders to swap their ve directly to Koi tokens without needing to wait for unlocks. The tokens used for this will come directly from the treasury holdings and veKOI's received will be unlocked as time permits to make the treasury whole.