Reducing FDV

Simple Summary

Reduce the total supply of tokens by burning the excess supply that is not intended to be used to a more reasonable level.

Abstract Premia’s FDV to float is excessive and has put off many looking to further deploy capital into Premia. At the time of writing, Premia’s Circulating Supply/Total Supply is sitting at 10.5%, compared to 40% for Dopex. Also, the FDV/TVL figure for Premia sits at 16.2x, quite high compared to 6.7x for Dopex, or 1.45x for GMX. Premia’s current emissions is at 1.8m tokens for 2022, or 1.8% of total supply. Despite Premia having higher volume, a superior UI/UX, and the ability to trade American options, Dopex’s market cap is 6x greater than that of Premia. While updated tokenomics and V3 will help, (Dopex also has an upcoming V2), the market cap differential will be difficult to compress without materially reducing the FDV.

Proposal & motivation Burn 60% of excess supply, which would make Premia more attractive on a relative value basis to other options and real yield protocols. This would take the total supply to 30m tokens, leaving room for 16.7 years of farming incentives (based on the 2022 rates). It would also take the Circulating Supply/Total Supply to 35% and the FDV/TVL to 4.9x. This would encourage new buyers from adding Premia and lead to more attractive relative value comparison to other real yield protocols.