SMT DAO Vote: Rewards Policy and Burn Proposal

Swarm proposes a DAO vote on two items:

• Update to the $SMT rewards policy and governance
• $SMT burn of 34% of total token supply

DAO Proposal 1: New $SMT rewards policy

With the upcoming release of dOTC v2, alongside the recently announced platform changes, we require a new definition of the current $SMT rewards policy. We propose the following weekly $SMT rewards:

• Distributed based on a TVL metric across parts of the protocol:
  • RWA staking rewards are calculated based on the TVL of the SMT staked
  • RWA holder rewards are calculated based on the TVL of the RWA assets held in a user’s wallet or in qualifying dOTC offers, multiplied by a 4x TVL boost
  • Liquidity rewards are calculated as the TVL of the RWA offers that are held within dOTC as long as they are within 20% of the market price. The closer to the market price, the higher the rewards. The TVL will enjoy a 2x RWA TVL boost. Furthermore, the rewards will be expanded to other "in-market" trading modules that will be introduced in future.
• As an $SMT holder you can cast your vote here on Snapshot.
• If the vote passes, the new policy will be effective starting the week of Monday 5 August 2024.
• New rewards will be distributed weekly from Wednesday 14 August, 2024, onwards. You can see the distribution of previous rewards here.

DAO Proposal 2: $SMT burn proposal

One more thing…. (as Steve Jobs used to say)

• Tokenomics are one of the hardest things to get right from the beginning. As such, we have been conservative with the initial time horizon for the Swarm rewards model and reserves for eventualities. As Swarm’s model has evolved, it has become clearer that some of that is no longer needed.
• We are therefore proposing to burn a total of 81.2M $SMT tokens, which will come from the following pools:
  • 38.2M $SMT from the Rewards Pool:
    • this represents all rewards after year 10; we believe that after this time, a viable and self-sufficient model should be in effect, rendering these reward tokens unnecessary
    • until the end of year 10 (7 years from now!) the weekly rewards continue to distribute
    • we further suggest to lock up the remaining rewards tokens into a vesting smart contract that unlocks them automatically on a weekly basis based on the release schedule.
  • 43.0M $SMT from the Reserve Pool:
    • the current pool is larger than needed. The proposed burn would reduce the pool to 7M SMT.
    • The burn would represent a total of 34% of the total supply being removed permanently. That means the number of tokens not in circulation (79.7M) will be slightly less than those in circulation today (79.6M).

Who can vote?

• One vote for every one $SMT on both Ethereum and Polygon.
• Staked SMT counts without you having to remove your stake.
• If you have one SMT on Ethereum, one on Polygon and one staked, you would get three votes

Read more in our Medium article, where you can find links to Twitter and our Telegram group to join the conversation.