[TIP-012] Amendment to Monthly Target-based Burn: Remove 3x Emissions

🔗 TIP-012 Draft TIP-012 Ideation

THE PROPOSAL

If passed, this TIP will amend the monthly volume-based burn mechanism by:

Removing the base 3x Emissions from burn calculations (if monthly volume $ target is met)

Summary

Since April 28, 2023, over 42% of the community incentives allocation has been burned. This TIP proposes removing the 3x Emissions by default and calculating burns based on emissions*volume multiplier only if monthly volume target is met.

Motivation

Since TIP-001 was passed in April 23, 2023 to initiate monthly burn of non-circulating supply from Community Incentives Allocation, a total of ~105.55M $THOR has been burned so far, accounting for ~21.11% of maximum supply and ~42.22% of the community allocation.

It's time to discuss revisiting the formula for the burn. For context, the $THOR burn initiative was mainly to address:

• Offset token emissions since TGE (we have burned far more than emissions now)
• Concerns around FDV
• With the recent adjustments to monthly burn from being calculated from RUNE to USD, and the addition of Chainflip + Maya Volume, plus no more caps on the multiplier. It's better to let the monthly burn challenge play out in a free market manner.

This TIP proposes removing the default 3x Emissions from burn calculations.

THORSwap monthly volume has consistently hit 3x multiplier already due to trading volume exceeding targets, so emissions are more than accounted for. With no caps, the incentivization of real yield and trading volume should be the driving force for burns going forward.

More than 42% (~105.55M $THOR) of the initial allocation (250M $THOR) has been burned, the burn challenge can now stand on its own as a volume incentive to drive more real yield, and the remainder can be reserved for its intended purpose for the growth of the protocol.

The intended purpose of $THOR Community Incentives allocation is to drive long term growth for THORSwap. This can be but not limited to:

• Drive THORSwap adoption via marketing, education
• Encourage more decentralization, more diverse holders, attract new users/community members
• Invest in improvement and maintenance of THORSwap interface and products (ie.infrastructure and SaaS costs)
• CEX listings, partnerships and other investments to grow THORSwap
• Grants for contributions, partnerships and integrations.
• Contingency for unprecedented situations

Specification

As a projection, if this TIP was executed for July’s Monthly Burn (which resulted in ~7.16M $THOR burned after 3x emissions and 2.69x multiplier).

Without 3x emissions base calculations, the $THOR amount burned would have been ~2.39M $THOR

Source for calculations

The proposed amounts maintain a healthier balance between monthly volume-based burn as a marketing initiative while keeping the Community Incentives Allocation more sustainable for other uses over the longer-term.

Benefits

• Ensures the on-going sustainability and growth of THORSwap protocol
• Allows THORSwap to stay competitive with other protocol/chains/swap providers by preserving the community pool for future use. This includes possible grants to attract users, builders and partners, liquidity for exchange listings, rewards for competitions and affiliate programs, and any other possible future incentives.
• Remain decentralized ensuring community $THOR holders remain diverse with governance power.
• Evolve into a sustainable protocol driven by real world usage, utility and real yield.

Drawbacks

• Lower burn values may lessen the marketing impact of Monthly burn.
• Smaller impact to address FDV concerns from community members.