TIP 37 - Adjusting LON Buyback Mechanism（关于LON 回购机制调整的提案）

Background

• LON (Tokenlon Network Token) is a utility token issued by Tokenlon, used to incentivize contributors within the Tokenlon network ecosystem. The LON staking, buyback, and trade mining was officially launched on April 1, 2021.
• Current Issues with on-chain buyback
  • On-chain buybacks come with gas fee costs, requiring a certain threshold to initiate and occur at a relatively low frequency.
  • In cases where feeToken falls short of meeting the buyback criteria, the available funds for buybacks decrease as token prices drop.
  • On-chain buybacks carry the risk of being exploited by MEV arbitrage.
• LON, currently listed on centralized exchanges, experiences short-term price volatility due to low trading volume during bear markets, impacting larger trades and causing extreme price fluctuations. This scenario is detrimental to LON's long-term development and may lead to potential delisting.
• Within the ongoing context of declining DeFi token prices, the rewards distributed to liquidity providers, community treasury, relayers, and users in each Tokenlon trade mining round are in the form of LON tokens. A decrease in token value reduces the incentive for ecosystem participants.
• Tokenlon has captured over $50 million in total protocol fees, and the accumulated feeToken & community treasury tokens require active management to address value preservation and appreciation concerns.

Objectives

• Streamline buyback operations for enhanced utilization of LON buyback funds.
• Operate the community treasury more efficiently to incentivize various participants within the Tokenlon ecosystem.

Proposal

• Adjust the on-chain LON buyback mechanism to execute off-chain. Future protocol income will not be restricted to on-chain buybacks; off-chain exchanges, OTC platforms, and similar options will be explored for LON buybacks.
• For rewards distribution in trade mining, explore possibilities beyond LON tokens, such as issuing feeToken, LPtoken, and other tokens, to enhance incentives for ecosystem participants.
  • For feeToken (e.g., USDT), rewards will not fluctuate with market prices during bear markets.
  • For LPToken (e.g., LON/USDT), this can boost liquidity depth.
• FeeToken and treasury management will be dynamically handled by the Tokenlon team, with treasury records regularly disclosed to maintain transparency.
  • Drawing from the example of $DAI, MakerDAO community votes for adjusting DAI savings rates to 8%.
• If the proposal is approved, trade mining will operate under the new mechanism, and the 22nd phase of trade mining will conclude on August 21, 2023.

Execution

• Rewards distribution in trade mining will encompass forms beyond LON tokens to heighten ecosystem participants' incentives.
• Future protocol fees will be managed through the protocol income wallet. The team will flexibly handle buybacks and positions, regularly initiating LON buybacks through centralized exchanges, OTC platforms, and similar means, with regular disclosures.
• The 22nd phase of trade mining will conclude prematurely on August 21, 2023, and the 23rd phase will commence.

背景

• LON（Tokenlon Network Token）是 Tokenlon 发行的应用型代币，用于激励 Tokenlon 网络生态中各方参与贡献者。于 2021 年4 月1 日 正式开启 LON 质押、回购及交易挖矿
• 目前链上回购存在的问题
  • 链上回购有矿工费成本，回购需满足一定额度才能进行，且频次不高
  • feeToken 在额度不足无法满足回购条件下，随着币价下跌，回购可用资金也跟着减少
  • 链上回购有被 MEV 套利的风险
• LON 目前被上架的中心化交易所 ，由于熊市交易量低迷，略大额订单的买卖，影响 LON 币价短期内的剧烈波动，不利于 LON 的长期发展，极端情况下会面临下架的可能
• 当前市场背景下 DeFi 代币币价都在下跌，Tokenlon 每轮交易挖矿，给做市商、社区财库、relayer、用户发放的奖励为 LON，币价下跌会对生态各方参与者的激励作用降低
• Tokenlon 协议捕获的总手续费超 $5000万，积累的 feeToken 和社区财库代币，没有主动的进行管理，存在保值增值的问题

目的

• 简化回购操作，提升 LON 回购资金利用效率
• 更高效的运营社区财库，以激励 Tokenlon 生态各参与方

提案

• 将链上的 LON 回购机制，调整到链下执行，协议收入未来将不限于链上回购，链下交易所、OTC 等平台都是潜在选项，以进行 LON 的回购
• 交易挖矿的奖励发放，探索除了 LON 代币外，如发 feeToken、LPtoken 等其他代币的可能性，以提升对生态参与方的激励积极性
  • feeToken (ex: USDT)，则在熊市下，奖励不随市价波动
  • LPToken (ex: LON/USDT)，则可增加流动流动持深度
• 由 Tokenlon 核心团队动态合理地进行 feeToken 和财库管理，财库账目定期公示，保持公开透明并接受社区监督
  • 以 $DAI 为例， MakerDAO 社区投票通过 DAI 储蓄利率调整至 8%
• 若提案通过，交易挖矿将以新提案的机制进行，且第 22 期交易挖矿调整为 2023 年 8 月 21 日

执行

• 交易挖矿的奖励发放，将不限于 LON 代币的形式，以提升生态参与方的激励积极性
• 未来协议手续费，将由协议收入钱包来进行管理，由核心团队灵活的进行回购和仓位管理，定期通过中心化交易所、OTC平台等方式，发起 LON 回购并定期公示
• 第 22 期交易挖矿调整为 2023 年 8 月 21 日提前结束，并开启第 23 期