VIP #2: Tax Removal

Proposal Overview

The intention of this proposal is to remove the buy/sell tax when swapping $VDO tokens (ValiDAO’s native governance token).

Background

ValiDAO is a proof-of-concept demonstrating that bootstrapping a legitimate project via tax is a viable strategy. Since its inception in December 2023, ValiDAO has achieved significant milestones:

• Made 1 major hire with a full-time salary (DevOps) and hired multiple contractors for research/content development.
• Purchased back over $250k worth of supply (average entry at $0.60 as of 07/06/2024).
• Maintained an ETH treasury worth $100k+.
• Legally established as a DAO in the Cayman Islands.

ValiDAO has no venture capitalists, no outside funding, and has used this model to provide major opportunities for early community members to effectively become “angel investors.” Note that similar organizations like Figment have conducted funding rounds that valued them in excess of $1B.

However, tax tokens have a significant stigma within the larger crypto ecosystem. While ValiDAO is one of the few major successes from the tax model, most tax tokens are illegitimate and do not deliver anything, often used purely to farm their holders. These are commonly referred to as “Tax Farms.”

ValiDAO is clearly not a tax farm, as evidenced by the constructive use of tax revenue. Nonetheless, the stigma surrounding tax tokens negatively impacts how major actors in the space perceive ValiDAO.

Speaking to many people privately about ValiDAO, the one drawback they all unanimously mention is the inclusion of a tax. Other community members have shared similar experiences, as per the below:

While bootstrapping the project initially with a tax has been one of the more appealing aspects, I believe we are now at a point where, to grow our mindshare, community, and assets under management (AUM), we need to move past the tax model.

Rationale

More people willing to buy $VDO inherently leads to more people invested in the project’s success, resulting in a larger community and more overall mindshare. We already have a really good community, but to reach our goal of $1B AUM, we need to attract even more people. A militia, if you will.

ValiDAO generates ~$300k per year in revenue right now, which mostly covers operational costs. However, there are still growing pains that need to be addressed. As elaborated on the forum discussion, runway is currently 4-5 months of assuming current prices remain flat, and taking the recently passed VIP #1 into account as well.

Proposal

• Remove buy taxes at the latest (but potentially before) 30 days after voting ends [and the proposal passes]
• Remove sell taxes at the latest (but potentially before) 60 days following buy tax removal
• Renounce the contract immediately following the above tax removal