It has been a concern of many that Minswap has a very low float and circulating supply. In an emission schedule where this supply was to be released in the relative short term, it would not be wise to tamper with it.
However given that emissions are set to be distributed for almost 25 years (when taking the lower emission bound), it may not be a bad idea to cut the total supply of $MIN on the backend and hence this has been a topic of discussion.
This is very controversial and it is a straightforward burn as opposed to a gradual burn with complex mechanics that directly tie to DEX and on-chain metrics.
Theoretically it would have zero impact on how the protocol operates, the emissions, and existing dilution metrics. The biggest change would be that the emissions would run out faster. The advantage on the other hand is that it gives the protocol better optics during a time of early adoption and Minswap’s debut, it takes care of the low float issue, increases our chances of staying relevant at the expense of shaving off a few years off of emissions on the backend, and makes the impact of decisions taken by the DAO more trackable rather than leaving these decisions to the whims of dilution over 25 years.
Some may think that this skews the % allocation of tokenomics, but the actual token amounts allocated to various purposes (such as team allocation) would not change. The only time the original allocation % would be met is once all supply is released. Given that the current schedule is set to stop emissions almost 2.5 decades away, by which time many people here may have moved on to other pursuits, it does not make sense to fear that a certain category will have a higher % allocation decades down the line when it is our duty to take every action possible as a DAO to maintain our relevancy in the mean time. Not to mention that tokens would constantly be bought and sold, further skewing what these % allocation would realistically end up as once full supply is circulating decades later.
This proposal is just to gauge what the right duration of emissions should be. It aims to bring the emissions into a time range that the DAOs actions have a higher chance of impacting. There is no guarantee that Minswap will be relevant 25 years from now, but a pretty good chance it will be more than relevant a couple years from now.
To that end, assuming that a token burn is the right thing to do from the backend in order to reduce emissions and shorten the emission schedule in return for a higher chance of adoption. What option would you think would be the best duration for emissions to continue for this protocol?
Update: Putting together some data that can give a better context as to what a “normal” duration of emissions will be. This will give us a better idea.
Very cool chooka. The question I have then is how will liquidity be incentivized without min emissions once they run out? Do you think market making on Cardano DeFi will become sophisticated enough (in terms of financial tools) to attract fresh liquidity?
I guess my thinking is, while your concern on optics and relevance is important, I can’t help but feel like you have skirted the fundamental purpose of farming emissions - liquidity incentivization. Unless you can provide an alternate paradigm/vision in which that occurs without min emissions, I feel like the premise of this proposal is not quite robust enough.
Granted, my concern remains regardless of the time-frame. I guess I’m asking, suppose we all vote for the aggressive 1-5 time frame, we will consequently have to draft a new scheme in preparation for the transition to a post-emission paradigm. Don’t get me wrong - there are plenty of ways to do this I think. Just wanted to chime in for the dear readers.
I agree with you 100%. Putting together a comprehensive analysis of many Dex metrics. I will address this and many other things in there. There are many ways this can be addressed. Uniswap’s emission schedule is set to end within a year. They have a 2% perpetual inflation on total supply per annum afterwards to keep governance and liquidity relevant (of course this must be voted on by their DAO, but was capped at a max of 2% at genesis). Balancer on the other hand operates similar to the bitcoin halving. They have an aggresive emission schedule to start, but implement a halving of emissions every 4 years to make it last a while. You bring up a valid point and there are many solutions to it. I will have more information ready in a couple of weeks.
From my understanding they are both the same concept. Its just that float is used predominantly in the stock market and tradfi. Circulating supply pertains more to crypto related companies and protocols. Either case it is the amount of “units” available to be traded at any given time.
