Minswap Token Burn


When the MIN Token first entered circulation, 0.5% of total supply (25mn MIN) was released without vesting and lockup. Many different initiatives were set in motion since then to fairly distribute MIN tokens and decentralize token ownership (FISO, Incentivised Testnet, Yield Farming…). However, this initial low float conditioned the tokenomics design from the beginning, allocating 3% of MIN supply towards the LBE and 5% towards the first 6 months of farming.

At the time the MIN Token was created, it was with an open policy. The reason behind that decision is that tokenomics is an extremely complicated area. Nailing token design on the first iteration is unlikely, and as such it is better to remain adaptable.

With this proposal, we aim to leverage that adaptability by proposing a MIN Token burn that will address some of the concerns voiced by the Minswap community in the latest months.


There has been lots of discussion recently within the Minswap community regarding $MINomics. $MINomics V2 was introduced to revamp $MIN tokenomics, listening to the community feedback in an attempt to make the platform better overall. The following improvements were made as part of $MINomics V2:

  • Redirect the Fee Switch ADA towards MIN stakers, so they can stake MIN and earn ADA.
  • Directing 50% of Batcher Fees towards the DAO Treasury, which has accumulated to date 335,733 ADA.
  • Cut down on Emissions significantly from 670,609 $MIN daily since $MINomics V2 started in July 2023 to 358,793 MIN daily (-46.5%) now in December 2023.

The long term aim of the DEX has always been to not entirely rely on Emissions, but rather have Trading Fees progressively become a bigger part of the yield earned by LPs. This has already been happening, as you can observe that a large portion of Liquidity Pairs on Minswap (such as ADA/DJED, ADA/SNEK, ADA/LENFI) have a majority of the yield coming from Trading Fees instead of MIN emissions. Minswap V2 will play a big role towards moving in this direction, Dynamic Fees will enable LPs to adapt better to market conditions, and to profit more from trading fees paid by traders swapping.

This shift towards sustainable yield also aims to transform MIN from being a token held as a reward for farming, to being a token held for its utility. The MIN token is to become a scarce resource, with trading fees distributed to stakers, utility within the platform, and a pivotal role in Governance both within Minswap but also the Cardano ecosystem as a whole.

Reasons for a MIN Burn

With almost 2 years since mainnet launch, we think now is the time for the DAO to decide on another important vertical that an open token policy enables: whether or not to burn MIN and how much to burn. But first, here are the reasons why we believe a burn is necessary:

  • Low Float and Clarifying Maturity Indicators - at 20.4% supply circulating, the MIN Token has a relatively low float compared to other DEX tokens. This is an issue as it does not represent the stage of the project (with Team Tokens almost halfway distributed, 2 years of mainnet and farming, etc.). With Emissions decreasing steadily for the last 6 months (-46.5%), Minswap has been on a path of relying less and less on MIN Farming incentives in order to attract liquidity and volume.

  • MIN Farming Token surplus - there has been significant research over the last months put into this proposal. A community member (Chicken) wrote up a DEX Emissions Schedule Study to determine the most optimal duration for the yield farming schedule. At the current rate (which is set to keep decreasing) the schedule would last for the next 25 years, significantly higher than industry standards. The study uses a variety of metrics to determine the Optimal Duration Based Supply Analysis, and concludes with it being around 9 years.

This leads to an inefficient resource allocation, as it is not prudent to predict timelines that are well beyond our control. Rather, it is better to run a tight ship and prioritize efficient allocation of resources as to influence a timeline that is within our control and garner further adoption at an early stage.

  • Community sentiment - Minswap prides itself on being a community-first project. There has been much debate recently within the community about the relevance of the circulating supply in relation to the total supply of tokens. An overwhelming majority of community members have expressed that the tokenomics of Minswap are something that they would like to see fixed. This would assuage these concerns and also make way for more positive sentiment regarding Minswap.

Burn Mechanics

While tokens could be burnt over a period of time, we think that a one time, significant burn is more effective. Not having to spend valuable resources to discuss the particularities of a burn over time allows for more time to concentrate on other DAO Governance initiatives such as more efficient management of Protocol Owned Liquidity, CEX Listings, Catalyst voting, adding MIN rewards to MIN staking and more.

We have established why burning a significant amount of MIN from Yield Farming would make most sense given the surplus. However, if the intention is to make MIN a scarce Token, it should be scarce for the Minswap Labs Team as well. It would be unfair to burn a very significant amount of community tokens from yield farming to optimize tokenomics, without Minswap Labs being held to the same standards of efficient resource allocation as well. Thus, we propose that Tokens be burnt both from the Yield Farming allocation and the Development Fund. Development Funds are MIN tokens allocated to Minswap Labs that have so far been used to reward community managers and pay bonuses and are mostly reserved for once the Minswap Labs Team tokens have fully vested in March 2025. With Dev Fund Tokens being reduced, so will the future MIN token vesting for the Minswap Labs Team members.

Minswap is fortunate to be a community funded and focused project, there are no tokens owed to VCs or private investors. MIN tokens are fully owned by the community, as such adjusting tokenomics, token allocations and total supply is straightforward if the community approves. However, we would like to clarify 3 things:

  • Modifying the total token supply is not a topic that we foresee revisiting again in the near future. Our goal is to properly allocate resources and not to give the community an idea that this is a common theme of proposals for the future.
  • An open policy ID for the MIN Token shall not remain standard in the future.
  • Further burns (if implemented) should follow a model where burning of MIN is correlated with economic activity on the DEX ($MINomics V3?). For example, Crypto.com periodically burns a % of the rewards from the inflation allocated to validators.

Options for voting

There are different options for voting so as to have as many community members be represented by the options as possible. With that being said, let’s dive into the Options for voting on this Proposal.

Option 1: No burn

In this Option, Tokenomics would remain as they currently are. The MIN left for farming could last for around 22.8 more years at the current rate until fully used. Development Fund MIN would remain fully as it is currently.

Option 2: Burn 20%, 18% from Yield Farming and 2% from Dev Fund

In this Option, the Dev Fund would be decreased from 452,495,022 MIN to 352,495,022 (22.06% drop) and the Yield Farming MIN would decrease from 2,947,666,843 to 2,047,666,843 (30.52% drop). The MIN left for farming could last for 15.8 more years until fully used.

Resulting circulating supply would be: 25.48%

Option 3: Burn 30%, 27% from Yield Farming 3% from Dev Fund

In this Option, the Dev Fund would be decreased from 452,495,022 MIN to 302,495,022 (33.15% drop) and the Yield Farming MIN would decrease from 2,947,666,843 to 1,597,666,843 (45.79% drop). The MIN left for farming could last for 12.3 more years until fully used.

Resulting circulating supply would be: 29.12%

Option 4: Burn 40%, 36% from Yield Farming and 4% from Dev Fund

In this Option, the Dev Fund would be decreased from 452,495,022 MIN to 252,495,022 (44.19% drop) and the Yield Farming MIN would decrease from 2,947,666,843 to 1,147,666,843 (61.06% drop). The MIN left for farming could last almost 8.9 more years until fully used.

Resulting circulating supply would be: 33.98%

The option with the most votes amongst the 4 will be implemented.

Please vote in the Poll below for this Proposal to proceed to an on-chain vote.

Authors: PurritoGeneral, Ch!cken, Cardano Farmer, Nilez

Should this proposal be put forth for an on-chain vote?
  • Yes
  • No
0 voters

Good proposal, I think an option for burning 50% would be good as well.


love this idea, defiantly support this proposal. how will this affect apr though, the min\ada farm mainly


For now the emission working group and bounds procedure remains unchanged. This burn will turn MIN into a scarce asset amongst the other many things mentioned, but this proposal itself should theoretically not affect farming aprs or emission rates (changes to this can be proposed by DAO community and voted on in future). It only affects the duration of the schedule.


My personal thoughts about the burn:

If you asked me a year, even a few months ago if burning MIN was a good idea, I woulda clearly said no. Usually burning has a negative connotation in the industry, one that we want to shy away from.

However, this is crypto, if you want to survive & thrive, you have to be ready to always revisit your assumptions, adapt to events and listen to feedback.

When Minswap launched, a large part of the success in attracting liquidity was in a very aggressive farming program that allocated 5% of total supply for 6 months. After 2 years of farming, we are now in the position to do the opposite, become aggressive in making MIN a scarce resource.

My case for 40% is simply, that we can afford it and it will make us better at managing emissions and team tokens. We dont owe tokens to VCs or anyone of the sort. We can cut a significant amount and it will make us more accountable when managing farming tokens and team tokens.


Agreed. Also I hope this proposal makes 2 things clear apart from its purpose.

  1. From my experience the Minswap team is one of the most community focused teams. They will take all feedback and continue to adapt themselves and the dex and stay relevant and community focused.

  2. All and any ideas and proposals are welcome. I found that putting together actual data, metrics, conducting case studies, forming a thesis, conclusion, and detailed analysis tend to be a way to get much more traction and recognition in getting a proposal taken seriously than just coming up with an idea with no data to back it.

I too am just another Minswap community member along with Cardano Farmer and Nilez and I hope this encourages others to participate more in creating proposals and backing them with data and analysis to drive home their point. :grin::muscle:


“just another community member”

I say the same thing :rofl:

It’s because we have intelligent and good willed community members that really hash this stuff out that Minswap will survive.

I agree with the comment above about adding a 50% burn.

I also agree with what Purrito said. I used to be one of the biggest opponents of burning. Artificially creating scarcity just to drive valuation… No. We ardently fought a particular hobbit over this one for awhile. Sad to say, he was right, just at the wrong time and for the wrong reason.

Now I’m team burninator because it makes sense now that we have analyzed data. And a wonderful data analysis you have done @Ch_cken


Also, how you write an epic in the forums and call yourself “just another community member”?

No one does that.


thanks. amazing !!!


brilliant, would make lp holders want to keep their positions for longer, for the pure fact of price increase and v2 coming out it would add so much more value doing this burn


Look at the option of burning 75%


All of the 'farming years left" are based on the current rate. As Minswap develops things like Stableswap pools, and as more competitors come to market, it may be needed to increase emissions at different points in time.

I would be a proponent for 20% burn and reevaluating annually. A burn is not something you can take back while emissions adjustments can happen bi-weekly. I get that a 1 time burn is more effective, but it is also permanent. Over time, Minswap will want to incentivize more rhan juat LPers. Minswap DAO will want to incentivize other Dev teams to build on top of Minswap, and DAO participants to continue contributing, plus who knows what else. Lets not put the DAO in a permanently disadvantaged position to other dexes, existing and yet to be launched.


Thank you sire :saluting_face:

Lol looks like you have not seen the dex study I wrote :joy: Its 25 pages that scream I am a community member :grin:

The forum proposal credit goes to Cardano Farmer, Nilez, and Purrito as well :muscle:


I did some research into what happens when we reach fdv when writing my paper and examined what other leading dexs do (although I left this section out of the paper). There are solutions for this. Many actually. For example, Uniswap is set to reach fully diluted value soon. They have a 2% perpetual inflation that they initially proposed to vote on for the sake of governance and liquidity incentivization. Balancer has a bitcoin halving like emissiom schedule for remaining tokens. Etc, etc.

Imho I figure it may be better to deal with that issue as we near the full token supply. And based on all these numbers, even at the most aggresive emission rate of 1,000,000 MIN per day we still have 5-6 more years before reaching total supply. So just imagine how much excess years of supply we have left at our current rates. I believe this amount will be more than enough for any future incentive programs in unison with the solutions presented above :grin::chicken:


I see that many here are asking for a high % burn, which is a good thing, it indicates that there clearly is a unified understanding that there is a need for a burn. But I would like to point out to those that are asking for a higher % that is proposed (50-75% burns) that it’s better to do things in moderation. I definitely think the highest burn would be waranted in this case, and even the highest option leaves us tools to possibly use in the future. Burning too little is easy to address, burning too much is a whole other story.


I read through the report and it was great. Thank you for that. Though i do think the conclusion was too heavily relent on uniswap, especially given it was tvl weighted (if i remember correctly). Uniswap had first mover advantage into an ecosystem prior to DeFi Summer. That set it up for success. That plus extremely well timed innovations to AMMs. Curvevqnd Balancer innovated on tokenomics design.

All I’m trying to say is Cardano DeFi is different. It’s a newer user base and a more open competitive environment. I’d like to see is keep our options open a bit more. 40% burn feels like way too much. Id be okay with 20% and a review 1 year from now after Axo matures a bit. And after V2 matures.


I agree with this, as burning an X% of tokens in one go makes room for mistakes.

I think, if an X% gets voted, the burn event should be distributed over a period of time with the option of omitting an individual burn.

So for example:

Burn 40% - burn 10% 4 times over 4 years and have the option to cancel each burn event. So you get a range of burn between (0%,40%) if over time the DAO realises that the initial burn was too high.


why would it effect the farm apr?
factors which determine apr are:
1 $min daily emission
2 amount of locked lp in a pool
3 price of $min


Why only the small 2-3% from dev fund? Shouldn’t it be in proportion to all other token distributions that way community has a fairer chance?


Burning much more from the core team fund can offset a lower burn rate from community distribution.