To combat dilution due to the rebase model, this topic is raised to gather support to burn $wMemo tokens to combat dilution.
Option 1: Schedule monthly token burning schedule in phases:
Phase 1 - monthly burning schedule to achieve 0 dilution (to achieve 0 dilution in 6 months time)
Phase 2 - monthly burning schedule to achieve (after 6 months, aim to create deflation rate)
(open to suggestion on the % of burn token monthly)
Option 2: Tokens sold back to Wonderland due to liquidation (below backing price) - A snapshot to be taken and propose to be 100% burnt (amount of tokens sold back to Wonderland due to liquidation below backing price) . Burn all buyback tokens (in wMemo)
wSifu (,) — Today at 12:19 PM
Liquidation requires repaying a wallets debt in exchange for seizure of collateral. As most liquidators are market neutral, they dump the seized collateral immediately to lock in their profit. As Wonderland owns the entire liquidity pool, liquidations essentially lead to those tokens being sold back to us.
How would option 1 work? We’d burn treasury tokens? I’m not sure what the benefit of that would be. Those tokens are meant to be bonded to feed the treasury. I am fine with additional minting as long as we’re doing it for a good price. eg now that wmemo is at an all time low I’d rather not have much minting until it’s well above 150k USD. The protocol currently has negative minting discounts which is great. Not sure what your proposal would accomplish.
Option 2 - this sounds interesting. I wonder if we should add a discount threshold eg we buy and burn if the liquidation is at least 10% below backing price.
Aim is really to curb dilution. Just like Spell having regular burning schedule, we should do it on TIME to reach an optimal level that doesnt create too much dilution. But i need expert help to propose the burning schedule.
As of right now I think we should wait to see what anti-dilution measures Sifu is about to utilize because even as I type this he is revealing more plans. If any token burning would be helpful, I would imagine wMemo would be the one to focus on as the supply would be capped. Time was already planned to be phased out.
Thanks. We can calculate back how many $wMemo tokens need to burn based on the number of $TIME token purchased during the both buyback at that point in time. If we got enough support to move to the next phase, i can update the proposal to burn $wMemo instead of $Time.
Why? Treasury should be used to generate returns/profits. I rather have a 10x on $18M investment than use $18M to burn time which wouldn’t even make a difference. BetSwap investment went 6x.
We can use profits to burn time. Until then, let it be!
I can get behind option 2 as its good for the DAO and won’t effect the treasuries ability to maximize investments:
Option 2: Tokens sold back to Wonderland due to liquidation (below backing price) - A snapshot to be taken and propose to be 100% burnt (amount of tokens sold back to Wonderland due to liquidation below backing price) . Burn all buyback tokens (in wMemo)
wSifu (,) — Today at 12:19 PM
Liquidation requires repaying a wallets debt in exchange for seizure of collateral. As most liquidators are market neutral, they dump the seized collateral immediately to lock in their profit. As Wonderland owns the entire liquidity pool, liquidations essentially lead to those tokens being sold back to us.
I don’t have a clear idea of which Option fits the best for the treasury, thus for the investors. But I think in general its a good idea to burn the tokens.
I’ve red that Dani is also down for burning. We could ask his opinion and he could give us insight about what way we can approach/ implement the burning mechanism.
Do we really need to make this deflationary? I’d suggest a 4th option where Sifu can either burn token bought or reissue at some multiple of the treasury. Say at least x1.1. And buy back at something below the treasury like 0.9. That way there is another tool to increase the treasury and he can possibly wreck someone trying to manipulate liquidations. Say I sell out 500 wMemo at 60000 down to 50000 and then people are liquidated and price drops to 45000…. Treasury comes in and buys up 850 driving price back up to 60000 before the manipulator does—they lose money and treasury bought below value. Net win. Later resells at 66000, it’s another win for the treasury and all holders. On the flip side if there are no deals to be made and it’s money just sitting there can opt to burn and increase share value for all holders.
Option 4: Burn 50% of the liquidated funds immediately to spike the price plus get some buzz, then burn the remaining 50% gradually over the following 3 months at set intervals.
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