PROPOSAL OUTLINE
Begin to burn a portion of MOZ from swap (trading) fees each harvest as well as milestone adjusted burns from the MozaicDAO token allocation in line with protocol TVL growth.
SPECIFICATIONS
The proposed token burns are outlined below:
1/ LP (swap) Fee Harvests
Burn 20% of the MOZ accrued each harvest
2/ TVL Milestones
Burn 5% of the total supply of MOZ at 1M Vault TVL
Burn 2.5% of the total supply of MOZ at 2.5M Vault TVL
Burn 2.5% of the total supply of MOZ at 5M Vault TVL
Burn 2.5% of the total supply of MOZ at 10M Vault TVL
Burn 2.5% of the total supply of MOZ at 25M Vault TVL
Burn 5% of the total supply of MOZ at 50M Vault TVL
Burn 5% of the total supply of MOZ at 100M Vault TVL
25% total burn by sending to 0x0000dead address.
Significant milestones at 50M and 100M TVL which represent a 50x and 100x from current standing.
Proposed Allocation for 2.5% Burn (double this if 5%):
DAO Treasury: 1%
Incentives: 0.75%
POL: 0.5%
Development Fund: 0.25%
Recommended that the MozaicDAO does not burn portions of the ‘Insurance Fund’ at this time.
Current DAO Wallet Balance:
596.36M
JUSTIFICATION
The core contributors have always maintained the notion that the entire supply of MOZ Tokens are not needed to bootstrap protocol growth. With the current trajectory, the protocol may now be in a position to begin modest but ongoing token burns.
The MozaicDAO is also in a rare position in that it does not need to incentivise liquidity providers for the MOZ-ETH trading pair having seeded its own liquidity following the LBP in September 2023. One under appreciated fact about this, is that the MozaicDAO itself has accrued well upwards of $250,000 in protocol revenue from swap fees alone, solidifying liquidity for swaps and allowing for the diversification of the Treasury.
However, with the MozaicDAO owning approximately 60% of the non-circulating supply of tokens (approx. value of $75M+) and no plans on the horizon to spend anywhere near this sum through governance token emissions or incentives or the like, it would be of benefit to begin and undertake milestone based token burns. The amounts mentioned in this proposal can be burned without harming short or long term growth prospects.
The TVL based token burns are aimed at reducing the FDV overhang while also aligning with protocol growth. The relatively ‘high’ FDV of the Mozaic protocol may be misunderstood without context — yet it’s a real surface level fact that may dissuade fundamental investors and 'sophisticated' retail.
Finally, burning MOZ periodically from LP harvests to reduce the circulating supply will also combat the effects of any future incentive programs and emissions to ensure holders are not being diluted over the medium to long term.
OVERALL COST
The overall cost to the protocol is in the form of the aforementioned burned tokens, i.e. the DAO will no longer be able to ‘use’ or have access to these tokens (for whatever purpose) once burned.
TIMEFRAME
Proposed Discussion - 72 hours (closed)
Call Out - 24 hours (closed)
Snapshot Voting - 72 hours (ongoing)
STEPS TO IMPLEMENT
Upon approval the Core Contributors will:
Burn 20% of MOZ from each LP fee harvest
Burn 5% of the total supply of MOZ at 1M TVL across Vaults
Burn 2.5% of the total supply of MOZ at 2.5M TVL across Vaults
…and so on in line with the above specifications.
CONSIDERATIONS
Quorum threshold (4,000,000 xMOZ) - maintained
Snapshot voting requires at least 65% of the vote weighting for a proposal to be considered 'APPROVED'
The MozaicDAO also recognises the need to solve for anti-sybil methods due to the nature of the Quadratic Voting system. Deviation back to simple choice voting or additional discussions to solve for anti-sybil methods are to be had.
