MIP-20 A 200 Million Merit Circle Token Burn

[0xDouwe]

I will be voting YES for this proposal. I don’t know the exact reason for creating a Community Incentives allocation in the first place, but I reckon there were many ideas in the very first days of Merit Circle. I fully agree with all the aforementioned comments about having this pool sit idle. I think the aforementioned rational is also spot on.

@SadCatCapital

“Burning a supply is only a waste if there is a better use for the same liquid MC. Every token use decision should lead to the max amount of value creation for the DAO. We think there are instances where there are better uses. Such as staking dividends, sales to strategic partners with long lockups, or incentivizing certain behaviors that will generate more profits to the DAO. However, as it stands today, and in the current proposal, we have enough MC available to facilitate these needs. In general, a split will probably serve the DAO best. Not in the least, because different stakeholders will value different things. Burns can be a much more tax-efficient way to distribute profits, whereas staking rewards more active participants and locks up supply.”

Having the 75m MC would indeed be enough for future incentive ideas. If not used, it’s more burn fuel in my opinion.

Side note
I don’t think we should use this forum or other people’s proposals to throw ridiculous accusations and personal attacks. SCC takes the time (and even does this regularly) to improve the DAO through proposals, ideas, and actions. Disrespectful, stupid, and clearly coming from a place of frustration to say they’re doing this purely for their own benefit.

kusjes,
Douwe
The Cactus Man

[Pentoshi]

I support this burn as these tokens are not intended to hit the open market. They therefore don’t accurately represent the MC supply and make the FDV seem much higher than it is. I feel that by burning these tokens it will therefore give a more accurate reflection of total supply and also allow future people looking at MC to see the impact of the tokenomics and various verticals and be able to make a more educated decision. I support the burn.

[BSide]

Hey SadCat,

I agree with the points referring to diluted value and potential investors. There are more than enough tokens available for incentives.

Will most probably go YES if this comes to a vote.

Regards,
BSide

[CryptoRJ]

First of all, thanks SCC for writing this proposal.
I think this proposal is what many token holder have thought about, but did not come with a proposal or plan. The community incentives are unused and waaay to much in my opinion, even at this bear market value it is still around 180 million usd. I will vote Yes on this proposal. I think it will be a positive move towards investors and the crypto community as a whole. Getting the FDV lower will be rewarding for everyone when the tide turns and merit circle thrives.

Really looking forward to the upcoming reply’s and the upcoming events for Merit circle, keep up the good work!

[NateMcKitten]

I think the tokens in the Community Incentives wallet are no longer needed. Thus, the tokens only increase the supply unnecessarily. Thanks SadCatCapital for articulating what we are all thinking.
I’ll be voting YES .

[SadCatCapital]

Meow,

Thanks everyone so far for sharing your thoughts and ideas! We’re listening to any and all feedback.

Just for an in between clarification:

There have been some responses about the Staking V2 rewards, both on this forum, Twitter, and the Fleet Trading Chat. We just wanted to clarify that the 200m tokens this proposal intends to burn are NOT the same tokens that will be used for Staking V2. Staking V2 rewards are safu, and secured. The same way Staking V1 is safu.

The Staking V2 rewards will come from this wallet which holds the unlocked DAO Treasury and Community Incentive tokens. This wallet has more than enough for Staking V2, and beyond. Perhaps after Staking V2, any future staking rewards could be funded purely through buybacks, or at least be heavily subsidized through buybacks. This would help promote self-sustaining tokenomics and lessen the burden on the DAO to keep funding staking (which the DAO would also run out of funds to provide for eventually).

So just to reiterate; burning these 200m tokens will NOT affect the planned Staking V2 rewards nor the old Staking V1 rewards. The Staking V1 and V2 systems and rewards are both safu, and unaffected.

I hope that helps! Keep the suggestions, thoughts and ideas coming. Every voice counts within the DAO.

Thanks!

Witty Kitty
Sad Cat Capital

[Ntr]

Thank you for taking the time for this write-up and addressing this important issue. If this proposal comes to a vote, I will fully support it. I don’t see any point in stretching this burn any longer than necessary and it will increase the health of this project as a whole and the DAO.

[JGdog23]

Cats,

Thank you for this proposal and ongoing support of the DAO. It is clear the DAO would be worse of without you so keep up the good work.

It’s an easy YES from me. The tokens are not going to be used and will be burned eventually anyway so we might as well speed up the process.

I don’t see the need to keep them as some sort of security for some unforseen reason.

It will be a nice way to celebrate 1 year of Merit Circle.

Let the vote commence…

[cks]

I will be voting yes, although I can understand the argument that doing this during the bull could be better for the token price we are not here to create narratives to pump the token, we are here to improve our beloved orange coin.

Oh, if you could be less cringe @NMTD that would be great also.

[joebags]

Hello, thank you for the proposal. I would gladly vote yes as this would swiftly address one of the biggest concerns MC critics could have. I think the remaining tokens are more than sufficient for all the future community incentives - which I think shouldn’t be overlooked. There are a lot of cool ideas on how to use those which should continue to be encouraged and explored, but I think it can just as effectively be done with the remaining tokens.

As for ‘timing’ of couse if you’re looking to create excitement in a growing market then you can use “news” like this to create a buzz. Do it now, and it becomes alpha for those who are paying attention. In a growing market, MC will have plenty of reasons for people to get excited. We don’t need some artificial catalyst for that. This isn’t ‘news’ this is simply fast forwarding the inevitable and moving toward much healthier token economics.

Godspeed
Joey

[bliahhh]

I see sad cat proposal, i hit like and yes button.

Thank you for your constant work.
Sadly i have to right one hundred characters to be able to post, so i am going to try to write something smart about two hundred million token burn, but i can’t provide anything else.
Yours truly,

Bliahhh

[Niesigreen]

Thank you for the proposal Sad Cat Capital.

I support the as-is proposal fully as it indeed seems a smart move to speed up the process of burning these tokens as they falsely represent token unlocks and FDV. Although such a move will likely boost prices more in a bull market, currently people are taking the time to research their projects and this will entice more investors to come to MC.

The remainder of the community incentives will be enough in the event that one may want to use it.

I did have a question regarding the path forward. If I have missed the point in your initial post ignore this. If the burn goes through, there will still unlock roughly 67m MC from this allocation (32 months * 2.1m monthly) in total. Can we clarify whether we will scratch the burning from this event forward or we will continue to burn 75% of the monthly unlocks (75% of 2.1m monthly unlock = 1.575m tokens burnt monthly) resulting in an eventual community incentives wallet of 16.8m tokens?
Regardless of the outcome, these 16.8m tokens will be enough even to incentivise community in the future. Assuming orange coin good number go up, this will lead to being as big a bucket in the future with higher prices as the 67m tokens are now.

Naturally, we can keep this as a reserve as a cushion and decide later and that would be the wiser choice. If we don’t need the bucket we can put it to the stake as well.

Would appreciate the clarification of the path forward after this burn regarding the 75% monthly burn.

Cheers,
Niels

[asam0oo]

Happy weekend,

Doing some extra thinking.

Thoughts on whether it’s prudent to keep a 25M - 50M stash until next year? To be noted, I’m definitely not opposed to burning the total amount.

Burning 150M - 175M (15% - 17.5% of supply) with another vote next year. Plus, the option of an emergency backup - for what? I honestly don’t know.
vs
Burning 200M (20% of supply)

Sure, 20% sounds like a better headline than the former.

Just trying to figure out if we’re missing something overtly obvious, but it does seem the consensus is good with it (as am I). I’m struggling to see any use case for these tokens that we couldn’t already do with treasury funds, bar something catastrophic.

Would be useful to hear from the core team as to what the original plan for this allocation was.

Great to see the activity in here.

Best regards,
AS

[SadCatCapital]

Meow,

We wanted to respond to some of the comments and questions we’ve had so far. Thank you to everyone for replying and being engaged in the DAO governance process!

@Timour NMTD

Timour and NMTD suggested that burning these tokens during more positive macro market conditions could have a greater impact. When we put forward this proposal the idea wasn’t to cause a short term spike in the value through the burning of the tokens, which likely would get sold into regardless. The purpose is to create more balanced and sustainable tokenomics, and to speed up the process of burning which is already happening each month. We aren’t fans of trying to manipulate the short-term value and believe that this decision is one which will benefit us far more in the mid-long term, than the short term.

@Timour

Timour also suggested that these tokens could be useful in the future and we should keep them in case a use crops up in the future. Our response would be that in the one year since the MC token launched, zero use cases have come up for the tokens in this wallet (other than to burn them). This has been during a bull market, and now a bear market and still the tokens have remained unused. If the DAO does think of a use case for DAO held tokens, there will still be more than enough to utilize even after burning these tokens.

@Timour

Another suggestion was also to use the tokens for staking rewards. We believe that the Staking V1 100m token budget was very generous to stakers, and we also believe that the 30m tokens for V2 Staking is still generous. In our opinion, future staking rewards after V2 should be supplied/subsidized through buybacks or draw from the remaining tokens the DAO has - there is more than enough.

@joebags @cks

As to the Bull vs Bear burning debate, while we agree that waiting for better market conditions could cause more short-term price impact from the burning of the tokens, we particularly want to avoid “Pump & Dump” type situations. We don’t think unsustainable short term increases in value (which usually get immediately sold into), greatly help the long term value of MC, and in some cases can even help prevent sustained uptrends.

@Niesigreen

So to clarify, if the Community Incentives tokens are burned, there will be no more unlocks from this wallet as we will be burning 100% of the tokens immediately. The 2.1m MC monthly token unlock will be stopped, as all of the tokens will be burned immediately instead.

We will still have over 75m MC tokens in the wallet where unlocked Community Incentives and DAO Treasury tokens were sent.

@asam0oo

In terms of an extra stash, this wallet where unlocked Community Incentives and DAO Treasury tokens still holds 76.6m MC tokens. Even if this proposal passes and 1.6m MC tokens are used from this wallet to make up the total burn to 200m MC tokens, the wallet will still hold 75m MC tokens to be saved as a stash. If 30m MC tokens are then used for Staking V2 rewards, the wallet still holds 45m MC tokens for the DAO to do with as it chooses. In our opinion this is cushion enough, plus the DAO can still utilize ongoing MC buybacks to replenish its stock of MC tokens.

We just wanted to thank everyone again for the responses and questions. We are glad to be part of such an active and involved governance process! If there are any further questions, please don’t hesitate to ask.

Thanks!

Witty Kitty
Sad Cat Capital

[asam0oo]

Thanks for the reply, @SadCatCapital

Didn’t realize there’s another 76.6M lurking in the background. I’m 100% convinced that a 200M burn is the play, then. That’s more than enough of a buffer, IMO.

Best regards,
AS

[HoneyBarrel]

Henlo,

I did some extra thinking too, like many here did. @Pentoshi said it well, ‘these tokens are not intended to hit the open market’. We can finally get rid of the FDV concerns, and we let the MC represent its true value.

For the people who want to wait and see if these specific tokens ever have some use, do you realize that the end result of these tokens being ‘used’ is all the same → being sold into the market onto our heads?

20% supply is a massive amount of raw tokens that would be taken out of the market permanently OR those 200,000,000 tokens would one day be distributed onto us - if they are not burned. We’ve had over 10 months of no-use for these, yet it lingers like a Damocles Sword above us.

I think the choice is clear.

Honey Barrel
Vanquisher of non-Frens
The Freefolk Fellowship

[SpeedyG]

Yeah, why people even assuming that this proposal is created to generate exit liquidity or any form of pump? How is it relevant here?

Sagey has been one of the most active contributors to DAO and Im 100% sure its not the way to generate any liquidity. Very little amount of people left in the market and they are not paying attention to forums whatsoever. Its only us who who does. T

This proposal is simply future driven value creation for the token not present.

[JDAKK]

Burn has my support to elicit a much more realistic FDV. Thanks for submitting the proposal. Everyone have a great day.

[BVM101]

Its a yes from me.

Might I also suggest that, moving forward, MC included how many native tokens we hold in the treasury and will hold once all unlocks happen? As people will still assume that the full 630M tokens outstanding will still go to outside investors, when I believe at least 75M to 100M of those will be at the treasury and we should only consider the other tokens for our true calculations of FDV moving forward.

Thank you.

[BVM101]

On another note, as far as needing tokens in the future, for other purposes, just the elephant in the room here, the DAO can always vote to create more tokens…this is not bitcoin, we do have a governance, the fact that not a single token will ever be minted again is not a law of physics, of course this course of action is, in an ideal world, not desirable. But something to keep in mind.