Deflationary model - burn fee to reduce inlflation

General Ideas
#1

Summary:

To reduce the current inflation and improve tokenomics I would like to propose a fee which will be (partially) burned. This creates deflation in the long term.

Abstract:

Every time someone sells or transfers SDT a fee of 0,5% will go to a locked address.
This address will be completely or partially burned so the inflation reduces.

The fee can be either completely burned divided in a 0,3% burn and 0,2% to staking rewards

Motivation:

I would like to reduce the inflation and let the stakers benefit.
This would also benefit the project long term because people are motivated to stake instead of sell

For:

Long term holders have more benefit

Against:

Short term traders, trading bots.

5 Likes
#2

I think this is an interesting idea. A 0.3% total burn and 0.2% to staking rewards seems like a decent distribution of what would happen to those 0.5% fee (I wouldn’t oppose the other way around as well). Conveniently, the burn should be performed fully (as in, sending it to the 0x00 address), in my opinion, but I frankly lack knowledge on how vulnerable, if at all, locked addresses can be.

This fee wouldn’t hinder most of the big bots doing arb trades, but it would be another data point for them to take into consideration, with the added advantage that per each of those trades everyone else holding would benefit from them.

It would be interesting to have some sort of model that allowed us to have a better picture on how much % of SDT supply could we be talking of being burned per year. That would be hard to figure out at this point, too many variables we still don’t have full knowledge of, but it could make a good thought experiment.

2 Likes
#3

no. this sounds detrimental to the token. Also the token is already made so cant really do this anyway. if you wanted to burn you would have to take profits from vaults, market buy sdt, then burn those.

first explain why you think the tokenomics are bad? and other example that use this model that has a success?

the basic tokenomics are simple and clear. the tokens entitle you to profit sharing. if the platform makes money then the tokens are worth more. very simple and straightforward. every time some new token starts theres always someone screaming burn burn burn. just keep it simple, the platform fees are everything.

also your “For” and “Against” are screaming bias. Need some proper thought into the merits and demerits

3 Likes
#4

This has been tried before, but unfortunately, it does not work we;; because of practicalities how blockchain work. There is no way to distinguish transfers, sales and wallet reorganisation and other transactions. For exchanges. would not list such a token as it does not fit to their wallet architecture.

1 Like
#5

Perhaps after 1559 the feasibility of this sort of mechanism changes. Not necessarily exactly as the OP stated, but I believe there will be more options.