Summary
We propose to burn 70M ALD tokens from the treasury that are not needed when the new tokenomics comes online.
Details
When the switch gets thrown to fully enable the Easy Mode tokenomic system, ALD will no longer be minted at a fixed rate every block, as it is now, but will instead be minted against real assets in the treasury as it grows from bond sales, and distributed via the rebase mechanism each epoch to stakers.
Under the current system a fixed amount of ALD is emitted each block, and a portion of those fixed ALD emissions are directed to the Aladdin treasury to pay the Boule council, contributors, etc. As we have been unable to list new integrations while the restructure is not in place, the Boule Council has mostly not been paid yet. The treasury has also retained a large amount of ALD tokens that are earmarked for liquidity support. For these reasons, the treasury has amassed a large number of these tokens.
In order to ensure that the majority of ALD distributed via rebasing do not end up back in the treasury but rather in the hands of our community of stakers, and to ensure that Aladdin has the longest runway possible to continue paying rebase rewards, we propose that the majority of ALD tokens currently in the Aladdin treasury be burned in a single event prior to the new tokenomic system being launched. The Aladdin treasury will retain sufficient tokens to stake and capture a part of the rebase rewards to fund DAO operations.
The quantity of tokens to be burned is 70M, comprising about 40% of the total ALD supply, which is currently about 175M.
Burning such a huge quantity of tokens requires a community vote, so as per our usual governance process we will begin with a poll here on the forum to ascertain the level of support from the community.
I thought part of Aladdin’s goal with the new tokenomics was to build a large Treasury. If so, it seems counter-productive to burn a large part of the Treasury.
Is the main goal to create additional runway for future re-basing rewards? Is that achieved by reducing ALD supply, or by reducing the ALD market cap? The market price could rise as a result of the burn, leaving the market cap unchanged. An unchanged market cap would have no effect on runway, I believe, as you’re dealing with the same multiple of market valuation over Treasury risk-free value. If the goal is to reduce market cap, then I’d question the logic of something that’s value-destructive.
What is your estimation of “sufficient” tokens remaining in the Treasury, and how do you arrive at that estimate? I see 12M ALD in the 0x47e9 address labelled as Treasury in the docs, 23M in the 0x78Dbc multi-staking rewards address, and 67.6M in the 0xc40549 community multi-sig, so I guess the burn would happen mostly from the latter address?
70m ALD is comprised of from 35m ALD reserved for liquidity support and 35m ALD generated from stage 1 liquidity mining and mostly reserved for boule research initiatives. Most of the tokens will come from 0xc40549 (community multisig) and some from 0x28c9 (airdrop and liquidity support).
These tokens haven’t been part of the circulated supply. Any legacy tokens going into the new tokenomic model should be part of the supply available for rebase. We just don’t think how it is feasible to do this without burning the legacy uncirculated token unless we want the token price to fall by 40% at new launch.
I just looked at Coingecko and they have those listed as uncirculated, like you say.
So out of that 83.7m the plan is to burn 70m. Then the 13.7m would be transferred into circulation instantly? Or over time? If the plan is to give rebase rewards, that 13.7m could act in place of rebase for the first 13.7m tokens. Instead of minting more, just distribute the reward from that uncirculated portion. That way, there’s no “supply shock” to the market, and any price action should be smooth over time. But if we like that approach, why not do that with the total amount? It seems the price impact would be the same irrespective of whether you burn all 83m or if you use it as a source of rewards instead of rebasing, no?
83.7m is the circulated supply. We plan to burn 70m from uncirculated supply. We keep 12m from 0x47e9 and around 8m from 0x28c9 as reserve for treasury expenses, boule incentives, airdrop etc. It is hard to predict bond sale so we need to keep some ALD to ensure ongoing operations for the DAO if things don’t go well as planned.
