Changing How Seigniorage is Handled

So within this week, we have seen SHARE pump from 1 penny, up to 50 cents, then back down to a penny. It was clear that the adjusted tokenomics looked good on paper, but then when it was implemented and users saw their SHARE balance get auto deleted, the market rejected this. This is crypto and nobody likes seeing their tokens get deleted from their wallet without their consent, whether they are actually being deleted or not.

I believe there is a sweet spot on how we can implement this design. What I propose is a Bank Account tied to users dashboard. In this bank account, will be USD that SHARE holders have received pro rata during positive rebase. This USD is separate from the USD users have purchased on the open market and is treated as such. Over time, with positive rebases, this amount in a users bank account will accumulate. However, the difference here is that the SHARE balance remains the same. Users will be notified that in order to claim any USD, they will have to burn an equivalent amount of SHARE. Moving SHARE from the wallets will not auto-claim the USD, instead they will just sit in your bank account. It is entirely possible for a user in this theoretical model to sell all of their SHARE holdings, and still have unclaimed USD in their bank account. This USD will only be claimable by burning equivalent amount of SHARE, remember. Where I believe this can be interesting, and gives SHARE holders some incentive is that when protocol goes into negative rebase, a SHARE holder can then access this unclaimed USD by burning it for discounted SHARE, increasing their stack of SHARE and giving them greater rebase rewards in the next expansion. This helps reduce supply of USD in circulation, and gives a SHARE holder value that they can redeem. I believe this model checks many of the boxes that we are going for, and is the only realistic solution I can come up with. Very curious to hear everyone’s feedback and whether or not you like what I have proposed with the addition of a bank account on the dashboard

agree ,Manual claim should be better which works like v1 , rule is simple you hold SHARE you got new USD whether its value change the quantity always increase ,people happy to see that ,
the burning mechanism is undergoing only when the bank account’s owner’s OPTION the claim
but better is as the same thing robert have done before whenever you move your USD/SHARE out of the bank account to burn for discounted SHARES /wallet/DEX you need to burn the SHAREs

I understand I probably didn’t explain this the best so here’s my attempt to re-describe it. Please bear with me:

When USD undergoes a positive rebase, the new USD that is minted is sent to a smart contract. This smart contract keeps track of all SHARE holders amount according to their SHARE holding. All of the USD that is sent to this smart contract is considered USD that is in circulation. Overtime, as more positive rebases happen, this amount in this smart contracts increases. On a SHARE holders dashboard, there will be a section called Bank Account or something along those lines where a SHARE holder can click and see how much of that USD in the smart contract they are entitled to. Even if a SHARE holder sells all of their SHARE and never touches this unclaimed USD, they will still be entitiled to this USD. Now a SHARE holder can access this unclaimed USD in 2 ways

  1. Manually burn their SHARE for a discount of their USD in order to incentivize redemption and create arbitrage opportunities

Or

  1. “Claim” this USD during negative rebase where a SHARE holder will be able to send this USD to the burn address for discounted SHARE. Remember this USD is in circulation so by allowing a SHARE holder to burn this USD without penalizing them by burning an equivalent amount of SHARE, this will allow USD supply to retract much faster as users are incentivized to burn their unclaimed USD as they are essentially unlocking it for ‘free’. This should allow USD to return to peg faster

By implementing this design, SHARE increases its composability in the broader DeFi ecosystem and we won’t have to worry with new users complaining that their SHARE stack is decreasing every positive rebase. I hope this explanation clears it up a bit

I agree with a part. I also think that pre-deleting the $share in the wallet will cause panic to the holders of the $share, especially when the price of the $share is much lower than the $usd. But the equivalent amount of $share will be destroyed when exchanging $usd. This deviates from the original intention of this project. I always think that this project is an algorithmic stable currency system. We should use $share as the consensus token of this system and $usd as this system. The stable currency application token. This scheme enlarges the speculative properties of $share infinitely and is not conducive to the circulation properties of $usd.

agreed - will be adding this into the dashboard and protocol by tomorrow :slight_smile:

Great job. This improvement eliminates the confusions, uncertainty, and the feeling of losing control of one’s own fund without major changes to the current design. Definitely top tier product idea.

Let’s see how the market react to this.

BULLISH. I hope we can implement the entire design I have proposed or something close to it

As I stated in the telegram, I’m worried that people will FUD if their unclaimed USD disappears from their bank account during negative rebase, potentially leading us to another downward spiral.

i understand there is hesitation in allowing users to burn this unclaimed USD for discounted SHARE during a negative rebase because of the SHARE dilution.

Although I don’t agree with this logic, I think there is a better solution to appease everyone - Users, during a negative rebase, should be able to route the unclaimed USD to the SHARE-USD pool to market buy SHARE. Since the protocol owns all the funds in the SHARE-USD pool, the protocol then sends an equivalent amount of USD to the burn contract, effectively removing the USD from circulation. This achieves a multitude of different things that are overall very bullish for the tokenomics:

  1. Buy pressure on SHARE during negative rebase
  2. USD deflation
  3. No SHARE dilution
  4. Users cash in their unclaimed USD without burning their SHARE

Everyone wins here in my opinion. I really don’t see the downside in implementing this at all unless it’s technically unfeasible from the devs side. This adds extra elements to the protocol as well which I would like to highlight below:

Imagine being a SHARE holder and you have accumulated your rebase rewards. The protocol now goes into negative rebase, and you are finally ready to cash in your rewards. So you market buy SHARE via the example explained above and then swap that right back to USD. Now, you can go to the dashboard and burn the USD for discounted SHARE, effectively burning USD from 2 fronts, and allowing us to reach peg while keeping SHARE dilution to a minimum. In my opinion this creates tons of arbitrage opportunities which will attract traders and entice them to play the game to keep USD at peg. This will be an extremely attractive project in the defi space with this buffed up tokenomics

1 Like