Summary:
The Across DAO should burn it’s ACX treasury reserve since the DAO can mint additional ACX tokens at any time and the treasury reserve unnecessarily inflates ACX’s fully diluted valuation (FDV) by >2x.
Motivation:
Burning the unnecessary treasury reserve will bring the FDV down to it’s true value and improve Across’s valuation metrics across the board.
Specification & Implementation:
Burn the ACX treasury reserve.
Seeking help on implementation.
Rationale:
This proposal will help the Across DAO by improving the accuracy of a valuation metric for ACX widely used throughout the industry. An additional upside is that new mints or grants by governance will show an increase in ACX’s FDV, therefore the effect of dilution and the importance of value add by spending ACX is highlighted.
Downside (Cons):
A possible downside is that it may cost more gas per proposal to mint and distribute ACX tokens, rather than just distributing them.
Voting:
Yes means in favor of burning the treasury reserve.
No means not in favor of burning the treasury reserve.
This is an interesting thought exercise. @eth-wei-trader what do you mean by improving the accuracy of valuation metric? Don’t many DAO treasuries mint a finite supply of tokens and allocate a large portion for the community in future incentives and grants? For example, both Hop and Stargate hold a significant amount of their native tokens for this.
An additional Con to this is the uncertainty of what the supply of ACX will be. Potential token holders would be concerned about the inflation of the supply whereas now the supply is set.
re accuracy of a valuation metric: i’ve always felt that FDV is meant to represent the amount of tokens that WILL come into circulation at some point in the future. Since the Across DAO has no plans to spend the treasury reserve, it seems incorrect to me to assume that they WILL be spent and added to circulation.
However I see your point, and the point of others made through discord, that this is the normal practice for DAOs. I would suggest that just because something is normalized does not mean it is optimal or particularly make sense.
It doesn’t make sense to preallocate a ton of tokens that “need” to be spent. The Across DAO should only issue new tokens representing ownership in the network if there is a positive EV place to spend it, not because there were a bunch of tokens minted to the treasury reserve.
So yes, I dislike the fixed supply notion. It is in every ACX holder’s best interest to only issue new tokens when there is a positive EV reason to mint and spend them. This is a very established concept for companies that sell equity and I believe the same holds for ownership in decentralized networks.