[Passed! ✅] Burn-Drop Tokenomics Updates

[larrypang]

Before reading this proposal, review the updated IoTeX governance process here.

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Change log

• 2022-08-08: Initial draft
• 2022-09-01: Updated with plan for unused “Drip” tokens from Phases 3/4, clarification of MachineFi DAO structure, and clarification that Meta-Pebble (and other devices) will be added to Burn-Drop device count. Updates can be found in bold/italic below.

Proposer

iotex-core

Summary

This proposal introduces a new structure for Burn-Drop starting at Phase 5 (i.e., after 15,000 registered devices), which we anticipate will kick off by the end of Q3 2022.

Context

Burn-Drop is an IoTeX tokenomics program introduced in 2020 where 1 Billion IOTX (~10% of total supply) was allocated by the IoTeX Foundation to be burned (i.e., sent to a zero address) and airdropped to long-term stakeholders (i.e., those that stake >91 days). Burn-Drop is facilitated by a smart contract that triggers new Burn/Drop actions after every new device is registered to the IoTeX Network. The Burn-Drop program has 10 phases, where the total amount of IOTX burned and dropped is halved after hitting certain device count milestones (see table below).

In September 2021 (i.e., the start of Phase 3), Burn-Drop was modified to add a new “Drip” category, which was intended to deliver Liquidity Pool (LP) tokens to long-term stakeholders in addition to IOTX airdrops. In addition, the ratio of Burn / Drop / Drip was updated to 50% / 25% / 25%, respectively.

The current Burn-Drop schedule is shown above – we are in Phase 4 of Burn-Drop as of the time of this proposal’s creation (August 8, 2022).

Proposal

This proposal introduces a new structure for Burn-Drop starting at Phase 5 (i.e., after 15,000 registered devices), which we anticipate will start by the end of Q3 2022.

Starting Phase 5, we propose the following changes to the Burn-Drop program:

• Creation of a MachineFi DAO, which will receive IOTX from the Burn-Drop program. To clarify, the goal of this MachineFi DAO is to empower the IoTeX community to collectively determine how best to utilize funds based on current market conditions, network priorities, and more. The IoTeX community will be able to propose ideas and vote for how DAO funds are spent, including but not limited to Airdrip campaigns, token burns, conference/event sponsorships, MachineFi developer grants, device/user incentives, and more. In addition to IOTX contributions from Burn-Drop, the MachineFi DAO may also receive funding from additional sources such as Foundation and community donations in the future.

• Updating the ratio of IOTX tokens allocated to Burn / Drop / DAO buckets to 25% / 25% / 50%, respectively.

• The “Drip” bucket will be discontinued and replaced by the MachineFi DAO bucket. Note: the IOTX tokens allocated to the MachineFi DAO may still be used for Airdrip campaigns, if decided by the community.

• The unused “Drip” allocation (~50M IOTX) from Phases 3/4 will be re-allocated in the following way: 25M IOTX will be added to the Phase 5 “Drop” bucket (for a total of 50M IOTX “Drop” in Phase 5) and 25M IOTX will be added to the Phase 5 “MachineFi DAO” bucket (for a total of 75M IOTX “DAO” in Phase 5). The graph below shows this update.

• Meta-Pebble registrations will be added to the Burn-Drop device count, along with any other devices that are registered to W3bstream and the broader IoTeX Network.

The newly proposed Burn-Drop schedule is shown above.

Expected Impact

The overarching goal of this new proposal is to align the Burn-Drop program with the current state of the IoTeX Network. From the perspective of the IoTeX Foundation, the most important priority is bringing new MachineFi builders in to our ecosystem; as such, IOTX previously allocated to the “Burn” bucket has much greater value as incentives/funding to onboard more MachineFi devices, data, and Dapps. We believe that this new proposed structure keeps IOTX supply deflationary, rewards long-term stakeholders, while also making critical incentives available to MachineFi builders.

Furthermore, the goal of the new MachineFi DAO is to provide optionality for the community to determine how Burn-Drop funds are spent. We hope strategies will be proposed / deployed by the community to use these funds to best support the growth of IoTeX and MachineFi, as well as reward long-term stakeholders.

Implementation Plan & Future Work

If this proposal is approved, the IoTeX Foundation will implement the changes to the Burn-Drop smart contract, including creating a new wallet for the proposed MachineFi DAO. The changes would be applied and activated at the beginning of Burn-Drop Phase 5 (i.e., after we cross 15,000 total devices).

In the future, new deflationary token mechanisms should be explored, including designs similar to Ethereum’s EIP-1559, but re-orienting Burn-Drop to fuel new MachineFi projects is currently of the utmost importance.

Call to Action

Please share your thoughts on this proposal using the comments section below – we appreciate your feedback!

• If you are in support of this proposal, click “Yes” on the poll below.

• If you are not in support of this proposal, click “No” on the poll below.

• Yes
• No

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[Til75]

Yes I agree, the Iotex ecosystem should always remain the focus and building on the successes achieved. There is a long road ahead for mass adoption, but there is a road.

We are moving into a new phase of living, where working and studying from home and remote will become a normal offering and employers will be requiring systems checks to give the confidence that people are engaged in their work. IoT and MachineFi will be able to provide those answers, many opportunities ahead.

Up and up Iotex.

[anwar139]

Hey Larry, nice proposal to further empower the MachineFi effort.

Some questions:

1. What will happen to burn-to-certify (after we’ve finished the last phase in burndrop)? Proceed as original plan?

2. I can see there will be no airdrip should this motion is accepted, what will happen to those who saved their airdrip points? I got a feeling some will be really upset, because I know some of them saved alot, like 6 digits of airdrip points

my suggestion is while we are still in phase 4, maybe run a closing airdrip campaign for those who still have points to redeem

[Swash5]

Well this will increase adoption towards the machinefi aspect which is the backbone of iot world.

[Buck08]

Well I voted Yes as its a given where the main focus needs to be, I think the airdrip was a fail ( good idea ) its a shame projects didnt really use it. Is there any reason a billion tokens cant just be Voted on and then set aside for Machinefi Dao.?? thatll drive the price up a little for everyone and Developers have there pool. win/win lol

[WaXTeP]

Dear Larry, can you clarify the math of this proposal? I have a few questions and even an counter proposal to offer.

A. How exactly IOTX goin’ to be deflationary if you going to increase the end supply from 9,420,000,000 to 9,570,000,000? We talk about 150,000,000 tokens added to circulation supply.

B. What is goin to happen with token price aftet the MachineFi incentives dev will sell the token for getting money to keep building? What’s your plan against selling pressure?

C. Why to decrease the burn supply? Why the proposal is not only about the 25 million of drip tokens?

D. What’s going to happen with all drip points that much of community saved and still not used?

My apologies, but I don’t really think that grant program of incentives looks like that proposal, this proposal discouraging holders to stake especially long 91+ days.

The community almost 5 years staking and supporting the chain with long staking terms, you come in one day and make this staking 91+ days nonetheless.

I truly see importance in MachineFi growth and it’s need to be incentivized. But not for 5.25million $
Fix the proposal. I offer this math as well to think about:

1. Burn need to stay 50 million to be deflationary
2. Community drop must be increased due to drip cancellation to 30-40 million tokens( from 25mill)
3. MachineFi incentives the rest 10-20 million (the drip) and with lock and vesting period
   Otherwise they just will cause sell pressure on IOTX token.

P.S.
50 million tokens today worth 1,75 million $ it is a lot of money to be sold on markets.
150,000,000 = 5,250,000$
Impossible to take 5 million $ from loyal supporters.

[kol9wa]

I don’t understand the benefit for stakeholders. Especially who have been stacking for long time with stake lock >91 days.

[Maksim]

I’m against, at the expense of investors to support

[PusyA]

Why should ordinary people from the community have to pay for the work of developers?
Each project has a special fund for such needs! Why are you shifting your development costs to your investors who have been supporting your project for 5 years??
I’m against it! I say no to this Proposal!

[Gopinath]

Machinefi Dao can give iotex to dev or builder but in return dev or builder should give some sort of there token to airdrip or longer term stake holders.
It’s my opinion.

Burn - yes
Airdrip -yes
Drop. -no

50% burn and 50% machinefi dao then 20 to 30% xrc 20 token distribution to long term stake holders

We need machinefi dapps token too. Thats the point the Airdrip actually created.

Foundation or machinefi dao can hold
70% to 50 % token in the form of xrc or native iotex.

The proposal should be made by the dev or builders and since its machinefi project kyc should be done to clime machinefi dao fund.
My opinion.

[WaXTeP]

@Gopinath

builder should give some sort of there token to airdrip or longer term stake holders.
It’s my opinion.

Personally I don’t want and Don’t need any of the MachineFi xrc tokens. IOTX cost much more than shitcoins. If I’ll like ajy project I’ll invest in it, but don’t take my iotx drip and give me back shitcoins.

[Gopinath]

I get it. you like iotex very much but think about it machinefi project is premium projects in iotex and do you think it will act as a shitcoin? I can say one think if you’re not providing any incentive to builder then builder will choose some other platforms. And if no one is building then our iotex doesn’t have much value with layer 1.
What i proposed is incentives for both builders and lone term stake holder. And also 50% burn quit good for deflationary.
And also if you don’t like xrc 20 token then you can swap it immediately to native iotex.

Its a win win situation for both imo. I agree we don’t get exact amount of iotex from airdrip if you swap it. But imagine if you get 10× and 20× potential coin.

Mtgo and gft and cyc are made good progress

[Gopinath]

And some of the machinefi dapps will be lauch on multichain then everyone will be participate to get data or token . Maybe one day xrc 20 token value might get even appreciated more then iotex that we invested.
You can see sumotex launching there token in eth chain but token holder will be who holding nft in iotex.

[Maksim]

or you won’t get anything, why don’t you talk about the scam projects that there have already been a lot of pixie, iotexsons, skaswap, for example, pixie had a grant in the form of iotex support. at Sumotex, I see so far only promises to distribute tokens, mtgo and starcrazy agree they have achieved a lot, but they also don’t have long left without new users. and where is metapebbel?) So far I see only promises. I share the position that ordinary investors should not pay developers, and hope that you will get x20, there are funds for this

[SenorSteele]

Machinefi Dao can give iotex to dev or builder but in return dev or builder should give some sort of there token to airdrip or longer term stake holders to community.

[Gopinath]

In pixie case they didn’t achieved there third goal and the grant haven’t given.
Metapebble still in the development dev as been working with Metapebble.
Kindly focus on machine and its dapps.

[PC717]

Fully support. Hope to c more real dApp on board.

[DatPan]

I agree with this proposal.

I think the Drip bucket is not being utilized as much as intended and I don’t see it being used alot (if even at all) within the short-term duration (Before reaching Phase 5). Reallocating these funds to the MachineFi DAO bucket will have a positive effect in the future of the MachineFi environment.

[anwar139]

just an update to my questions assuming this idea is accepted:

1. Yes, burn-to-certify will proceed as planned. Can refer here to understand burn-to-certify

After 1 million “Powered by IoTeX” devices are onboarded, Burn-Drop will be finished and “Burn-to-Certify” tokenomics will be activated. From then on, builders (e.g., device manufacturers) will burn IOTX to obtain access to special services/capabilities for each new device. source: Burn-Drop - IoTeX Onboarding Pack

2. Larry and the core team will figure something out - my suggestion is taken into consideration as well

[Astor2011]

The proposal needs a component to improve stalking rewards and long time holders and enhance deflationary features ir IOTX price will drop making Machine Fi grants less relevant and appealing. Otherwise it has the opposite effect to incentivate MachineFi developers and investors