Reevaluating Token Burning: Exploring New Strategies for AirDAO

Token burning has long been recognized as a powerful mechanism within fully developed ecosystems where circulation closely matches full supply. This process can enhance the value of the coin and positively impact its price by creating scarcity. However, in our case, while monthly burning in small portions can create deflationary pressure, it may not support the price as effectively as desired, and the novelty has already gone. With this in mind, we propose a diversified approach to utilizing profits from COMP and AAVE while incorporating the burning procedure more effectively.

Strategic Burning Adjustments

If we move forward with these diversified options, we propose to maintain the burning process in a more impactful way:

• Competitions, Low entry barrier opportunities, and Engagement: To engage the community, incorporate burning as part of the rewards in competitions and lotteries. Also, active ecosystem participants will be rewarded for their contributions.
• Biannual Large-Scale Burning: Significant burns are conducted every six months, which could have a more pronounced effect on the AMB price and scarcity.

Understanding the Downfalls of Regular Token Burning

• Ineffectiveness of Small-Scale Burning: Monthly burning in small portions has not had the anticipated significant price-supporting effect. For instance, despite PancakeSwap burning approximately 8.59 million CAKEs worth around $18 million, there was no noticeable price reaction. 

Similarly, ALPACA.finance’s regular monthly burn of about 0.5% of the entire supply initially led to a price increase, but this effect eventually waned.

• Examples from Other Projects: GNO abandoned its approach of smooth, small purchases in favor of a single, larger buyback of $30 million. This strategy had a more noticeable medium-term impact on the price.

Diversification of Profit Utilization

To better leverage the profits from COMP and AAVE, we propose a multifaceted approach that includes community engagement and strategic burning. Here are the options for community engagement rewards:

• Farm Rewards on DEX: Distribute USDC to provide additional incentives for adding liquidity to pools. For example: this may offer a ~100% APY for three months exclusively to SBT holders.
• New Staking Pools in AirDAO Wallet: This pool may allow users to stake stablecoins with an APR of 50%, capped at $3,000 per wallet. SBT token holders can achieve a yield of 150% per year.
• Interactive Claim Mechanism: Introduce a feature where users can claim rewards (1 USD, 100 AMB, or 80 BOND) every hour. These claims will appear randomly across different pages of our website, adding an element of fun and engagement, increasing the time people spend exploring our ecosystem.
• Lottery System: Users can buy lottery tickets for 1 USDC each, with the chance to win 10,000 USDC or claim a refund in AMB.
• Daily Faucet in Wallet: Allow users to claim 1 USDC daily by logging in and signing transactions, allowing them to earn 30 USDC for 30 consecutive claims in a month. Alternatively, reward users with AMB rewards with a daily increase and a reset if a day is missed.
• Community and Contributor Rewards: Offer drops and rewards based on activity and contributions to the ecosystem.

The community vote will decide 

We believe in the power of community support and engagement. Therefore, we will conduct a vote to finalize the next steps for utilizing profits and the new burning strategy. The community will decide whether it accepts the proposed new burning mechanism and reward system. We encourage all community members to participate and voice their opinions.

• Voting Date: July 17, 2 PM UTC - July 19, 2 PM UTC
• Snapshot time: July 16, 2 PM UTC
• How to Vote: The voting will take place on the Snapshot platform. Snapshot is a trusted and widely used tool for DAO governance, offering a secure and transparent voting process. This is where we have always made our DAO governance decisions. Make sure to have your wallet ready and linked to Snapshot at the time of voting.

Snapshot voting guide: Read here

Important: Our AirDAO Governor SBT (the first soul-bound token acquired by each registered AirDAO Governor that indicates the holder is a verified person with the right to govern in AirDAO) and the new system are still being developed and are not yet at a sufficient level to make certain decisions.

Past Activity Retrodrop Rewards

In the interim, we are excited to introduce a retro drop program using previous months' profit to reward those wallets that have actively supported the ecosystem through their participation during the last months. The overall pool contains $33711 USDC.

Retrodrop Criteria:

• Number of votes participated In: More participation in votes will result in higher rewards.
• Activity on the wallet in the last six months: Active wallets will receive greater rewards.
• Whether the User Has Minted SBTs: Users who have minted SBTs will receive additional rewards.

Conclusion

The AirDAO community's active participation is crucial to the project's success. By diversifying our profit utilization strategies and adjusting our token-burning approach, we aim to create a more resilient and sustainable ecosystem. Join us in the upcoming vote and help shape the future of AirDAO!