Hello SOVRYN citizens, my name is SOV_HOOLIGAN, been here since Genesis, stalking you from the shadows. I decided to prepare this SIP after having discussions with many active Sovryn holders/stakers. So this is a draft proposal with suggestions that I believe will be beneficial for the future of Sovryn. Alright, there we go:
The more SOV comes into circulation, the easier it gets for future people to buy up and stake their SOV, thereby making the earlier stakers less powerful in voting power. On the other hand, if we enable a burning mechanism with the amount of SOV staked as an indicator, it will get more expensive for future people to buy up and “outwin” the earlier stakers (or core stakers). This will happen because the burning mechanism will buy back a portion of SOV from the market and burn them according to schedule.
FACT: More circulation
Assumption: More revenue in the platform
Result: More stakers from the released circulation for the revenue.
Harm: Dilution of the earlier voting power
Prevention: Burning Mechanism
Example: Bob staked for a long time, with all the coins unlocked, his Voting Power (VP) gets lower value when it comes to reward distribution. The burning mechanism solves this problem by protecting your Voting power and ensuring that by the end of the staking period, those who staked their tokens will be “compensated” with less SOV in circulation.
It is also important to reward those who hold SOV in their wallets, as this will give SOV owners a feeling to understand SOV power. Right now, there are many ways people use SOV, Liquidity Pools, staking, margin trading. What if people want to hold their coin? How can they be rewarded by just HOLDING it? SOVRYN must be rewarding in every way, with whatever you choose to do with it, even if you decide to do nothing with it . Of course, the reward for just HODLING must be less than any other way you use your SOV on the platform. But the idea is, everyone must feel inclusive. A suggestion would be to implement a pool just for SOV HODLERS with minimum stable APY, like 1%, and the ability to withdraw anytime.
Many teams work hard around the clock on many different assignments. So if we end up with unused development tokens in the future, the suggestion is to burn those tokens to improve SOV tokenomics.
The vast majority of people from the community are pleased with the SOV locking through new tokens. The suggestion is to continue using the same strategy for any future token that will be introduced on the SOV platform. SOV is and must remain the platform’s major coin, and any new token that is about to release must be in a bonded relationship with it.
1) Implement a way for SOV holders (not stakers) to get a value out of SOV. Fees generated, suggestion for 1%. Or implement a pool where HODLERS can keep their SOV with minimum APY and the ability to withdraw anytime without penalties.
2) Implement a Burning mechanism on the platform that will gain power when more people are staking their SOV and have several burning mechanism rankings and scheduled burns like Binance. Alternatively, burns can happen daily (a burning tracker will be required). The burning mechanism will buy back a portion of SOV from the market according to the staking rank. Suggestion for the Burning mechanism factor to implement on top of any platform fees. An additional pool can be created to act as receiver of the fees collected from the burning mechanism factor then buy SOV according to schedule. Rank Example:
Maximum number of SOV tokens burned from burning mechanism: 21,000,000 SOV
When the maximum number of SOV tokens (21,000,000) burn, another discussion should occur again whether this factor needs to remain in place / removed or used for something else. It will require a different SIP proposal, and the community will need to decide what will be the best use for the burning mechanism factor.
If the decision is to use it for something else, the burning mechanism factor the suggestion is to transform it into a factor that will increase revenue to stakers and LP providers. An idea would be that stakers receive 75% of the burning mechanism factor, and LP providers receive 25%.
3) Burn unused development tokens and other tokens to improve tokenomics in the future (this has no connection with the burning mechanism, any burns will further reduce the total circulation).
4) We continue locking SOV through new tokens just like MYNT, ZERO, ORIGINS.
Any comments/suggestions/feedback are welcome. I feel that with this SIP, I express some thoughts of the SOV community of what it would be nice to be implemented on the platform in the future. But I can always be wrong. So no matter the case, I hope this SIP will bring some valuable discussions.