The proposal would buy back PGOV and BGOV using BZRX.
The topic of the GOV tokens being bought has been discussed before and there were some disagreements on the subject. Having said that, it seems that the current token model continues to cause confusion and ambiguity on the value proposition for BZRX and the individual GOV tokens.
This has resulted in complex and confusing voting/funding proposals due to a lack of treasury for GOV (PGOV, and BGOV) tokens and BZRX financing these chains without a strong benefit. The most recent example of this is with the B.Protocol integration and how BZRX will be used to incentivize liquidity on polygon, even though the fees do not flow to BZRX stakers. An additional benefit of this token split and migration opens up a possibility to introduce a supply increase to buyout the GOV tokens.
I am proposing a supply increase to finance this buyout as it would be a waste of liquid treasury supply to buyout with outright BZRX. The supply increase will be roughly 15-20 million BZRX (1.5-2% supply increase) and there can be a buyback and burn mechanism from protocol fees to cover this supply increase. The token amounts given for the respective GOV tokens will be based on their price at the time this proposal was posted ($0.0048 for PGOV and $0.0113 for BGOV) plus a 10% premium. With this buyout, the voting and proposal handling for all chains will be done through BZRX and all fees collected on each chain will flow to BZRX holders on one chain. This can be implemented through the usage of relayer bridges as a communication layer and cross-chain bridges for moving funds (Hop Exchange is a prime example). The unification of the token used across all chains will allow for a simplified analysis on fees given to BZRX stakers and properly align treasury incentives, irrespective of the chain the funds will benefit the most.
How will the PGOV/BGOV Token buyback be conducted?
There will be a mint of an additional supply of tokens which will be used to exchange BGOV/PGOV at a fixed price. Over time this additional supply of BZRX will be burned through the following process: BZRX platform fees will be used to buy back and burn BZRX in order to reduce the supply to the same amount prior to the additional minted supply.
How much supply increase is needed?
15-20 million BZRX will need to be minted, depending on the premium applied and price of pgov and bgov for the buyout.
Over time this supply increase will be burned using platform fees so that the bzrx quantity will not increase.
What will buyback price be?
Market price at time this proposal is posted plus 10% premium
PGOV token on Polygon hasn’t yet reached it’s max 250m supply through the yield farming program. How will this program be handled should this proposal pass?
End the program, fixing PGOV at a lesser max supply. The current unvested PGOV supply will be immediately vested.
Most amount of BZRX that is going to be minted?
16.5m bzrx. Approximate.
Who Votes on this proposal?
All three chains will vote on snapshot vote