Dear all
I want to propose creating a Token Treasury for PGOV similar to the BZRX treasury, and similar to many other DeFi protocols.
This recent article by Kain Warwick of Synthetix has some good information on market standard tokenomics for projects and suggests that 10-30% of the total tokens in a project should be allotted to the project treasury.
We don’t have to follow what he suggests - for one thing he is talking about funded projects which have to allocate tokens to investors etc, and not fair launch projects like PGOV. But it is a starting point for discussion.
The idea will be to have a token treasury under the control of PGOV holders, and we can vote on how to spend the funds for the benefit of the protocol.
The treasury will be created by a one-time mint of PGOV. The total supply (250m) of PGOV will NOT be increased. It will stay at 250m. Instead, the the farming program will end early to compensate (so for example, if a vote approves creating a token treasury of 25 million PGOV, or 10% of supply, then the farming program will end at 225 million PGOV, so that the total supply does not exceed 250m).
PGOV holders can choose to spend the tokens for any purpose by a vote - marketing, funding development, partnerships - anything.
This could include approving the current DinoSwap proposal (although I personally think that is a bad idea), or funding development efforts like the funding given from the BZRX treasury for Drypto to work on limit orders (great idea), or marketing - anything the community wants.
I think the biggest advantage of having a Treasury is that it formalises and gives some structure to the process of spending tokens for the benefit of the protocol. I do not think it is a good precedent or good governance to have ad hoc one-off votes for one-time mints of tokens for particular partnerships or funding needs. If you know how much money you have in the “bank”, you know how much you can afford to spend.
The right way to do it is to have a token treasury with a fixed number of tokens in it. Once we know how many tokens are in the treasury, we know that’s it for the whole lifetime of the protocol, and there won’t be any more. We can then make a decision on any individual spending proposal from the treasury and decide whether it is worth spending on each proposal.
So for example, if the treasury has 25 million PGOV for the entire life of the project, we can decide if it is worth spending 5-6 million out of that (more than 20%) on Dinoswap (in my opinion: No). On the other hand, we could also decide whether it is worth spending (for eg) 300,000 PGOV on funding development of stops/limit orders for Fulcrum Pro, and in my opinion the answer is clearly yes (this is an example only: stops/limit order development has already been funded from the BZRX treasury and is not a proposal for PGOV).
The size of any proposed token treasury is up to the community. As a starting point for discussion I suggest 25 million PGOV (10% of supply), or if people want a larger treasury, perhaps a maximum of 50 million PGOV (20% of supply). I do not think a larger treasury is feasible.
While the purpose of a Treasury is to clarify and formalise the process of spending money to benefit the protocol (and NOT to pump the token price), it should be noted that creating a treasury means a significant chunk of the token supply will be locked up for a long time and will not add to selling pressure. On the other hand, it also means that those tokens (in the treasury) will not be available to be distributed as farming rewards, which could make generating protocol liquidity and TVL more difficult - these are the concerns to be balanced.
What does everyone think? I want to emphasize that even if the community wants to approve the DinoSwap proposal, it makes more sense to create a token treasury and then spend out of that, instead of doing a one-time mint in response to an ad hoc request from Dinoswap.