I’d like to suggest some improvements to Pangolin’s current tokenomics.
Two topics I would like to cover are 1) emissions and 2) deflation. Strong PNG tokenomics is essential to the success and health of the Pangolin project, since PNG rewards are the primary way we can incentivize liquidity into the DEX.
Topic 1: Emissions
Current state of emissions:
The current emissions schedule of PNG is to emit 175k PNG per day for 4 years with a halving every 4 years. So in 4 years the emissions rate will be halved to 87k PNG per day, and then again in another 4 years, etc. Source: Platform and PNG Token Litepaper - Pangolin
There are a few issues with the current emissions schedule centered around 4 year halving:
- The token remains inflationary until there is a halving, which is 4 years away
- The halving is an abrupt and jolting event
Suggested improvement of emissions:
I suggest we move to an emissions schedule that gradually reduces each month to meet the target levels that were originally set. So after 4 years, we would still reach the same target of reducing emissions by half, but we would do it gradually over time instead of all at once.
Benefits of a gradual reduction schedule:
- Helps the token become less inflationary
- Eases users into less emissions instead of changing it in one abrupt event
- we can route excess emissions to the community treasury to ensure that the treasury stays consistently funded.
Topic 2: Deflationary measures
Currently, there are no deflationary measures in place for the PNG token. New tokens are minted each day and added to the circulating supply.
I suggest adding a buy-back and burn program to PNG’s tokenomics. We would fund the buy-back and burn by turning on the swap fee switch that re-routes 1/6 of swap fees revenue. At current trading volumes, this would allow us to buy-back and burn ~$100k USD of PNG per month. We would buy back PNG from both the market and swap tokens for PNG with the treasury to help diversification. 100% of the PNG bought back and swapped will be burned. This buy-back and burn event would occur twice per month. As volume and revenue increases, we can buy back and burn an even larger amount each month. We’ll need to do a deeper dive on the exact tokens and amounts we will be swapping with market vs treasury during the implementation of this.
Benefits of buy-back and burn:
- Removes PNG from circulation
- Adds PNG buy-pressure to the market
- Helps treasury diversification
- Increases demand and reduces supply
We should improve Pangolin’s tokenomics through 1) a gradually decreasing emissions schedule and 2) a buy-back and burn program. Improved tokenomics will help ensure Pangolin’s long-term success as a premier DEX.
Please post any feedback or questions below.