Introduction
As our ecosystem matures, it’s essential to have a well thought out strategy for utilizing the treasury beyond staking rewards.
While the staking module remains a core driver of value and engagement for $LENFI holders, there are scenarios where deploying the treasury for strategic initiatives could accelerate growth and enhance the protocol’s ecosystem.
These initiatives may include funding opportunities, community incentives, or centralized exchange listings.
One approach to managing future emissions and treasury usage effectively is to establish clear infrastructure and guidelines for how and when these resources can be deployed.
Proposal: Introducing Liquidity Bootstrap Events (LBE) for Future Emissions
One potential mechanism to support treasury utilization is Liquidity Bootstrap Events (LBEs).
This model could be particularly effective in avoiding excessive sell pressure while enabling the community and outside participants to support strategic funding needs. Here’s how it could work:
- Funding Initiatives Example: CEX Listing
• Cost Estimation: A typical high-end CEX listing may require $100,000–$400,000 to cover listing fees, market-making (MM) costs, and marketing efforts.
• Token Conversion: At current valuations, a $400,000 initiative might equate to approximately 115,000 $LENFI tokens.
- LBE Mechanism:
• Snapshot and Pricing: A snapshot of $LENFI price is taken to determine a fair entry price for participants.
• Event Participation: Participants contribute to the LBE by reserving the right to purchase $LENFI tokens at the determined price.
• Vesting Model: Instead of releasing all tokens immediately, participants’ $LENFI allocations are vested over a period. This approach mitigates sell pressure and ensures long-term alignment with the protocol’s goals.
- Broader Applications:
• This LBE model can scale for larger initiatives, enabling the community and even external participants to fund significant protocol upgrades, integrations, or partnerships.
• Participants gain early access to $LENFI at a fair price while supporting the protocol’s growth initiatives.
Alternative: Borrowing Funds from the Treasury
Another potential option is borrowing funds directly from the treasury to support initiatives like a CEX listing. While this approach avoids additional emissions, it introduces Operational Risks Repayment terms and failure to meet obligations could create challenges for protocol governance and trust.
This option might be suitable for low-risk, high-confidence initiatives but should be approached cautiously.
Governance Considerations
To ensure transparency and alignment with the community’s interests, I propose the following:
1. **Establish a Framework**: Develop guidelines for how the treasury can be used outside of staking, including:
• Funding thresholds and evaluation metrics.
• Decision-making processes (e.g., governance proposals, community votes).
• Risk mitigation strategies.
2. **LBE Implementation Plan**:
•. Define mechanics for pricing, participation, and vesting.
• Set limits on emissions for LBEs to preserve tokenomics and value.
3. **Scenario Analysis**: Simulate different funding scenarios (e.g., CEX listing, marketing campaigns, integrations) to assess the feasibility and impact of LBEs or treasury borrowing.
Open Questions for the Community!
• What other initiatives should we consider for treasury utilization (e.g., incentives, partnerships, integrations)?
• Do you support the concept of LBEs for funding large initiatives? If so, what vesting periods and limits would you recommend?
• Should borrowing from the treasury be an option, and under what conditions?
By building a robust plan now, we can ensure the protocol is equipped to scale effectively and respond to growth opportunities without compromising token value or community trust.
Let’s discuss!
(Yes it was written using chatgpt get over it.)