SPS Governance Proposal - Keep All Burns
About
The purpose of this proposal is to address the recent announcement from the team that the DAO would need to be making decisions in regards to which burns the DAO would like to keep moving forward and gave us 30 days to vote on how to proceed. Previously many of these decisions were made for us and after the passing of the recent proposal for us to begin employing the team via a service agreement and the DAO buying the IP, it was decided that the DAO should make these types of decisions moving forward.
Proposal
If this proposal passes, the SPS DAO will choose keep the burns operating as they have been prior to the recent announcement.
Note
To be clear, this means that if this proposal passes, then nothing will change in terms of which tokens are currently being burned and that the DAO would then be able to have more time to assess and potentially vote on each burn individually.
I will add some argumentation I collected for a proposal to stop the burn, I didn't run in the end because of the development with the DAO taking ownership:
Advantages to burn:
Well, the obvious advantage is that the DAO has more income to cover its cost. There is however, another advantage that may not be that obvious. By having more DEC income, the DAO becomes less reliant on card/pack sales being the only income. This could open up the option to sell less cards or make them cheaper, both are a good thing for the overall ecosystem.
The ‘but burn is good’ argument:
We all know about the flywheel and we all know that if there is not enough DEC available, SPS needs to be burned to get more DEC. I personally don’t subscribe to the idea that burning SPS increases the price in the long term, it just shifts value from DEC to SPS. Burning DEC on the other hand technically increases the value of DEC, so why stop it? Because DEC not in circulation is not a price factor. Whether the DEC is burned or locked away in the DAO makes no difference.
Of course, as we all know, it won’t be locked away in the DAO forever. It is given to the team as payment, but these payments are now mandatory anyway. So either the DAO can put DEC into circulation or it needs to put something else into circulation, which would likely be more cards to get your DEC one way or another.
The (hopefully) killer argument:
Burning DEC may drive up the value of assets slightly in the short run, but cards will have to be bought to compensate for the loss of assets in the DAO. In the end the DAO will have to foot the bill for the DEC burned, which means we all pay for the privilege to burn our assets.
Some more data:
A lot of DEC is burned throughout the ecosystem through market fees, land LPs, wild pass, etc. While this varies wildly depending on many factors a rule of rough average to go with is about 1m DEC per week.
At the same time the DAO is about to pass a proposal which would increase the daily expenses by 5500 USD, so 38500 a week.
If we stop burning DEC and instead give it to the DAO. Going with the rough estimate of 1m DEC being burned per week and using a defensive price tag of .0005 for DEC this means about 1,3% of the daily cost increase for the DAO could be covered by simply not burning the DEC.
Just to make it clear, burn rate varies wildly and so does the DEC price tag, so the 1,3% are just here to give you an idea how much DEC is burned in comparison to what is needed.
Thank you Clay for getting a vote up.
I will vote against this.
We shouldn’t accept the “status quo” simply because it was done before.
Some burns were done at a specific time based on the economic picture at the time.
I think the DAO could use this as an opportunity to think carefully about which token burns are most relevant, or which burns would be better suited to offset future expenses.
Until we figure out a long term strategy, it won’t hurt the DAO to retain a bit of the buffer.
I'm voting in favor of this not because I feel we MUST keep burning everything, but because I think we need to think about each bucket individually and look at data before we make decisions.
I.e. I am in favor of maintaining the status quo and THEN following that up with a thorough data analysis and proposal of where we should perhaps consider reducing or re-allocating tokens that are currently getting burned.
I don't think we should go from "burn everything" to "keep everything" without more analysis.
Yes, let's sort it out after we have a baseline!
And why not share a portion of the fees with SPS stakers? Every quarter? / month? / year? depending on the SPSP
It could be a virtuous cycle