Revised Tokenomics and proposed token BURN

Hey guys, I have gone through the token distribution document published by the team and wanted to express my thoughts on improving/revising the tokenomics for the long term growth of TrueFi. The goal is to at least reduce the total circulation supply by ~160M TRU (11.11 %) by a token burn.

The post identifies places of possible token burn/re-allocation and logic behind it

Current Allocations:
1) Incentives : 39% (565 million)
2) Presale : 26.75%
3) Team: 18.5 %
4) Company/Foundation : 11.25% (163M, 53M unlocked and 110M unloced in next 2 years)
5) Future team: 4.5% (65M)

Proposal:
a) Incentives Pool

  1. Burn UNUSED Balancer pool incentives : 8,912,512 TRU
  2. Burn UNUSED Nexus Mutual pool incentives 1,227,500
  3. Burn UNUSED Uniswap leftover allocation: 53M tokens (due to reduction of Uniswap and then removal of uniswap incentives)

Reduction in supply from BURN ~ 64 Million tokens

b) Company foundation

  1. Burn 35% of company fund (57M TRU)
    This leaves company reserves for spending at 70% i.e 106M TRU which is a sizable budget for all company expenses (35.33 million unlocked at each vesting period) and SAFU fund

  2. Re-Allocate 5% of company fund as a Marketing Fund: (8M TRU)
    This is absolutely essential to set a budget aside to exclusively spend on AMA’s, Youtube influencer videos, and directed media marketing using the existing crypto juggernauts. This should only be used for social media and influencer marketing. At present, there is no separate marketing fund for this spending and the creation of one will make the spending expenses on directed influencer marketing transparent. In addition, the community can decide if this amount is to small or too big but having an exclusive marketing fund is vital.

Reduction in supply from BURN ~ 57 Million TRU
Cumulative reduction a+b : 121M TRU

c) Future team
Burn 70% of future team tokens (45M TRU)
These have been overallocated as mentioned in the document above. Also since TRU is becoming more valuable this will not diminish the USD value of TRU incentives for new team members. Remaining in pool (20 million TRU)

Reduction in supply ~ 45 M TRU
Cumulative reduction a+b+c : 166M TRU

These are some numbers I have crunched to reduce the token supply without affecting the incentive pool or affecting the functioning of the company. With the token unlock coming every 3 months, this is going to help greatly in reducing the supply of TRU by a sizable amount immediately.

I would request @ryan.rodenbaugh @Jacks @MG-TT @rafaelcosman and the rest of the community to provide their thoughts.

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This is some amazing detailed proposal @spidey Thank you for this.
I have a high level question regarding this. Why can’t we initially put this into a temporary SAFU fund until we have a proper SAFU fund initiated through some options we discussed at Secure Asset Fund for Lenders (Similar to SAFU)

I’m trying to see if we can hit two birds in one stone. Once we have a proper SAFU setup, these token in the temp SAFU can be burned. The only advantage I see burning right away vs putting it in a temp SAFU is the optics.

If tokenomics are super important to onboard new comers and influencers, then I’m fully onboard even without any temp SAFU.

I don’t have a strong opinion with one vs the other. Overall I’m in supportive of this token burn.

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I support this 100%. From my perspective and experience in crypto recently, coming back to the industry as a sell-side crypto analyst:

  1. I’ve pitched the TRU coin to 2 sell-side crytpo analysts and I know @JupiterCapital has as well. The tokenomics need to be fixed , this and the resulting valuation were a major concern. Basically institutions won’t buy this coin and the sell-side can’t recommend it to them in the 1st place until we fix these legacy issues and small tokenomics fixes aren’t good enough. Let’s fix this once and for good.

  2. the Marketing fund is pure genius and every other major coin out there has this allocation. In 2018 when it was ICO time we didn’t need this but times have changed. I am personal friends with the head of a $100mm crypto VC and have learned how they do things. Projects like PAID, RUNE, PUNDI, 1INCH, have all been taken to market via “influencers”. The influencers are given allocation of the ICO and /or coin on an ongoing basis to do write-ups on Twitter and YouTube and the like. We want to work with the top 10 influencers who have worked with major projects, like Cardano and the ones above and these guys need to be paid well and quarterly. These influencers have basically created the entire user base and valuation for these coins, allowing the mgmt teams to then take the wheel and steer the company to the moon without having to focus on the coin price much. PAID has already done 100x to its investors , RUNE 70x, PUNDI 50X, 1INCH 40X . So it’s time we get up to date with 2021 marketing and get this approved.

I support creating a general marketing fund like Spidey has done b/c I want to get 1) management buy-in 2) not focus on promoting the coin but rather on growing the project as a whole 3) allowing enough wiggle room (let’s not be cheap) to allow management to make the correct decisions: (i…e. let them build a superior product but have the allocation ready to market the heck out of it (influencers, press releases, youtube, whatever they need, here is their fuel)

Great work @spidey and thanks for your hard work and commitment. We have amazing momentum and teamwork (and management buy -in I think). Let’s increase our TVL to well past $100mm and gain the attention of major borrowers like Yearn Finance, and take TRU to $5+

Agree 100% with point #1. I do think additional burns of company tokens would make sense, the “tokenomics debt” of our legacy structure is clear to me as well.

Iffy on #2 in the way that you present it in here, while I am fully aware of the projects you’ve cited, their methods, and performance… I’m not sure PAID is the token we want to aspire to… something tells me that one doesn’t end well.

RUNE is ANON, 1inch and PUNDI are not US based teams to the best of my knowledge. 1inch for as great as it is, isn’t listed on DeFipulse and has poor relations with the rest of the larger DeFi projects in the west (not discounting the team at all, I hold a bag).

I want TRU price to go up, as a reflection of the work the team/community is doing together. A lot of 2017 coins like Cardano/XRP have predatory marketing aimed at retail noobs that just end up as someone else’s exit liquidity. Personally, I wouldn’t want TrueFi to be associated in the same realm as Cardano or similar projects. Numbah go up is important but at what cost?

Overall, I agree some tokens should be converted for marketing fund, just can’t endorse the examples you outlined.

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@spidey thanks for putting this together to start on a much needed conversation / proposal.

Team. I have personally pitched TRU and while the overall sentiment of the project / protocol is amazing, the tokenomics is a concern. This has also been said via twitter posts as well.

Why let this go on any longer and risk losing the solid momentum and community that has been built thusfar.

I support every measure Spidey has put forth. Let’s get this to vote and fix this asap in order to move forward. 2017 ICO tokenomics wont work in this environment and we can really push TRU to new heights.

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@Jacks my idea behind marketing fund is to make allocation for marketing/amas, youtube influencers transparent. It’s a hard truth that marketing goes a long way in adoption and I am proposing having a transparent allocation reserved for this purpose. As for examples, I agree they don’t matter as our philosophy is different from them but the end goal of adoption is the same.

What are your thoughts regarding the tokenburns proposed? Removing 161M out of supply without affecting the TrueFi ecosystem is absolutely vital to instill confidence is new users as well as institutions looking to adopt TrueFi! I would appreciate other team members to chime in as well. @MG-TT @ryan.rodenbaugh @rafaelcosman

I think we should put these to vote, with changes as necessary as I am proposing something which has been under discussion for a while.

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haha, sorry to laugh but you are correct in that those weren’t the best examples. The point is they are ones that had good marketing budgets with influencer allocation. Now while we can claim 1inch doesn’t have great relations with other companies in the industry, TRU has had 4 years to create great relations, and, for what? We’re struggling to hold a spot on DeFi pulse 1inch just did $12 billion in volume last month and became the #1 DEX aggregator in the world and returned 40x for its investors , we want to give you, the team, a marketing/influencer budget as opposed to no allocation , which is what we have now. From what I learned 1inch, for example, used influencers, not only to increase their coin price, but also to increase product awareness use of their platform some 100x. The proposal aims to give management that budget and ability to do . Let’s remember that some (very few) of these influencers are first and foremost proponents of blockchain and the crypto ecosystem and they would love to work with companies such as ours that add serious value to society. Candidly I’ve discussed this with @MG-TT I believe he understands this area well. He asks the right questions and understands the benefits and drawbacks well. He has legacy crypto experience and now is up-to-speed on current expectations and risks of influencer use so I don’t think he will steer you wrong with regards to use of this budget. I am always here to give him feedback given my experience taking 2 startups to the 8 figure revenue level using grassroots marketing efforts and my experience as a scrutinizing sell-side research analyst.

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I have been on the discord server since launch, and followed the developments of the product and feedback from the community very closely. The product is evolving nicely, and the v2 changes will be a massive step forward - and “fix” many of the issues I have personally experienced and reported.

There has been regular and consistent feedback regarding both marketing and tokenomics from people that are looking this from an investors perspective. Although marketing strategy and execution is subjective, I will always support more funds being made available to marketing. Marketing is the fuel to take this product where we all want to see it. Therefore I agree with allocating more TRU to marketing - and to keep this money ringfenced.

The second point is regarding the tokenomics. Now this is not an area I have much experience in - so I have to take council from the people that do (the people on the front line that are talking to inventors and pitching TRU and TrueFi). From what I am hearing, the tokenomics are based on what was appropriate/standard a couple of years ago. Things have moved on quickly, so we need to adjust appropriately. If the likes of @spidey and @orion.da (along with the TrueFi team) think that the proposed changes will “fix” the problems, I will support their judgement and vote for the change.

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guys, talking w/ mgmt I was told that, while this is a step in the right direction, @ryan.rodenbaugh @tylerw and @rafaelcosman have already worked on new Tokenomics including allocation for marketing. So I am hereby asking Ryan, Raf, and Tyler for their comments: what do you like about this proposal, what don’t you like about it? (and what is already covered in your new tokenomics)?

Please respond soon b/c we will halt pushing this to a vote until we get our comments. We don’t want to push something through that is counterproductive to the team’s efforts and goals.

thanks

I think this is a good post, but also a bit shortsighted. Let me explain my thinking

1

I agree that the original token distribution PROBABLY overallocated to (a) future team (b) company and maybe to incentives (more on incentives later).

I also agree that the total supply is a legacy #. Fewer projects launching today have so many tokens outstanding. I think the only one that’s close is Uniswap which has 1bn tokens and after y4 plans to introduce 2% annual inflation.

2

On the incentives: I am opposed to burning the leftover Balancer, Nexus Mutual, and Uniswap tokens. Those pools were created to incentivize people to join the TrueFi community and decentralize ownership of the protocol. Burning those tokens would directly opposed to those goals of decreasing centralization of the protocol. It would only be to the benefit of existing token holders (of which you all are). I can’t fault you for wanting that outcome, but at this time, I don’t believe it’s best for the long-term growth of TrueFi. At a later date, it could be decided that burning those tokens would be the best decision, but I believe it’s too early to make a decision on that. From the Google Doc linked in the original post, it provides a ton of nuanced detail (more than most other token distributions I’ve read) and I believe people who read that will be satisfied with the state of the unallocated incentive pools. If they’re token holders, they’ll be able to vote on the best new ways to use those tokens to grow TrueFi.

3

Future Team Tokens: Same setup as incentive tokens. I’m opposed to burning these right now. I already said in the Google Doc above that while yes, this category was probably overallocated to, nothing has changed between when I typed the google doc and now to confirm that this has been overallocated to. While these tokens do count against the total supply, they have no impact on circulating supply right now and anyone who reads the Google Doc (which will soon be a medium post) can clearly see that.

4

Company tokens: I think this is the category that could be adjusted now and as I said on the SAFU thread, I’m working on it. I’ve been working on it nearly every day for the past week including today (Sunday) and yesterday. It’s extremely top of mind.

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Thanks @ryan.rodenbaugh. I appreciate your comments and as I mentioned my post was just based on some number crunching I did myself to figure out what % of token-supply can be reduced without affecting company operation and at the same time increasing the investment value for TrueFi from a tokenomics perspective. I want to still strongly emphasize that a tokenmics model which significantly reduces or locks away the current share of Un-released tokens is absolutely essential for the longterm growth of TrueFi.

  1. The current token model is definitely a legacy model, so I am glad you agree it needs retweaking to be attractive in the current market. I look forward to your comments and how you incorporate our feedback.

  2. Community incentives need not be burned, I was just trying to find ways to reduce supply. A better way would be to use these based on community feedback. Also any unallocated community incentives should definitely not be reduced at all.

  3. As for future team and company tokens, I commented on the SAFU post (Secure Asset Fund for Lenders (Similar to SAFU)) that if we allocated > 70% to the SAFU fund, I have no issues with these tokens being NOT BURNED, as they are still being used for insuring the current users and also locking away the TRU in a way. I was unsure of how much progress had been made from team’s end with regards to SAFU, and hence suggested to burn these instead, but I will not be opposed to using these for SAFU operations. Please keep in mind that this needs to be a significant chuck to make a dent in the SAFU fund.

Finally, I thank the team for considering the community feedback, but have to again insist that we need to bring the total token supply by a lot (atleast by 200-300 million), to make TrueFi attractive to incoming investors/users and reduce the sell pressure from newly released tokens.

I look forward to your post ryan :slightly_smiling_face:

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