[VIP-34] Revenue to be used for VCX buybacks & burns

VaultCraft Improvement Proposals
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1
  • Yes
  • No
0 voters

Summary

  • Objective: To enhance the value of VaultCraft’s VCX token through a strategic buyback and burn policy as indicated in VaultCraft’s tokenomics: oVCX - VaultCraft
  • Scope: VaultCraftDAO can utilize all protocol revenue for the buyback & burns of VCX tokens.
  • Limitation: Annual expenditure on buyback & burns not to exceed 45,000 ETH.

Value Proposition

  • Strengthening Token Value: Reducing the number of tokens in circulation to potentially increase demand and price.
  • Investor Confidence: Demonstrating commitment to the token’s longevity and stability, thereby attracting and retaining investors.
  • Financial Prudence: Setting a cap of 45,000 ETH per year ensures financial responsibility and sustainable growth.

Implementation Plan

  1. Revenue Allocation: Allow VaultCraft DAO to utilize protocol revenue for the VCX token buyback & burn.
  2. Monitoring Mechanism: Implement a transparent system to monitor and report the amount spent on buybacks. This has already been done on VaultCraft
  3. Execution Timeline: Establish a monthyl schedule for buyback & burns, ensuring a consistent approach throughout the year.
  4. Compliance and Review: Regularly review the policy to ensure it aligns with market conditions and regulatory requirements.

Conclusion

  • Long-Term Vision: This strategy supports VaultCraft’s long-term vision of creating a robust and valuable token ecosystem.
  • Sustainable Growth: By capping the buyback & burn expenditure, VaultCraft demonstrates its commitment to sustainable and responsible financial practices.
  • Enhanced Credibility: This approach will potentially lead to increased stakeholder confidence, fostering a more vibrant community around the VCX token.

This proposal outlines a structured and sustainable approach to enhancing the value of the VCX token, aligning with VaultCraft’s strategic objectives and ensuring long-term stability and growth.

3 Likes
2

Fully support this overall. One question on this point:

What did you have in mind for this schedule? If it results in large, predictable buys, wouldn’t traders start frontrunning them and potentially cause spikes and crashes in VCX price?

If it’s smaller, more frequent, and maybe even somewhat irregular buys I don’t think this would be an issue.

Curious what your thoughts are on this.

3

Having the foresight of a buyback & burn means assumes the market will act rationally, meaning that some will try to frontrun, but those that do not can counter front running. Quarterly buybacks could work as well, for example: https://www.binance.com/en/feed/post/1367010. Arguably the most successful buyback/burn that created value for its stakeholders.

This proposal is to allow VaultCraft DAO to use protocol revenue for buybacks ultimately.

3 Likes
4

I fully support this proposal. It is well thought out and we have a history of buyback/burn being a successful mechanism for both token price and ecosystem TVL from a multitude of tokens including Bnb, Inj, Rlb, and many others.

1 Like
5

Now that this passed, when will details and schedule for the buybacks & burns be announced?