Discussion: Burn unclaimed CXD tokens

Dear CXD Community,

We should discuss on what to do with the unclaimed CXD tokens given that it has been two months since CXD airdrop completed. People who missed CXD airdrop complained that claim window was short and asked for second airdrop. The DAO constitution is in place and the team has provided a template for the second airdrop discussion. However, no formal proposal has been put forward by those who missed the airdrop and their support for second airdrop has remained completely non-committal. Therefore, it is reasonable to assume that people who missed airdrop have moved on, and we, the CXD community, should make plans to deal with the unclaimed token. With the preface laid out I will put forward my point with some numbers. I request the community to check the correctness of the numbers (from CG) and voice their opinion about my suggestion to burn unclaimed CXD tokens.

APY tokens in circulation = 66,469,950
Expected CXD total supply = 66,469,950 X 2.7182818 = 180,684,055
Current CXD total supply = 122,659,559
Unclaimed CXD tokens = 180,684,055 - 122,659,559 = 58,024,496

I propose that ~58M of unclaimed CXD tokens be burned and removed from the max CXD supply of ~271M. This will not reduce CXD total/circulating supply but it will reduce max CXD supply from ~271M to ~217M.

I posted this in Discord as well:
Regarding the lack of proposal for a 2nd airdrop, I may only be speaking for myself, but I believe most of us who missed it are in the category of inexperienced DAO users and feel unqualified to write a proposal. In reading the template, I find myself quickly out of my depth, and I check this every day, hoping that some of the leaders of this group, or at least someone more qualified, would initiate the proposal. My main concern is that if I do it, I’ll do it incorrectly or poorly and ruin the chance for a 2nd airdrop for everyone.

I am against burning any tokens for this project for the following reasons:

  • It is short-sighted
  • It will cause artificial, unsustainable price growth.
  • It discourages other people from joining the project
  • It moves the focus of the dev team from high priority to low priority work

It is short-sighted.
In the future, this project could execute multiple promotions using these tokens. If we burn them instead, we stop the project from executing any number of new and exciting ideas to either promote or bring new people into the project.

It will cause artificial, unsustainable price growth.
Outside of algorithmic stablecoins, the only real reason for burning tokens is to increase the price. This project has just started. It’s not a good look when the early investors of the project immediately vote themselves a raise instead of spending the time to add something that actually benefits the project as a whole. Also, a move like this this early in the life of the project may not even result in the price movement people would like to see. Without even a Convex Index token available on the market, there’s not much reason to invest in the project right now. We are all early to the party. If we reduce the number of tokens that are available, it may not even result in much price growth, because not many people are buying the token right now for any reason. The entire exercise of reducing the token amount may be wasted for that reason.

It discourages other people from joining the project.
As of right now, this is a good project, but the governance token price is low. When the Convex Index token is built and the team starts to promote the project, others will see the value in a good project with a great entry price. Those new investors will be encouraged to invest larger amounts of money into this DeFi project as opposed to others. If we burn tokens now, anyone who comes along afterwards will see us climbing the ladder to success while pulling up the ladder behind us. By not allowing as many tokens on the market, we are discouraging other people from seeing profits on their tokens the way we will. A move like this may hamstring early growth in the project.

It moves the focus of the dev team from high priority to low priority work.
Right now, the Convex Index token is the most important thing that the dev team can work on. But beyond that, they need to be free to make other index tokens with different risk levels, investigate other strategies for token diversification, and plan the future of the project. Instead, this proposal would take time away from all of those things to work on something that doesn’t flesh out the project. This, in my opinion, is not a good use of the time of the developers. Nobody will want to invest in a half-baked project. Working on this proposal will slow down the development of a fully featured product for the marketplace.

Instead of trying to force upward price movement for the token (that may not even happen), we need to trust in the development of a good project with strong fundamentals and sustainable growth. In the short term, we may not see the governance token price action we would like. But In the long run, a good project like this will outlast the other flash in the pan Ponzi DeFi schemes out there, and CortexDAO will win in the end.


Hi @Newbete, nice first cut at a proposal. I’m sure many are inexperienced in writing a proposal but what you’ve put together is a great starting point.

I myself like the rolling 10% unlock every 30 days. Would this also enable those who claim to earn rewards on their vlCXD? I’m looking for what would drive continuous engagement with the protocol. I know that might sound generous, but I don’t see what would cause people to stay with CXD otherwise.

Great question and point, Jope! I was asked to move the proposal to its own thread for feedback and to suggest changes. Here is the new link. I’d like to hear from others regarding your point, but I agree that I am trying to find the balance of driving engagement while accommodating life circumstances.

That last paragraph says it all.

Wow. Well said. I agree.

I’m against burning for the sake increasing scarcity - and hopefully price. I feel this is old thinking that needs to be shaken off.

A good project doesn’t need burns, or other types of “voodoo tokenomics” to do well. It needs stability, security, trustworthiness and an active community of good stewards.

Each cxd token represents the potential participation of someone in the future. Burning tokens centralizes control.

Burning tokens for the sake of creating scarcity is “voodoo tokenomics” - agree.

Burning unclaimed CXD is not that. Pay attention to next few lines to understand why.

For each APY token 2.71 CXD token could be claimed. Since there were 100M APY token the total CXD supply comes to 271M.

Now, if all 1M APY token holders did not claim CXD then what does it mean? It means 2.71M CXD tokens will never enter the CXD circulation. So, we have three options -

(1) Allocate all unclaimed CXD tokens to treasury. To me, this is no different from team confiscating the money of those APY holders who did claim their CXD

(2) Do nothing. This means unclaimed CXD will never enter the circulation and total supply will never reach max supply. This is okay but it will unnecessarily depress CXD price as buyer will feel that more CXD tokens are yet to be released when total supply has already reached its max (which will be lower than the theoretical max)

(3) Burn unclaimed tokens. This means that no one is going to use the unclaimed CXD tokens. This also means that total supply (or max supply?) will come down and give a clear idea about the remaining emission.

So, if you still think that burning unclaimed token is voodoo economics then what do you propose? Option 1? Option 2? Or, you have some other proposal for the unclaimed tokens?

Too many people have got used to telling the cliché “honesty is the best policy”, or an equivalent in crypto - “burning token is bad blah blah blah”

Crypto is crypto because it is crypto - with all “stability, security, trustworthiness” it will become a pension fund.

Well, I can also play with words :slight_smile: