CUIP-049 - Tokenomics Update: Buy and Burn [Pass]

Live Proposals
1

Abstract

I propose upgrading $CU tokenomics by introducing a Buyback & Burn system with the upcoming migration to XAI. If approved by the DAO, 50% of all future ETH Treasury inflows will be used to buy $CU and burn it. This will reduce the total supply and increase liquidity simultaneously.

Motivation

Deflationary tokenomics are easy to understand and can be leveraged to attract more people to our ecosystem. By tying all revenue (from primary sales, secondary sales, LP fees, etc.) to the purchase and burn of $CU tokens, we can support the value of our ecosystem over the long term.

Details

ETH Treasury inflows come from various sources and represent the revenue of our protocol:

  • Primary Sales: Land Vending Machine purchases, with land type set against its own bonding curve. At current ETH prices, this represents $50M if all 1M land plots are minted. Note: We would need only 62,500 DAW demand at 16 lands per wallet.
  • Secondary Sales: Our new custom marketplace will charge a 4% fee on all NFT transactions. Players can use $ETH or $CU to purchase NFTs.
  • LP Fees: Our treasury earns 0.5% per trade in the $CU/$wETH DEX pool. These fees are in $ETH or $CU, depending on the trade.
  • Auxiliary Revenue: As our ecosystem expands, we will have additional revenue sources, including revenue shares from Unicorn Party and licensing revenue from merchandise and media deals.

If this proposal passes, 50% of all ETH earned by the treasury will be used to purchase $CU from the open market and burn it. For NFT purchases made in $CU and $CU earned from LP Fees, we will burn these tokens directly.

Operationally, this process will be handled semi-automatically. On a daily basis a series of bots will make purchases and transfer bought $CU to the burn address. Additionally, $CU collected from Secondary Revenue and LP Fees will be burned twice monthly.

Conclusion

Implementing a Buyback & Burn system will strengthen our tokenomics by creating a deflationary model and enhance our ecosystem’s attractiveness. I encourage the DAO to vote in favor of this proposal.

Snapshot: Snapshot