Appreciate your feedback! However, the idea here is not inflate the price artificially for the sake of it. Its about discussing mechanisms to add value to the intrinsic value of the $OP token now that we have one. Also, keep in mind we have the lowest risk of “unsustainable” price growth because we have the fundamentals. I mean this is a functioning project. Further more, once a project has a token, thats it! Not everyone is a tech nerd nor are they passionate about the insides. The token will be the face of the project and we cannot inch towards market leadership or induce the expected impact unless the token perform well…
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I have shared this towards the end of my initial post. Buyback and burn is a rather blanket approach and of course we should discuss the exact mechanics in detail with the community. From ethereum to matic to BNB, all leaders did some form iteration of a buyback and burn program.
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This not entirely accurate, Uniswap’s token is a governance token and the project is thriving. It has already passed $1 trillion in total trading volume.
Bnb had success with burning tokens and avax had. Even ETH
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Ummm… that is an apples to oranges comparison. Uniswap is the bench mark of DEXs and pioneer of DEFI and the absolute benchmark for airdrops. Uniswap is the market leader and also the absolute GOAT in marketing. They had no comparable competitors at the time of airdrop launch and they set the standard for airdrops (which i must add that the airdrops that followed somehow keep missing the plot).
Uniswap is in almost in every chain! They also had the first to market advantage in DEFI/SWAPS/AIRDROPS. They dont have to buyback and burn because its already staked with most leader pairs in the world. So comparing Optimism to UNI is not a fair comparison.
Optimism is great but we have a long way to go. We are currently sitting at less 300 million USD MC.
I would also like to reiterate the marketing angle since we are already here discussing UNI. UNI was propelled to its place by the surprise airdrop they did. They were incredibly popular and garnered so much popularity and along with that came success (granted there weren’t airdrop farmers because it was a surprise). I am beginning to notice a pattern here and I would later try to make a quantitative argument for it. What I am noticing is projects that were too hell bent on “removing Sybillers” have in fact performed poorly as opposed to the ones who didn’t. This is not a debate about whether or not filtering airdrop farmers is good or bad rather this is strictly an observation. In theory airdrop farmers “do” the qualifying work means that they have contributed the project by using it (of course their intentions are debatable). Sybillers or not those who will dump will always dump and those who will buy will always buy. So the markets eventually balances things out. In the process of all these stringent filtering and anti price growth sentiment is just bad marketing at the end of the day.
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How can we increase demand for the $OP token if it’s not going to be used for gas? How do we make sure that $OP does not just become another worthless governance token?
Here’s an idea:
A token that generates $ETH for stakeholders (or stakers) while simultaneously burning itself EIP-1559 style with every transaction. Here’s how it would work in theory:
Users transact on Optimism > Gas fees are paid in $ETH > L1 Fees are subtracted > Leftover fees get added to the treasury > the treasury uses 20-30% of $ETH generated to buy and burn $OP > 70-80% of the $ETH fees that’s left gets spread across staked $OP tokens.
This way, the Optimism economy is perpetually rewarding itself as usage grows, while being able to incentivize growth with a token that has created a “value” loop as antidote to the worthless governance token sickness.
Assets that generate $ETH for their holders will significantly outperform in the long run imo. $OP can either become one of these assets or eventually be vampire attacked by an anon team.
This only concerns “revenue” generated from transaction fees and what to do with it. Not related to the community fund of $OP tokens that reward projects or charities etc.
Original post is below
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Hmm… It looks like pumping. it’s not wrong but I think it’s quite unhealthy for optimism itself “in the long run”.
please elaborate in detail how it is unhealthy for a token value to go up?
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After reading most of these comments and replies; I am thinking? Should Optimism have gone for a stable voting token? I mean makes sense in governance terms; 1 OP = 1 vote?
A buyback and burn alone is not enough IMO. I’ve written a post on a solution that includes rewarding part of the ETH fees to stakers and using another part to also buy and burn. This way the token becomes yield bearing while increasingly scarce. That is a golden combination that surpasses a simple buy and burn. Dont get me wrong, a buy and burn would be good, but why choose good when you can have better?
Heres my original post:
https://gov.optimism.io/t/the-best-of-both-worlds-op-eth/2391
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I was not comparing OP to UNI, but pointing out how your statement was not accurate, which it is not.
This is the problem, using market cap as the definition of success. There are other metrics that should be used to measure success. TVL, number of users, number of transactions, for example.
If the sole focus is make token go up, yes focus solely on market cap and burn all the tokens, turn it into a gas token, and punish people who sell.
Buyback and burn is a blanket term in this case and of course we can get creative and innovative with the idea.
I’m not just responding to you. Great example of someone that thinks this tread revolves around one person. I was just making a point that this is just another proposal that is focused solely on token go up, which it is. You can write paragraphs that say otherwise, but that’s just a bunch of words saying nothing but how do we make token go up.
MakerDAO is probably the longest running example of a buy and burn design and some can say it has had mixed results.
More DAI creation via Maker Vaults = more stability fees paid/revenue to the protocol.
If there are more fees that means MKR holders are making good decisions on managing the protocol, from setting fees, on-boarding collaterals and managing risk (to name a few parameters).
Poor governance decisions would then = less revenue and less burning of MKR.
Increase in MKR price has not always correlated with burning and there is currently a divide in the community on re-starting the burn (which was voted on to pause in order to increase the surplus buffer to a larger size for growth objectives and risk management).
Regardless of ones view to burn or not to burn, the more important issue is that once there is an expectation to burn OP tokens as part of the system mechanics, it will be very complicated for the community to undue that promise should it turn out not to be the best technique long term.
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Individuals respond to economic incentives. If we provide a mechanism whereby token holders benefit from increased economic activity in the ecosystem, then they will be incented to take governance seriously and support proposals that enable growth. Without any economic link, then there is no positive feedback loop and apathy persists. The buyback and burn mechanism has been implemented and effective for multiple top protocols. I fully support diverting 10-20% of revenues towards this mechanism.
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Again, this is not about pumping the token. Its about increasing the market share so $OP can be better positioned. Only way to communicate in this forum is to use words and mean it. Thats how productive communication goes; saying you never meant it is not a good defense to invalidate another’s statement.
Yes, I agree. This is just a sad attempt to artificially prop the price up. Before submitting proposals some people need to read the mission and vision of the Optimism collective.
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This article does not have any valid economic concern or merit. Buy back and burn does not contribute to the growth of the OP eco-system. We as a community need to promote OP for mass adoption through out web3 communities and make it more attractive for users to use OP network.
We can also invite and fund developers to build new infrastructure to launch new projects on OP to create more diverse and vibrant eco-system. This will have positive impact on price over time. It’s not a sustainable option to pump token price artificially.
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VERY GOOD PROJECT…need agressive marketing to shine
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The price doesn’t matter, the eco is.