It’s been some time since I posted my initial proposal which you can find here: [Discussion] Proposal to Increase the Shimmer supply for a Community Treasury. First I’d like to thank everyone that’s taken the time to read and provide feedback either positive or constructive. It’s greatly appreciated and is required for such a proposal.
I’d like to take this opportunity to follow up on my proposal and attempt to answer some unanswered questions and concerns I’ve heard.
Why I strongly believe we need an Ecosystem Fund
Put simply, I have yet to come across one successful smart contract ecosystem without an ecosystem fund to provide incentives to Developers to grow the ecosystem. Developers bring activity in the form of user growth, volume and liquidity. Without sufficient activity on Shimmer the value of the token will not grow. There is a clear connection between activity on a chain and the value of the utility token, this is because the utility token is used:
- Smart contract fees
- Within defi applications for staking/liquidity/collateral which locks up a huge amount of supply which cannot easily be sold
- Visibility of the token and speculative price nature increase with the supply/demand mechanics in a popular ecosystem which uses the utility token
Diluting the supply of Shimmer
There’s no denying that increasing the supply of Shimmer by 20% would dilute the supply, the strong argument I am making is that the value created is far greater, especially if we’re able to deploy successful management of the funds which could grow over time.
As a reminder only 52%of the potential Shimmer supply was created due to inactive wallets during the staking period.
The token proposal for ecosystem funding is far smaller than a lot of the competition, but I believe that by learning from their mistakes we can make our fund allocation go much further.
I believe it’s the builders, community and IF which will provide the long term value needed on Shimmer, so let’s target and support the necessary builders with the resources needed to build unique use cases.
An additional idea to consider for a future proposal is the general approach to Inflation of the Shimmer supply. Currently there is a plan to have a yearly 8% Inflation which was proposed by the IF, however this is also open to the community deciding on the future changes to the Inflationary model. A future proposal could tackle this question and perhaps put forward a lower inflationary or fixed model which could reduce dilution further of the supply of Shimmer.
Do you want 100% of a small and uninteresting cake, or 80% of a huge cake of which everyone is piling up to get a piece?
Use of “build or burn” funds
Some within the community have raised the prospect of using the IOTA Community Treasury funds. Unfortunately this is not possible at least in the short term due to some legal challenges and hurdles required to use such funds within the Shimmer Ecosystem.It is also not something that the IOTA voters in the Burn / Build vote have voted for. The Funds belong to the IOTA network and cannot just be used for a different network. I am also of the opinion that it would benefit IOTA to have its own Treasury Fund to help support additional use cases and utility on IOTA.
By supporting this proposal we as a collective for the first time would have seperated / independent Ecosystem/Treasury funding within our control on IOTA, Shimmer and Assembly all focused on building value in their own right but with strong synergies between the three tokens and value propositions.
Should this token proposal pass we should then look to put forward future proposals which could be used to shape the Governance of the Treasury and use of the funds. Please note that I would not look to seek a seat at the Treasury committee as I feel I may have too many conflicts of interest, however there are many within the community that I feel would be capable.
I propose to put the following question up for a vote by all IOTA token holders using the Firefly Wallet Governance functionality:
Question: Should the Shimmer token supply at network launch be increased by 20% and be split in equal parts. One part given to a Shimmer community Treasury DAO and the second part given to the Ecosystem Development Fund managed by the IOTA Foundation?
- Yes, launch the Shimmer network with additional 20% supply and give 10% to a Shimmer community Treasury DAO and 10% to the EDF
- No, do not increase the Shimmer supply