Proposal to make drift token deflationary along with a burn mechanism of a portion of the trading fees allowed to be paid w/ drift token - proposal

DIP - Discussion Forum
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DRIFT TOKEN ASSET DEFLATIONARY PLAN AND BURN MECHANISM WITH TRADING FEES ALLOWED TO BE PAID WITH THE DRIFT TOKEN

There are 2 things a token needs to be an in demand and valued governance token.

Num 1)
Allow Drift token to be used as a means of paying for trading fees on the Drift Platform.

Num 2)
Burn a very small percentage (2% of fees paid in drift) of that fee to create a slightly deflationary asset/ Drift token.

Note:
This is what BNB does with their BNB token and it causes the value to climb with their token and creates a deflationary asset and will create demand to hold the DRIFT token to pay trading fees and hold as a deflationary asset in place of fiat currency.

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Nice! I like it but let’s hear counterpoints to this as I’m sure there are also benefits to having a large supply in the beginning. I believe MAKER DAO has a burning mechanism.

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REGARDING THE BURN MECHANISM, FOR EXAMPLE:
The quarterly burn process is part of Binance’s strategy to manage BNB’s supply and potentially increase its value by reducing the number of tokens in circulation. By systematically burning a portion of the total BNB supply, Binance aims to enhance the token’s scarcity and value proposition

See the link below for clarity on a token burn protocol

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Could you perhaps gather a few links to burning mechanism for other coins out there?
Would help with stimulating discussion on this.

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Proposal for Distribution of Drift Protocol Fees to Stakers
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Hey, thx for writing this proposal 🫶🏻

So $DRIFT was launched with 1B in total supply. Is this proposal suggesting to regularly burn 2% of the total supply, or 2% of supply in reserves, or yet 2% of distributed supply? Is the % fixed or could it be dynamic?

I think the frequency is also important to be defined.

The idea behind the proposal is solid but it needs refining imo.

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Hello,
The proposal is meant to create a deflationary token asset out of the Drift token. As of now, the token does you know good to own other than to vote on proposals. If you stake, you earn such small amounts of rewards that you would have no idea you even received a reward. If you have a deflationary asset, you create a token worth buying to hold and keep up with inflation and possibly do better than that. The proposal would be to allow DRIFT users to pay for trade fees at a discounted rate with their DRIFT token. This creates a use case other than voting for the token to become an asset to hold for those using the platform. The burn rate would be a small percentage of the Drift token trade fees paid after each trade. 2% was just an idea of starting point. We need to go over the numbers to find the amount of Drift it would take to pay for a average trade, then find out what burn rate would keep that token at a 15% deflationary asset to keep up with the melting ice cube that is fiat. The burn would only be a percentage of what is used to pay for trades. It doesn’t need to burn 13 to 15 percent of the overall supply each year. But any amount of burn would allow the asset to become more scarce and as the only way to get discounted trading fees on the Drift Platform, that would cause people to want to hold it even if they don’t trade perps. The more scarce the asset the more valuable the asset becomes. BNB token does the same thing on the BNB platform. It started at a 50 cent token and now it’s worth upwards of 500 or 600 dollars per token. I hope that answers your question. I’ll try to respond faster if you have any further questions. Thanks!

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At first i wasnt supportive of this proposal but why don’t we make this a temporary solution until downward price action slows down. There still is virtually no utility with the drift dao token and every day around 500k coins are released into circulation driving the price lower and lower. Definitely think some of the fees generated by the protocol can burn the supply.

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Take a look at what the BNB token has done in just the last week too. Can’t hurt too adopt their deflationary asset model for even a few months to see what it does. I agree 10000%!

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What bothers me is during the last Spaces that Drift did with Pyth, they answered this exact question and said to create a proposal so they could look at it and implement it. Well, we did that months ago. I am getting concerned that I’m holding a dead weight asset. Come on @Cindy. Listen to the people that are the major drifters on your platform… :unamused:

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I think here the devil is in the details.

At a high level giving utility to the token to through using it as fees makes sense.
Why burn instead of giving it to the treasury to invest in future growth initiatives?

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