Aggressive $SHU emissions

Shutter DAO
1

I was advised by Loring that the community forum is the best place to start discussion with more sophisticated members of Shutter community so I want to bring you some discussion from Shutter discord channel.

There is a concern amongst some participants of the community (including me) that vesting schedule for SPT holders and Early community members is too aggressive. Here is a quick breakdown of SHU supply amongst the holders:

Max supply of SHU is 1B tokens.

Shutter DAO Initial Allocations DAO Treasury: 58% Early Community Members: 20%

  • Team: 10%
  • Others (protoDAO members, active contributors, partners, and users): 10%

SPT Holders: 22%

  • brainbot: 15%
  • External Financial Contributors ($2.36M in 2022-2023): 7%

Besides that there were grants for Brainbot and advisors, OTC sale in February and Fjord LBP sale.

To simplify (and someone please correct me if ii’m wrong) I will consider a Brainbot allocation as a team allocation as well.

  • So team got 15%+10% = 25% of the whole supply (which is fine)
  • External investors got 7% at cost basis of $0.035-0.04
  • ‘‘Others’’ got 10% (airdroppped)

Not all the allocations have the same vesting, but because I don’t know the exact terms of each, i’ll simplify it here for tha sake of discussion. Most of these investors allocations have the same vesting: 10% was unlocked on March 18th, the rest 90% will be unlocked linearly over the next 2 years.

And while the distribution looks fine, the emissions are pretty aggressive and I think it will hurt the project and all the token holders in the long run.

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Circulating supply at the moment is ~80m SHU, and per theoretical emissions, it’s going to almost double until July 1st this year, to 170m (in the next 3 months) or triple before the end of the year, to 250m SHU on December 31st .

In my opinion (and it’s proven to be the case many times), aggressive linear vestings are often the party killer, not only in terms of price but in terms of community growth.

Such emissions are killing the speculative interest from outside investors and basically limiting the community growth. Without speculative interest from outside capital and mindshare, there is a concern that this will just be another race to dump vested tokens.

Behavior of the top 10 holders aka. vesting contracts is already proving so. 7 out of 10 biggest addresses already sold at least some of their tokens. Some sold more some less, but it definitely doesn’t inspire confidence.

I started this topic to try to get a sense of what the big holders are thinking about it and if there is a will to try to find a solution.

If there is any interest for tokenomics rework, it should be done in a way that linear vesting ends. There should be a cliff of 6-12 months before any of these tokens are released and the project find a market fit. To make big holders vote for such a proposal, they should be given something in return. There could be other solutions but I’m thinking of something like this:

  • an opportunity to stake locked tokens when staking is introduced
  • allocate % of the treasury for staking rewards
  • protocol revenue share

This way holders of vesting contracts are losing their linear vesting but get a chance to increase their network share through staking and rev share. For holders of vesting contracts this might sound like a not so attractive deal, but leave the emissions like this for another couple of months and the token price could go to low single digits, and end up as a race to dump on each others.

Cliffs on such allocations often offer an opportunity for holders to OTC their allocations to potential longer term oriented buyers, which then increases the floor price of the token and reduces the dump of the upcoming unlocks.

Imagine if SHU is trading at 35 cents. There is a holder of vesting contract of 1m tokens with a cliff on Jan 1st 2025. In case he needs a liquidity, he might be able to offer those tokens at $0.2 to an OTC buyers and the team or an OTC desk could facilitate such deal.

With tokenomics change, I believe Shutter community might actually revive as more speculators enter the market which could raise the token price in the short term, and also raise the psychological floor price once the unlocks are about to happen after cliffs expire.

This is just a pulse check to see if there is anyone thinking about this issue in the forum and to see if we could brainstorm the solution to make everyone happy in the long run

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Forgot to emphasize that brainbot and the team allocation together make majority of voting power if we discard treasury.

Brainbot and the team have 250m/420m= ~59.5%

So if the team have enough runaway and feels the same as most of the active community on discord, which is that tokenomics change might significantly improve sentiment, market position of Shutter and improve long term prospect of the project - they can make it happen

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I think this a great proposal. No one wins if the price continues to bleed. At the moment with the constant linear vesting I do not see many investors coming in for a while. I know a couple of projects that have changed vesting times/dates and this ended up being a great success. We can look to DYDX as a good example. Even though the situation is not the same in terms of vesting they had a huge unlock coming up in the middle of a bear market. Instead of letting their token die, they pushed vesting back and allowed the price to recover, this resulted in new investors and users and a stronger community. The willingness to change the vesting showed that the team and early investors wanted the best for the protocol and not just to make a quick buck.

With the team holding such a huge big percentage of tokens (which as Shea stressed, is not a problem) they could definitely make a good faith change to their vesting. Not only will this show the Community that the team cares for the project but it will also probably result in the tokens having more value for when the teams tokens do vest. For me this seems like a win win situation for everyone.

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Unless otherwise clearly and explicitly stated, brainbot will refrain from voting on proposals to let the community drive the decisions.

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First of all, thank you for opening this discussion for the community.

Secondly, In my personal opinion, I do not think that brainbot or people associated with it, should vote on this.

This should be a representation of the Shutter DAO 0x36 community, and to properly gauge the sentiment of it’s members, they should be the ones participating in this decision.

I’m also not saying that I am personally for or against this change, my reasoning is that this could also be a case of silent majority, where the loud minority is pushing for a change that does not accurately reflect the sentiment of the community. And the only proper way to measure the support for the change, is by not having a major holder push the proposal through.

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I think this a great proposal

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To be clear, this is not a proposal. It’s just a discussion to get a temp check.

@tatu i’m not really sure why Brainbot or the team would refrain from voting. There are so many options here.

i.e. if Shutter and Brainbot are well funded at the moment - it makes more sense for them to lock their allocations than Investors who paid $0.035-0.04 for their tokens. Unless investors think it’s for their long term benefit to do so

Also, if funding is the issue it can be proposed that they get paid a reasonable amount of money (USDC or ETH) from the treasury for the duration of their cliff.

I don’t think Brainbot and the team should refrain from voting if it’s for the benefit of the community and the token

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This was a general statement on behalf of brainbot. Thus far, brainbot has followed this and has not participated in any of the past votes. It would be clearly and explicitly stated if that were to change at any point.

This is not particular to this discussion, but for the people participating in the discussion to know that it is also not likely that brainbot would vote on this proposal either.

And not participating in a vote also does not comment on the discussion taking place.

In addition, I have already provided my personal views topic on this in a separate reply.

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I haven’t followed the Discord conversation about this, but if I’m understanding - the suggestion here is that existing vesting schedules of brainbot and the core team should be changed so that the price of the SHU token behaves differently.

I would not support this idea and I would vote against a proposal that suggests it. The existing schedules should not be changed.

I’m happy to expand on my reasoning if this becomes a serious conversation, but I’m hoping we get some simple comments from other delegates that make it clear this isn’t something that would have significant support.

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yeah i would like you to expand on you reasoning. Would like to hear why the current vesting is a good thing.

As I tried to explain, price is just one factor that’s impacted by the token unlocks at the moment.

Outside capital avoiding the project because they don’t see how they can benefit from SHU is hurting the project for couple of reasons

  1. limiting the community growth
  2. slow bleed in price and drainage of Uniswap pool which will last for the next 2 years as 15m SHU/month will be vested
  3. smart people not joining the project because of fear of ‘‘getting dumped on’’

Whoever is in space for longer time knows that long linear vestings are a sentiment killer and as you can already see, Shutter is pretty much in a bad spot in terms of community activity. Couple of msgs every day, half of which are ‘‘GM’’ and ‘‘change tokenomics’’ is pretty much under achievement in the current market, especially if you have a potentially decent product to offer

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I am in favor of this proposal a lot of smart guys don’t want to buy shu because of this awful unlock schedule

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Just a couple of quick thoughts as an early investor.

  • I haven’t sold any tokens, and have no immediate plans to sell. I invested as I believe in the project and its goals but understand that the real value is likely to accrue over the long term and there will be short term volatility.
  • Whilst I have no plans to sell, I do value the ability to sell because sometimes life gets in the way of long term plans.
  • Given I don’t plan to sell, I may be open to supporting a change in the vesting schedule however given it is a material change with a material economic impact, I would like to see more concrete analysis from those proposing any changes in addition to opinions. Without this I would definitely vote no.
  • I have seen changes to tokenomics with other DAOs that are intended to support the price and they have ended up doing the opposite because the full impact of the change has not been fully modelled.

Having said that and whatever happens next, I appreciate the thought and engagement that the community is putting into posts like these.

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exactly. It’s not as easy as ‘‘just se the cliff instead of vesting’’. tokenomics should be crafted in a more sophisticated way and try to benefit all the participants.

Regarding your second bullet: we gotta assess options but sometimes it’s possible to sell locked tokens as well, and it’s much easier to do so when there is a cliff than it is when there is an ongoing vesting.

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I think this is a very important, crucial topic for a proposal that would get the project on its feet. And again, everyone involved in the project would have benefit from it.

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