Since announcing the LQ tokenomics final version with the the planned Minswap CZI allocation, multiple community members have responded with pushback against the CZI and the initial token emission release. The LQ token emission schedule has been public for over a year and the token allocation to the community have not changed whatsoever.
Since completing the highest value airdrop ever for a Cardano DeFi protocol where every user earned an equal LQ amount irrespective of their ADA balance, the token emissions have essentially remained at 0 with circulating supply remaining flat for an entire year. It was always inevitable for the circulating supply to increase at launch with allocations such as the LQ staking, protocol incentives and DEX liquidity program already announced in our tokenomics details. Nonetheless we have reviewed the community’s sentiment to this and want to find a solution we can gain broad consensus around.
The core dev team met this afternoon following review of the community’s feedback to this amendment and the Minswap CZI. Ultimately we agree that if the community is by majority requesting for lower token emissions at launch this is exactly what we should pivot to until a more community aligned approach to DEX liquidity incentives and bootstrapping protocol owned liquidity emerges. The concerns around LQ token emission rates are detailed in posts such as this thread from SCATDAO: https://twitter.com/scatdao/status/1620903170162696192?s=46&t=a9DmnOIUYjefxejBCmkfww
We propose the following three changes to aptly respond to the community’s feedback immediately take effect:
- Cancel the CZI and DEX liquidity incentives allocations for the initial launch near term and return this LQ back to the DAO treasury allocation until (if) a community aligned proposal is passed through the DAO in the future*.
- Make the user distribution (LQ protocol incentives) exclusive to lenders and borrowers in the following markets: ADA, Cardano stablecoins.
- Partner with SundaeSwap to make use of their rewards distribution solution for LQ staking rewards and protocol incentives for lenders & borrowers (accelerates the timeline for launching LQ reward distributions).
*A proposal the community deems acceptable that rewards LQ/ADA LPs will draw from the 16% DAO treasury allocation. Cancelling the initial Minswap exclusive DEX liquidity program linked to the CZI is in line with the overwhelmingly negative sentiment received since announcement on the token emission rate at launch.
The updated LQ tokenomics would be as follows:
Do you support these three tokenomics related updates to reduce initial LQ token emissions in line with recent community sentiment?