Summary
This proposal aims to reduce the supply cap for the ERG token within the Liqwid app.
Following a successful vote, the ERG market will have its supply cap reduce to an number of tokens being equal to the ERG supply on Liqwid at the moment of the vote’s closing. (currently around $93,000).
Reason for removing ERG Token as a market:
The ERG token currently has a very low on-chain liquidity, valued at approximately $0.3 million. (data: Taptools , 22. July 2024). The token is still traded on multiples CEX such as Gate.io, MEXC, KuCoin with daily trading volume around $500,000.
Consequently, a large sell order for ERG would result in a significant price drop on any decentralized exchange (DEX). Furthermore, most of the ERG tokens were bridged through the Rosen Bridge, and on the Ergo blockchain, the liquidity is not much larger. Liquidators must then use centralized exchanges to exit their positions.
Lastly, the lack of demand and use cases is why ERG has not been widely used as collateral or for borrowing, despite having a strong community.
In consequence, we are proposing to reduce the current supply cap from 1,250,000 tokens to ~108,000 token. This amount is calculated based on Ergo price of $0.86 and supplied Ergo amount of $93k on Liqwid (data 24.07.2024).
Conclusion
The Core Team recommends adopting this proposal to reduce the ERG token supply cap being used on Liqwid.
Do you support the reduction of the supply cap for ERGO with the proposed parameters?
- Yes, I support the reduction of the supply cap for the $ERG token.
- No, I do not support the reduction of the supply cap for the $ERG token.