Conditional Token Unlocks: A New Approach to Address Market Flooding
Introduction
Binance founder and former CEO Changpeng Zhao (CZ) has proposed a new tokenomics model to address the issue of market flooding in the crypto space. This innovative approach aims to ensure that tokens are released into the market in a controlled and sustainable manner, rather than flooding the market with a large volume of tokens at once.
Conditional Token Unlocks
The proposed model involves a gradual release of tokens, with each unlock triggered by specific conditions tied to time and price. This approach is designed to incentivize project teams to focus on long-term growth, rather than seeking to rapidly increase the market value of their tokens.
Key Features of the Model
- Only 10% of tokens are initially unlocked for sale, with the remaining 90% retained.
- Future token unlocks are subject to strict conditions, including a minimum six-month wait period since the previous unlock.
- The new price must have sustained at least twice the previous unlock price for more than 30 days.
- The maximum amount of tokens released at each stage is limited to 5% of the total supply.
Example Scenario
To illustrate this concept, CZ provided an example of a token created in January at an initial price of $1. Under this model, the token would not be eligible for an additional unlock in June unless the price had exceeded $2 for at least 30 days. In this scenario, the next unlock could not occur until March of the following year, provided the price had risen to at least $6 for the required period.
Project Team Flexibility
Project teams have the discretion to delay or reduce the size of each stage, but they cannot shorten the waiting period or increase the percentage of tokens released.
Avoiding Market Flooding
By introducing this model, CZ’s proposal aims to avoid the problem of coins entering the market when prices are low, and incentivize project teams to focus on long-term growth.
No Plans to Launch a New Coin
While introducing the idea, CZ clarified that he has no plans to launch a new coin. He also acknowledged that this model is not a one-size-fits-all solution.
Addressing Pump-and-Dump Schemes
The proposal comes at a time when concerns over pump-and-dump schemes in the crypto market are growing, following the recent collapse of the LIBRA token. CZ has previously expressed his disapproval of market manipulation and has donated tokens to compensate victims of fraudulent schemes.
FAQs
Q: What is the purpose of the conditional token unlocks model?
A: The model aims to address the issue of market flooding by ensuring that tokens are released in a controlled and sustainable manner, rather than flooding the market with a large volume of tokens at once.
Q: How does the model work?
A: The model involves a gradual release of tokens, with each unlock triggered by specific conditions tied to time and price.
Q: What are the key features of the model?
A: The key features include a 10% initial unlock, a six-month waiting period, and a price requirement of at least twice the previous unlock price for 30 days.
Q: Can project teams adjust the model?
A: Yes, project teams have the discretion to delay or reduce the size of each stage, but not shorten the waiting period or increase the percentage of tokens released.
Q: Does CZ plan to launch a new coin?
A: No, CZ has no plans to launch a new coin, and this model is not a one-size-fits-all solution.
