[VIP #3] Migration of VDO and One-Time Inflation of Total Supply by 16.9420%

ValiDAO Improvement Proposals (VIPs) VIP - Proposals
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Migration of VDO and One-Time Inflation of Total Supply by 16.9420%

Overview
To ensure ValiDAO is well-positioned to incentivize stake for chain launches over the upcoming year while maintaining a sufficient reserve of VDO for future needs, we propose a one-time inflation of the VDO token supply by 16.9420%. This inflation will require a token migration and will bring our total treasury holdings to ~29%, aligning more closely with industry norms for treasury allocations of projects in their early growth phases. The inflation and migration will be executed simultaneously, shortly after March 1st 2025, which coincides with the unlocking of approximately half of our Uniswap V2 liquidity.

Rationale
Currently, ~12.4% of the VDO supply is held by the treasury and available to ValiDAO for incentivization and compensation. This limitation caps our ability to incentivize staking on our validators while still maintaining sufficient reserves for future needs and act strategically during both bear and bull market cycles. By increasing the supply, we aim to:

  1. Enable Staking Incentives: With the inflation, we can allocate VDO to incentivize staking on existing and upcoming chains
  2. Retain VDO for the Future: This increase allows us to retain VDO for future use, whether for compensating and incentivizing contributors, strategically raising cash from aligned investors, or responding to any other future growth opportunities. Our treasury will be better positioned to support these needs.

This inflation will be a one-time event. The specific allocation of the newly minted tokens will be determined by the ValiDAO council as needs and opportunities arise, but the goal is to use them in a way that supports our growth yet maintains the long-term sustainability of the DAO, and this proposal passing shall be considered a commitment to undergoing a token migration and thus allow us to operate under the assumption of the supply held by the ValiDAO treasury being close to 29%.

Timing of Inflation and Migration
The token migration will occur at some point not long after, but not before, March 1st 2025 due to a significant portion (42.49%) of our Uniswap V2 liquidity being locked until then.

Conclusion
The proposed one-time inflation of VDO by 16.9420% and accompanying token migration is a significant step to ensure the continued success and sustainability of ValiDAO. This move will enable us to better incentivize staking, secure our treasury for future growth, and position ourselves in line with industry norms.

We welcome your feedback and look forward to your support in this important governance decision.

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Also, an aside: we’d almost certainly have no fees (taxes) in the new token implementation

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thank you @murakamikaze for shepherding this forward and having conversations with as many people as possible to gauge the feasibility here. Oftentimes topics that are hard for projects to broach, as someone that has been on the DAO council I am (like eveyone on the DAO council) supportive of this and think it’s a necessary step to really crush the next few ecosystem launches and give the project sufficient treasury to succeed :saluting_face: really proud of what has been accomplished thus far without raising money and excited for what’s to come

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We’re looking at this being 4 or so months away at the very least which seems reasonable.

I’m for it considering I think we’ll get a ton of growth from what this can give us going forward.

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Thanks for putting this together—it’s clear a lot of thought and effort went into making sure everything is transparent and well-explained. I really appreciate the diligence here!

I’m also glad we took the time to speak with so many people while thinking about feasibility.

I’m on board with the proposal. It makes a lot of sense to position us for growth and to ensure we have the flexibility to incentivize staking and keep reserves for the future.

One suggestion: it might be helpful to send out a reminder or heads-up closer to the token unlock in March 2025. A quick communication could go a long way in keeping everyone on the same page and avoiding any unnecessary surprises.

Overall, great work on this

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