What Should DAO Do with Buybacked Governance Tokens?

DAO Proposals
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Following the passed DAO proposal, a $WRT Buyback initiative leveraging platform revenues was implemented from the 29th of November, 2024, aiming to create upward price momentum and reinforcing value for holders. Refer to WingRiders’ Transformative Updates and New WRT Buyback Program Medium article for more details.

WingRiders DAO now faces an important decision about how to allocate the buybacked WRT tokens. As a decentralized protocol, WRT token holders’ input is invaluable in shaping WingRiders future. Let’s explore two potential paths for these tokens and open the floor for your opinions.

Buyback Statistics

Protocol fees from dedicated pools are sent to a DAO wallet $wr_buyback, dedicated to buybacks. All transactions are viewable on-chain, allowing community members to track activity in real-time.

  • Start Date: November 29, 2024
  • Total WRT Bought Back: 795,199 (0.8% of total supply)
  • Total ADA Used for Buyback: 30,434

Current Source of Buyback Revenue: Protocol fees from the ADA/SNEK, ADA/WMTX, ADA/IAG trading pairs

How Should the DAO Utilize Bought-Back WRT?

WingRiders proposes a DAO vote to determine how the bought-back WRT should be utilized. To ensure the community has the opportunity to provide input, a discussion is opened before the vote. This discussion will allow DAO members to share feedback, suggest alternatives, and refine the available options.

Option 1: Burn the WRTs

  • Burn all the Buybacked WRTs, permanently reducing the total token supply.
  • Pros: Reduces total supply, introducing a deflationary effect. Creates scarcity, which can increase token value.
  • Cons: The action is irreversible. Once burned, WRT cannot be used for rewards, grants, or incentives.

Option 2: Allocate to Yield Farming

  • Extend WingRider’s yield farming program by allocating Buybacked WRTs to farming treasury, and continue incentivizing liquidity providers for an extended period.
  • Pros:
    • Temporarily removes WRT from circulation, similar to burning.
    • Yield farming rewards attract liquidity, improving trading efficiency and reducing slippage.
    • Drives long-term participation in the protocol.
  • Cons: No permanent reduction in total supply, as tokens remain accessible in the future.

That said, this approach requires careful planning to avoid potential downsides like unsustainable rewards or short-term sell pressure.

DAO Community Wants to Hear from You!

Both options have merits, and we value your thoughts on which path aligns best with our shared vision. Here are some key questions to consider:

  • Should we prioritize token scarcity and value (burning) or ecosystem growth and liquidity (farming)?
  • Are there other creative uses for these buybacked tokens we should explore?
  • How can we balance immediate impact with long-term sustainability?

Share your thoughts on the community portal and Your input will directly shape the proposal that will be brought to a vote.

Let’s build the future of WingRiders together!

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Great to see this decision being open to a DAO discussion!

I would suggest a hybrid approach to potentially counter the cons while taking advantage of each pros:

  • 5~10% to burn (deflationary effect, but slow and steady);
  • 50% to farming rewards (increase rewards for farmers that, not necessarily, are WRT holders);
  • 30% to boosting vault rewards (increase the incentive of not just being a farmer, but also a WRT holder);
  • 10~15% to competitions and/or other marketing campaigns (make a “fund” to recurrently bring activity and attention to the platform).

In a side note, I think it’s also important to set a threshold to execute the decided strategy (every time we reach 1 million WRT buybacked, e.g.).

That’s just my opinion and, as always, I’am open to the discussion.

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45% to boosting vault rewards

45% to burn

10% to creatively advertise the program

We could call the program Buyback & Burn/Boost.

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I do like the idea of a hybrid approach with dedicated allocations for each. If I would have to choose I would lean more heavily into the burn as I find cycling these tokens back into farming rewards a little counter productive. At the same time I do see the appeal to be able to boost the APR % to draw in more liquidity.

And using a small amount to create a fund for activity and marketing campaigns is good. The amounts are likely small but this fund could build up over time. This would be another separate discussion entirely in future as there would have to be rules and decisions made on how and when this fund can be used.

I would also echo the importance to set some threshold or other to execute the agreed strategies, so that there’s continuity and some predictability. It’s important to be able to showcase there’s a transparent plan in place that continues to execute.

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This could be a decent compromise. In my mind it will come down to this hybrid approach and finding the best allocation.

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How about using it as a top up to bribe external farm rewards, that could give exposure to new communities and attract new liquidity.

My other thought is we could keep it for now and use it to build stablecoin liquidity for the upcoming cycle.

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@ilkka, agreed that cycling these tokens back into farming rewards is a little counter productive, but we really need more liquidity and farmers want to provide liquidity where the APR is, at least, as good as competitors. This first boost could give us what is needed. The burn could also do it, but it isn’t reversible, so caution is required.

@domoducks_founder, I see that you want all the farming rewards going to boosting vault, but this would lead us to the same problem in the past, where big farmers needed to deposit an expressive amount of WRT into the boosting vault to get APR as good as competitors. This would make no sense thinking in a diversified allocation, so the result was that it would make sense to get part of the liquidity and farm elsewhere. That’s why I’m trying to avoid taking everything to boosting vault.

So maybe a phased allocation could help getting a mid term? Something like:

  • First 6 months: 10% burn; 40% boosting vault; 40% farm rewards; 10% marketing campaigns;
  • Next 6 months: 20% burn; 40% boosting vault; 30% farm rewards; 10% marketing campaigns;
  • Next 12 months: 30% burn; 40% boosting vault; 20% farm rewards; 10% marketing campaigns.

This is just an example, but a burn isn’t reversible, so getting time to leverage data about the strategy efficiency is important.

This phased implementation would give us 6 months of 10% burn, another 6 months of 20% burn and another 12 months of 30% burn.

After this period, we would have enough data to get a more informed decision about the burning impact.

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Hey hacket!

Can you expand the option about building stablecoin liquidity?

In a first impression, I think that providing the right incentives through farming (boosting vault included) to the desired pools could attract this liquidity. In this case, the incentive would have to be granted for an amount of time.

E.g.: WR will guarantee, at least, a 60% APR (farm + boosting vault rewards) to these pools for 12 months. This would allow farmers to take a calculated risk.

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Building up some DAO-owned stablecoin liquidity sounds like a very interesting idea. The amounts would be very small though but this could slowly build up and 1. Grow liquidity on DEX 2. provide a source of additional income for the DAO, while keeping the funds with community (DAO-owned). In this case we would need to think about how much % to allocate for this from the treasury funds, and what stablecoin pairs, etc.

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Hi GM! It’s great to come together to share our ideas, aiming for the sum of all of them to result in a refined model with everyone’s contributions.

I would like to propose a model in line with what has been discussed—a mixed model that is also dynamic and, therefore, does not require predefined and static percentages.

For example, the model should distinguish between minimum treasury amounts in each part of the puzzle and the rest.

Let me explain: a model that prioritizes reserves allocated to boosting vault and agricultural rewards up to a certain limit—for instance, ensuring that there are enough reserves to sustain operations for 12 more months without running out. Once the reserves are secured to keep both incentive programs running for an additional 12 months (for example), 100% of the remaining funds could be allocated to burning and providing liquidity in key pairs (such as those soon to be generated with USDA), with this liquidity being owned by the DAO. This way, the incentive programs always fulfill their function, while also ensuring that the value of the agricultural rewards reserves increases, so that without additional funding, they still last for 12 months.

At the same time, a high burn percentage of 50% (for example), once there are sufficient reserves for the two incentive programs, combined with a percentage allocated to grants and promotion programs, along with a high percentage of sales for liquidity owned by the DAO, should yield a positive outcome.

As long as there are not enough reserves to cover 12 months of incentives:

45% for agricultural incentives

45% for boosting vault

10% for other programs

Once there are sufficient reserves to sustain 12 months of incentives, all buybacks would be allocated as follows:

50% burn

50% increase in liquidity for importants pairs

The exact number of WRT needed to guarantee 12 months of reserves for the incentive programs would also be dynamic, depending on the APR values of competitors and the price of WRT. Therefore, it would be up to the WingRiders team to determine how many WRT should be held in reserves to ensure that both programs are always secured for an additional 12 months (for example). The team should calculate this figure each month based on their own criteria.

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i was thinking more that at some point when the market is right, a portion of collected fees or new fees could be converted to stables and entered as stable liquidity in the protocol and would make the dao also earn passively

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One thing I don’t like about using the funds to add reward on some pools is that the current emission rewards of the platform are not decentralised, so nothing guarantees that it would be a top off reward. It could be used as a way for the team to focus on rewarding other pools with new emissions because the dao would have some already covered with fees which would not productive or clear for any parties. The same could be said for boosting rewards. It would be clearer to have the funds be rewarded in a different way

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How urgently does a decision need to be made? If the WR team can accumulate 1 million WRT with small amounts of Ada does a decision need to be made quickly? It seems like the team can gradually increase the amount of WRT the DOA holds over time. People haven’t noticed the buyback wallet acquiring 1% of total WRT supply. The rewards could be replenished for years at this rate. If those rewards are put at the back of the line for the boosting vault that is like an unannounced temporary burn because those tokens would be out of circulation for X amount of time. I’d recommend acquiring 3 years worth of rewards while WRT are this cheap.
Once there is a burn that cat will be out of the bag.

Would it be possible for the WR team to put the WRT in wr_buyback into a smart contract that just holds them for X amount of time?

I also like the idea DOA owned stable coin liquidity. It provides a service, it gives the DOA a source of income and it will lead to more trading on the DEX. I’d recommend against using Iusd though because the second Ada’s price started going down it lost it’s peg again. As I type this it’s at 98.53 cents. It was around 94 cents yesterday. Minswap is apparently going to have some sort of iusd stability pool in the future though so perhaps that will stabilize it?
Could some of the Ada profits be used to add Ada to the wrm01 stake pool to increase the Ada added to pools for staked Ada from LPs? WRM01 only minted 3 blocks in epoch 538 as I type this. Perhaps after some WRT price appreciation some WRT could be sold to have DOA owned stake, which would also increase the number of blocks minted by WRM-01, which would put more Ada in LPs.

My last point is kind of a question and a recommendation. How much longer are FirstRider NFTs going to provide full WRT rewards to their holders? If FirstRider NFTs are too much of a burden on the treasury I recommend reducing the amount of WRT they provide to bronze holders considerably while keeping the rewards constant for silver and gold holders. This will almost certainly lead to more silver and gold NFT sales. Perhaps the royalties could be used to increase the pot of WRT for every NFT holder?

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I tend to agree with not rushing with a decision, in a short amount of time the DAO treasury has acquired more than 1%+ and keeps going. It’s a good time to keep growing that position (at this market valuation) and not rush to spend it. I would love to see how much the DAO can collect from fees if this is kept going as is and agree a lot with building up something for years to come

As for the First Rider FTs, I don’t think they are weighing us down so much that I would consider reducing the boosting rewards on them but that’s just my opinion without looking into the numbers in detail.

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If every FirstRider NFT is being fully utilized then 114,450 WRT would be getting dispersed every 5 days. 87,200 of that would be going to bronze holders. 76.19% of NFT WRT is going to bronze holders so if we reduce the bronze holders rewards it would be good for everyone. If they got 1/10 th of those rewards that would be 78,480 less WRT distributed every 5 days. 5,650,560 less WRT distributed every year! Silver and Gold NFTs would go up in value, WRT would have less sell pressure. It would be good all around!

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I loved the idea about not rushing into a decision and just keep accumulating - indeed, this would have a “burn effect” temporarily.

But I don’t think the NFT reward is a problem and here is why:

  • 1744 Bronze (needs, at least, 25k WRT deposited to get all the 50 WRT)
  • 112 Silver (needs, at least, 50k WRT deposited to get all the 100 WRT)
  • 107 Gold (needs, at least, 75k WRT deposited to get all the 150 WRT)

So, how much WRT would have to be deposited in the boosting vault to get all these rewards?

  • Bronze: 49,200,000 WRT (49.20MM WRT)
  • Silver: 5,600,000 WRT (5.60MM WRT)
  • Gold: 8,025,000 WRT (8.02MM WRT)

In a nutshell, 57,225,000 WRT (57.22MM WRT) would need to be deposited. This is 57.22% of the total supply (if we don’t get any burn at all).

But just in case we really get an emission rate problem from the FT rewards, this adjust could be done increasing the deposit amount needed to get max rewards. E.g.: adds 25% more WRT to get max rewards for every tier (bronze = 31,250 WRT, silver = 62,500 WRT and gold = 93,750). I see no point doing it just for the bronze tier. It gets more just because there is more bronze FTs. Proportionally, there is no difference between them.

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thanks for sharing the numbers for this! :slightly_smiling_face:

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Latest DAO treasury numbers, Feb 17:
1.14M+ WRT or 1.15% of the max supply!

Reminder that you can also keep an eye on the buybacks on-chain:

Whatever gets decided later this train keeps moving along with DAO treasury growing each day!

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Latest update from team:
“Based on valuable community feedback, we’ve decided to postpone the DAO vote on burning or extending farming rewards. Meanwhile, these tokens remain out of circulation, reducing available $WRT supply—effectively creating a temporary “burn” scenario.”

DAO Treasury keeps growing with more fees collected each day, let’s keep the discussion going! Looking good so far.

You can follow the different socials for latest updates, keep an eye on the treasury buybacks by following $wr_buyback wallet, and join in the ongoing discussion here on the forum. Thanks to everyone for your participation so far! :cowboy_hat_face:

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