The issuance of social tokens should not be based on time or TVL ratio. It should take into account the actual usage of the project and the number of users. Because many farmers are now digging and selling in defi, which is very detrimental to the development of the project. The issuance of social tokens should consider more factors, just like company employees will have KPIs.
Here are two examples:
Ⅰ. Project A is somewhat the same as most Blockchain/DeFi networks. It’s in an early-stage with low demand. To attract users they distribute their Token A (TKA) via large reward rates.
This however leads to their users, liquidity providers, or node validators, to be benefitted in the short-term for an immediate gain. There is no incentive for the longer-term users, as this is fundamentally a short term model.
The large emission of network supply, plus the weak network adoption – creates supply-shocks and damages the entire economy.
Instead, they could create their own synthetic flavour, called dTKA. This would be pegged everyday to their network’s own adoption & value. dTKA would immediately lower issuance rates to the network’s users, while incentivizing greater quantities as the network grows.
Ⅱ. Network B follows the same token-distribution model. A year after they launched, the market declined. They are now struggling to incentivize their network participants – as releasing large amounts of tokens in a bear market, has even worse effects for users.
Network B (NTB) could collateralize the 1M tokens they planned to allocate, as they are currently at $0.10 in price, they could create a synthetic pegged to $1.00 (creating 100k dNTB). They have now reduced the amount of tokens issued to their network by a factor of 10 immediately – enhancing scarcity.
Participants still supporting during this period are rewarded later when their adoption grows.