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Stop Burning Tokens – Buyback and Make Instead — Placeholder

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In most “buyback-and-burn” token models, a network generates income in one currency token and uses the proceeds to buy-back and “burn” its own native token. The intent is to grow token value by reducing its supply as income grows. Buybacks tend to accomplish that goal, but burning affects currency and capital assets in different ways. When it comes to money, reducing the supply can increase the unit value of currency. But when it comes to capital assets like governance tokens, issuance is key to capitalization and burning can get in the way of growing fundamental value. First, we’ll establish a test for whether a token is currency or capital. Then, we’ll study the components of buyback-and-burn and consider their consequences. Finally, we’ll sketch an alternative token model, buyback-and-make, which keeps the benefits of buybacks without the drawbacks of burning capital. An asset is Currency when its value comes from exchange: when it’s spent to consume goods or services, like the U.S.

In most “buyback-and-burn” token models, a network generates income in one currency token and uses the proceeds to buy-back and “burn” its own native token. The intent is to grow token value by reducing its supply as income grows. Buybacks tend to accomplish that goal, but burning affects currency and capital assets in different ways. When it comes to money, reducing the supply can increase the unit value of currency. But when it comes to capital assets like governance tokens , issuance is key to capitalization and burning can get in the way of growing fundamental value. First, we’ll establish

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