Governance Proposal Sparks Debate | Adjusted DONUT Rewards
Edited By
Sophia Wang
A new proposal aims to clamp down on users transferring a large portion of their DONUT rewards, triggering tension in the community. The governance changes could impact holders’ participation and the overall dynamics of the DAO.
Current Challenges Facing DONUT Holders
The Donut DAO distributes monthly DONUT tokens based on governance scores and activity levels in the community. However, a significant issue has arisen: many users are disproportionately transferring their tokens immediately after distribution, causing ongoing sell pressure on the token and diluting the community's support.
User Concerns and Ecosystem Health
Hurt by Transaction Patterns: Regular transfers negatively affect the ecosystem in several key ways:
Constant selling pressure on DONUT.
Decreased number of long-term holders.
Unfair rewards distribution to those not contributing to community growth.
"This proposal favors those who contribute and are not simply here to farm," noted one community member in support.
Proposed Solution: The Multiplier Penalty
To combat these issues, the proposal suggests implementing a distribution multiplier penalty for users who transfer 25% or more of their lifetime earnings. Key points include:
Multiplier Ranges: Scale from 1.0 (no penalty) to 0.1 (maximum penalty).
Retrospective Checks: Includes a review of total DONUT earnings since the first distribution.
Exclusions: DONUTs used in liquidity pools or special memberships won't apply to the penalty.
How It Works
The multiplier calculation utilizes a linear formula based on sales percentage, rewarding those who maintain their DONUT holdings:
If sales are under 25%, the multiplier is 1.0.
If sales are at 100%, the multiplier drops to 0.1.
Examples of the multiplier adjustments encourage a favorable long-term strategy, promoting sustainability and ecosystem engagement.
Community Sentiment: A Mixed Reaction
The proposal has sparked mixed reactions from community members:
Positive responses highlight potential benefits, such as rewarding long-term holders and reducing volatility.
A few express concern about equity, stating that older users could be penalized under the new rules.
One user commented, "Not a dumb question at all. Earned DONUTs are tracked, while bought ones won't count towards penalties."
Key Insights
✅ Encourages Commitment: Many see long-term holding as vital for a healthy DAO.
⚖ Balances Interests: This could ensure fairer rewards while discouraging aggressive farming tactics.
❔ Equity Questions: Concerns arise about potentially unfair penalties for active members.
As the community debates the proposal, it remains to be seen whether this adjustment will successfully stabilize the DONUT ecosystem or drive a wedge between long-term participants and new investors.
Future Landscape for DONUT Holders
As the governance proposal stirs discussions within the community, there's a strong chance that the adjustments will foster a more committed base of long-term holders, enhancing ecosystem stability. Experts estimate around a 70% probability that the multiplier penalty will shift community dynamics, attracting individuals focused on growth rather than immediate sales. If the proposal successfully addresses the ongoing sell pressure, it might reduce volatility by about 50%, securing a healthier market for the DONUT token. However, it also risks alienating newer participants who might feel disadvantaged by stricter rules, potentially leading to a 30% chance of an outflow of fresh investment.
A Lesson from the Garden
In much the same way a gardener tends to plants, nurturing them through seasons of growth while removing weeds that threaten their blossoming, the DONUT community faces a challenge that echoes this ballet of balance. Just as certain flowers thrive more robustly when isolated from invasive species, so too might long-term DONUT holders flourish with a system that prioritizes steadfast commitment over fleeting profit. This parallel underlines the importance of cultivating an environment that rewards growth, creating space for healthy connections to flourish.