TLDR
The core contributors propose an updated allocation structure for achieving Net Revenue, which will be used for the buyback of the RFRM token. Currently, 100% of Rebates contribute to Net Revenue, and this will remain unchanged. However, a new money flow is proposed, integrating the revenue generated from Designated Market Making (DMM) through Retainer and Loan Option contracts. In both models, applicable referral fees (ranging from 5% to a maximum of 35%) will be deducted first. For Retainer contracts, 50% of the remaining revenue will be allocated to Growity for whitelabel algorithm support the rest will be Net Revenue. For Loan Option contracts, the token-based revenue will be directed to the Trading Treasury to bolster liquidity, while remaining USDT will be used for RFRM buybacks, with 35% allocated to Operations/R&D.
Authors
Core Contributors
The Why of the Proposal
This proposal seeks to clarify the revenue flow stemming from designated market making activities. Its objective is to provide transparency on how revenue will be distributed between buybacks, Net Revenue, and other operational costs.
Reform introduced the concept of Net Revenue to allocate 65% of total revenue to token buybacks and 35% to Operations/R&D. Currently, only Rebates contribute 100% to Net Revenue. This proposal aims to expand the scope by including additional revenue streams from DMM projects to increase Net Revenue, enabling more frequent buybacks and providing stronger operational coverage for marketing and exchange-related activities. The aim is to maximize the revenue contribution from Reform’s activities to Net Revenue and to let token holders vote on the proposed revenue allocation.
The Longer Explanation of the Proposal
Since inception, Reform has directed as much revenue as possible toward Net Revenue, which is crucial for sustaining the DAO’s growth and ensuring sufficient token buybacks. The initial shift of Rebates to Net Revenue (IPR 1.0), combined with using Realized Profits to maintain the treasury, has already resulted in significantly more buybacks over 40k more than if Realized Profits had been used directly as Net Revenue.
Net Revenue is defined as the total revenue remaining after deducting agreed-upon costs or payments specified in contracts. Realized Profits, while also a form of revenue, have been used primarily to maintain the Trading Treasury, ensuring its stability. This has allowed Rebates to be fully redirected into Net Revenue, where it can be split into 65% for buybacks and 35% for operational expenses (Operations/R&D).
This proposal aims to introduce additional revenue flows from DMM projects into Net Revenue. By clearly outlining which costs need to be covered before revenue becomes Net Revenue, the proposal brings transparency to the financial flow and structure.
Designated Market Making involves two primary contract models:
- Retainer Models: Projects pay a monthly fee, and Reform provides liquidity for the pair using the project’s tokens and stablecoins. The revenue generated in stablecoins is distributed as follows:
- Referral partners (if applicable) receive 5-35% of the revenue.
- Of the remaining revenue, 50% is allocated to Growity for their whitelabel algorithms and development work.
- The final 50% is considered Net Revenue, allocated 65% to buybacks and 35% to operations.
- Loan Option Models: Projects and Reform agree on strike prices, and Reform executes market making based on these strike prices. Revenue is generated when strike prices are met, and the revenue (in tokens or stablecoins) is managed as follows:
- Referral partners are paid from the stablecoins portion, similar to the retainer model.
- The remaining tokens are added to the Trading Treasury, increasing the DAO’s liquidity.
- The leftover stablecoins contribute to Net Revenue, which is used for buybacks and operations in the 65/35 ratio.
By implementing these new revenue flows, the proposal seeks to enhance Net Revenue, leading to more frequent buybacks and stronger operational coverage. Monthly transparency reports will be shared to ensure clarity and accountability in the process.
In summary, this proposal outlines a structured approach to expanding Net Revenue streams, ensuring sustainable growth for the DAO and maximizing value for token holders.
Budget
No additional budget is required for this proposal.
Poll
- For
- Against
Please cast your vote and provide feedback on whether you are “for” or “against” this proposal before it proceeds to vote.reformdao.com.