TLDR
Reform’s original tokenomics, built around Locked Bonding and Staking Treasuries, are no longer aligned with current market behavior. Long lock-ups have become unattractive, staking participation is low, and a high FDV is creating community skepticism.
This proposal aims to burn 474,000,000 $RFRM tokens (~47.4% of total supply) from:
- Bonding Treasury
- Burn 235M unsold tokens due to lack of demand for 1+ year lock-ups.
- Refill slowly via buybacks from net revenue (IPR 3.1).
- Staking Treasury
- Burn ~239M tokens to reduce inflation in 1 year.
- Aim for staking APRs around:
- 2–5% for single-sided
- Up to 20% for LP staking
- Setting daily emissions at 12,500 tokens, declining over time.
- Market Narrative / FDV Fix
- Burn reduces FDV, caps supply at 525M tokens forever.
- Reinforces Reform’s commitment to sustainability and market alignment.
This burn helps modernize Reform’s tokenomics, rebuilds trust, reduces future inflation, and responds directly to community and investor concerns.
Authors
Core Contributors
The Why of the Proposal
This proposal addresses a growing misalignment between Reform’s original tokenomic structure and the current behavior of market participants. When Reform launched, mechanisms like the Bonding and Staking Treasuries were designed to promote long-term participation, remove tokens from circulation, and bootstrap liquidity through disciplined, delayed incentives.
However, over time, three key issues have emerged:
- User behavior has shifted — Community members are no longer willing to lock up tokens for long periods, resulting in underutilized bonding mechanisms and very limited staking engagement.
- Market conditions have become worse — Liquidity is scarce, volatility is high, and participants increasingly prioritize flexibility and short-term access to capital over long-term lock-ups.
- Perception has become a barrier — Despite Reform’s fundamentally different model, the presence of a high fully diluted valuation (FDV) and large token reserves has created community skepticism and limited participation from new users.
As a result, the Bonding Treasury is no longer functioning as intended, with most of its tokens sitting idle. Staking rewards are disproportionately benefiting a small group of participants, leading to unbalanced token distribution and unsustainable short-term inflation. Meanwhile, the broader optics around supply, inflation, and FDV are restricting Reform’s ability to grow and onboard new token holders and investors.
This proposal to burn approximately 474,000,000 $RFRM tokens is a structural correction designed to:
- Rebuild trust in the protocol’s economic model
- Reduce future inflation and stabilize emissions
- Adapt to current user behavior and market needs
- Respond directly to community and investor concerns
It is not just a deflationary gesture, it is a realignment of Reform’s economic foundations with the realities of the ecosystem it operates in today.
The Longer Explanation of the Proposal
1. Bonding Treasury: Reduced Effectiveness and Proposed Burn
The Bonding Treasury raised over $3.3M during Reform’s launch phase. It allowed early buyers to purchase $RFRM at a discount in exchange for long lock-up periods. Initially, this model effectively took tokens out of circulation and created protocol-owned liquidity.
However, since launch, engagement has dropped. Long lock-up periods one year or more no longer appeal to most users, and the majority of the Bonding Treasury remains unutilized.
- Action: Burn 235,000,000 unsold tokens from the Bonding Treasury.
- Forward Strategy: Utilize net revenue (via IPR 3.1) for periodic buybacks and replenishment, allowing the Treasury to remain functional without being inflationary.
2. Staking Treasury: Low Participation and Inflation Concerns
The initial design aimed for ~90% of circulating tokens to be staked, bringing APRs down to sustainable levels (5–10%). In practice, staking participation has remained low, especially in LP staking due to impermanent loss risks and volatile market conditions.
This has led to excessive rewards for a small group of stakers, creating an uneven distribution and accelerating short-term inflation.
- Action: Reduce the Staking Treasury allocation to 25,000,000 tokens, down from 264,000,000 tokens.
- Target APRs:
- Single-sided staking: 2–5%
- LP staking: Up to 20%
- Emission Plan: Begin with 12,500 tokens/day in rewards based on existing 0.05% distribution, declining over time to manage inflation.
- Governance Flexibility: Core contributors will monitor APRs and adjust buyback mechanisms as needed.
- Future Utility: Additional staking use cases and real-yield mechanisms are under development.
3. Market Narrative and FDV Sentiment
Despite Reform’s locked supply model and market making strategies, it still faces skepticism due to its large FDV. This narrative, increasingly common in the broader market, deters new participants who fear excessive dilution and inflation.
- Action: Burn a combined total of 474,000,000 tokens across Bonding and Staking Treasuries.
- Impact:
- Reduces maximum total supply by ~47.4%
- Caps total supply at ~526,000,000 tokens permanently
- Removes uncertainty around long-term unlocks and reward emissions
- Narrative Alignment: Demonstrates commitment to sustainability, market alignment, and community responsiveness.
This proposal is designed to future-proof the Reform protocol by aligning incentives with current market conditions and reducing structural inefficiencies. Token holders are invited to vote and participate in shaping this next chapter.
Budget
No additional budget is required for this proposal. The Core Contributors multisig will transfer the tokens to the 0x0dead address.
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
