[Tokenomics] The elephant in the room - Serum's FDV

Hello all,

Now that we are moving more towards a DAO I suggest to burn almost all (90%+) of the locked supply and start decreasing the FDV of Serum. Let’s be honest. There is just no point in having so much locked supply. Arguably you can say that in the future when SRM becomes much more deflationary the inflationary forces could be a good driving force to counter balance deflation. Nevertheless, there are many other ways in doing that by adding inflation at that specific moment in time. Right now if we go up in value and even 1% goes into circulation it just heavily increases the market cap. Also many people are not investing in Serum because of this issue. Any thoughts on this? Besides this i’m also a bit concerned about early investors owning a big chunk of the supply and when they eventually get unlocked in a few years they will own 100 of millions in USD worth…

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I agree with you. I have raised this question before myself but to no avail. Most retail investors won’t invest in serum since the fdv is so high. The tokenomics to the average joe make no sense and if anything, put people off. Something needs to be done regarding this and i am sure the Dao can come up with a nice plan.

I think @MJP also has similar concerns

I think burning 90% is a big extreme. However it could be reduced to 2-5 billion and the unlock calendar should be changed. Growth will be exponential and not linear so unlocking should be the same. 1 billion serum could be used for mega serum but really 10 billion is too much and scaring investors. I’d to understand the reasoning behind the choice of such a high supply.

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True that, can we get the dao to do something about this? Everyone is awfully silent on this

I have spent months looking for an explanation as to why the tokenomics of this project are not a serious problem. I have yet to find one. Nonetheless, I am a large holder of SRM, because I believe in the vision of the project and the Solana ecosystem. Any steps we can take to address the supply issue will help the project enter price discovery, which will increase visibility and ultimately help with the project’s long-term success.

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I agree with you, the total supply doesn’t make sense. On top of that, despite the increasing concerns, the team doesn’t look interested in addressing it. Even here no one seems to talk about it. People have similar concerns on the serum telegram aswell. Something needs to be done before people jump ship

hey I would encourage you to think about what actions you would take, then the community can discuss. You never know, you may spark the discussion that leads to the idea that solves your concerns :slight_smile:

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You also see sentences like this We expect a very small percentage of these tokens to actually enter the circulating supply. from the blog (see SRM Unlock. Serum has come a long way since its… | by Project Serum | Medium). Actually, that ‘very small percentage’ doubled the market cap and still 90+% is locked. It could be that the foundation may be stuck with their VCs and partners (who are now all billionaires on paper). They made a mistake with the tokenomics and its very hard to change it. Also a bit odd that Sam never talks about Serum anymore while he was the main evangelist in the early days.

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You may find it funny but the latter part of what you said is exactly what i posted on project serum subreddit aswell. It is weird how sam doesn’t market serum at all, his entire focus is on ftt(ftx). Being the confounder and for someone who is so active on social media, he doesn’t talk about srm nearly as much as one would expect him to.

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I am actually doing some brain storming and thinking of ways how this can be achieved. Maybe we can get the dao to change the linear unlock schedule to one where the locked tokens unlock after 5 years or so without anymore tokens getting released into the market before that. If the volume picks up in 5 years then i am sure the remaining tokens can be released as per need and the price will also reflect that

Linear release period changed to fixed i.e: no further release before 5 years from now
Supply burn: the total supply(10bil) can be reduced to lets say 5 bil)

How about we prioritize making Serum a top tier DEX first before spending time on tokenomics? A quick look at the 24H DEX trading volume rankings shows that Serum is still outside the top 20.

Ironing out details of a Volume Incentive Program and a Serum Fee Reduction to bring more traders and volume should be the main focus right now.

We can come back to discussing a supply burn once Serum is considered a top DEX.

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Sir what you say is valid and makes sense. Build a solid product and the price will follow.
But don’t you think that once more people are invested in the serum token, the volume on the dex will go up itself? Crypto is a funny world and i think this is how it works.
Token holders, once invested, will want to use the dex itself and this will result in greater volume. Also, there is no reason why what you say and what i propose can’t be done together.
Just my two cents.

I think the purpose of this thread is to focus on solving the problem with the token supply not to continue to pretend like it doesn’t exist or is just a minor issues. In my experience, ignoring significant problems only makes the problem harder to solve in the long run.

Are there actionable steps we can take to move this to an actual proposal? I am not familiar with how this process works. Thanks!!

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Yes, it is indeed a significant problem, one that is the biggest criticism of this project for most out there. Building basics is correct but this is also a basic problem. Tokenomics is one of the biggest selling points of any token in the market. Also, like i said before, there is no reason why building the dex and working on tokenomics cant go hand in hand

I have been a long-time hodler of SRM and am happy this topic is getting more discussion. Yes, Lets get Serum volume higher than other Solana DEXs like Orca and Raydium, but tokenomics can’t be ignored.

Serum burns do nothing for the supply. This week 62k SRM was burned. This same rate for the next 6 years, only 19M SRM will be burned. But the max supply of SRM is 10 billion! Why does Serum team celebrate these burns like they do something??

Even if the rate of burn becomes $1M worth of SRM burn per day for the next 6 years, that will only be $2B worth of SRM tokens. When there is a $80B FDV, only 2.5% of supply will be burned. This FDV is higher than Solana’s market cap too, does that even make sense?

Why is there no Serum team member clarifying this matter? Is it because VCs and team have large bags they want to keep with high FDV, like other commenter said? Please, this silence is very weird.

I agree with a large burn like the thread creator said, maybe 75% burn… Even then Serum will be largest project on Solana but now average investors can invest with confidence in upside…

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Yeah. I understand. We all agree that Serum tokenomics don’t make sense. My main concern is Serum’s daily volume b/c despite Solana ecosystem blowing up, Serum is not even a top 20 DEX. But, yes, we can still tackle multiple issues at the same time.

1st thing to do is to look at the distribution of the 10B supply. 24% to the team and seed investors so those can’t be touched. Will need clarification on the buckets that make up the 76%. How much has been, or, is set to be given away?

Once this is known, then we’ll know how much of the supply the DAO actually controls.

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How do we find out the details about the rest of the 76 percent?

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I hope the Serum team and VCs will clarify the rest 76% along with reasoning for this crazy FDV for the community’s greater benefit. Transparency is in the crypto spirit @adrian @armaniferrante @jhl @JumpCrypto

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