Should 100 million LSK of the DAO treasury be burned?

[system]

Abstract

As part of migrating the LSK token to an ERC-20 token on Ethereum, 145 million new LSK were minted for the Lisk DAO treasury. With this proposal, the community is asked to vote on whether 100 million LSK in the Lisk DAO treasury should be burned or remain in the treasury with the existing vesting schedule.

Motivation

Since the announcement of the migration of LSK to an ERC-20 token and the new token economics, there have been a lot of discussions and a wide range of opinions on whether all newly minted tokens are needed for successfully growing the Lisk ecosystem. Due to the community feedback, the Lisk team proposed an optional 100M LSK DAO fund that will be voted on by the Lisk DAO, see the announcement blog post of the new token economics. The vote on the 100M LSK was initially planned for 2-4 months after the token migration, but was postponed to July 1st, 2025, in order to give time for LSK holders to become accustomed to the Lisk DAO and governance around it as well as have first experiences on how much value it can provide.

Rationale

If the proposal is approved, the 100 million LSK tokens will be burned, which means they will be permanently removed from the total supply. This action would reduce the overall LSK token supply by 25%, bringing it down to a total of 300 million tokens. The risk, however, is that it may turn out that 45 million LSK are insufficient for growing the Lisk ecosystem and Lisk DAO to a level where they have sustainable revenue.

If the proposal is rejected, the 100 million LSK tokens will be kept in the Lisk DAO Fund. These tokens are then released into the treasury from 2027 to 2033, with 15 million LSK tokens distributed annually for six years, followed by 10 million in the seventh year. Note that any funds only go into circulation if the Lisk DAO passes a spending proposal. Therefore, the Lisk DAO can decide to keep holding these tokens long term or still decide to burn a part of them in the future.

A good reference point for how the treasury can be used and provide value for growing the Lisk community going forward, are the DAO proposals that passed so far:

• Builder Program - Strategy Season 1
• Onchain Market Making for $LSK on Ethereum via Arrakis PALM
• Lisk DAO Season 1
• Lisk DAO Seasons Strategy
• Extend voting period to 14 days
• Redistribution of Unclaimed Hodlerdrop Tokens

As a result of the Lisk DAO Season 1, the DAO was able to support Builders and LSK holders alike, and grow the overall TVL on Lisk. For further details about the impact of the first season of the Lisk DAO, please refer to the Lisk DAO mid-season report in the forum.

Specification

Current vesting plan for the Lisk DAO treasury:

Year	Amount (LSK)	Description
2024	15,000,000	6,250,000 LSK liquid at migration, 8,750,000 LSK are linearly released in 2024, starting from the migration.
2025	15,000,000	LSK are linearly released over the year.
2026	15,000,000	LSK are linearly released over the year.

---

Total: 45,000,000 LSK

Vesting plan for additional 100M LSK, if not burned:

Year	Amount (LSK)
2027	15,000,000
2028	15,000,000
2029	15,000,000
2030	15,000,000
2031	15,000,000
2032	15,000,000
2033	10,000,000

---

Total: 100,000,000 LSK

Vesting wallets

Name	Address
Vested DAO Funds 2027 - 2032	0xdEA264322978933724d2147C45ddd186E7994A8c
Vested DAO Funds 2033	0x8F0dc4c07a876aB963eB84df26cDAA1cc43F6b24

Action plan

If the proposal is accepted, the 100 million LSK tokens residing in the vesting wallets for 2027-2032 and for 2033 will be burned.

If the proposal is rejected, the 100 million LSK tokens will be added to the DAO treasury according to the vesting plan above.

Please note that for this proposal, the quorum is reached if:

• the sum of “yes” and “abstain” votes is backed by at least 24M LSK, or
• the sum of “no” and “abstain” votes is backed by at least 24M LSK.

[Filmmaniak]

This is not fair to give DAO 100M tokens if proposal is rejected. It should be also voted if we want to give DAO 100M tokens or not. Otherwise this is taking crucial action without voting on it.

After proposal rejection action is NEVER taken. Don’t change the rules and don’t play dirty tricks with us.

As you stated in original post from 2024 - you leave decission about fate of 100M tokens to community to decide so don’t change that now. Rejection from insufficient voting power is not the reason to auto accept DAO proposition. If it fails, community have other propositions.

[janhack]

This is not fair to give DAO 100M tokens if proposal is rejected. It should be also voted if we want to give DAO 100M tokens or not. Otherwise this is taking crucial action without voting on it.

@Filmmaniak I don’t understand what you mean here. There are 3 possible outcomes of the vote:

1. Majority for burning 100M LSK
2. Majority for keeping 100M LSK in DAO treasury with current vesting.
3. Quorum not reached.

Why do you want another vote to happen in case of Outcome 2? Of course, both for Outcome 2 and 3 there LSK are kept in the treasury, but in both cases there can be future votes on burning tokens or using tokens for any purpose the community finds valuable, see also the quoted proposal text below.

@system

If the proposal is rejected, the 100 million LSK tokens will be kept in the Lisk DAO Fund. These tokens are then released into the treasury from 2027 to 2033, with 15 million LSK tokens distributed annually for six years, followed by 10 million in the seventh year. Note that any funds only go into circulation if the Lisk DAO passes a spending proposal. Therefore, the Lisk DAO can decide to keep holding these tokens long term or still decide to burn a part of them in the future.

[maxkordek]

In my opinion it will be crucial for the Lisk ecosystem to KEEP the 100M LSK tokens inside the DAO treasury (i.e. to REJECT the proposal!) in order to finance future endeavors for the benefit of Lisk.

Recent activities, as linked above, have proven how extremely good this works while at the same time retaining strong neutrality by collaborating with third-party experts.

In any case, if the proposal is to be rejected, the 100M LSK would only become slowly available over 7 years (2027-2033) during which the DAO retains full flexibility to decide on how the LSK tokens will be used (e.g. for Lisk ecosystem improvements or even for smaller burn proposals).

[grumlin]

@Filmmaniak don’t panic, please. Read more carefully — “rejected” means that the sum of “no” and “abstain” votes is backed by at least 24M LSK.

about proposal

As I said before, and as @dominic confirmed(in his opinion), only the community should vote on this proposal.

In my opinion, any vote regarding these 100M LSK — whether to keep or burn, and how to manage them — should be decided only by the community, since the team(led by @maxkordek and Oliver) already made its choice by changing the tokenomics. Now it’s the community’s turn to decide.

But in the current state, the DAO doesn’t even have enough voting power to reach 18 million, let alone meet quorum. That’s why I asked the Lisk team to vote “abstain”, so the community alone can decide what to do with the 100M.

However, once the community has made its decision — whether to keep or burn, and under what conditions — then the votes of the team, including Max and Oliver should participate in deciding how to actually spend the funds, if they are kept by voting.

[Mona]

@grumlin

But in the current state, the DAO doesn’t even have enough voting power to reach 18 million, let alone meet quorum. That’s why I asked the Lisk team to vote “abstain”, so the community alone can decide what to do with the 100M.

I see your idea here, and the Lisk team also wants to stay neutral in this decision, but at the same time, we want to ensure that the decision is carried by a great majority of the Lisk community.

Ideally that would mean, that we do not participate in the voting at all, instead of voting abstain.
Why that? Let me explain: Currently we have the situation where most voting power is distributed among a few delegates, namely the delegate of the Lisk team, the delegate accounts of Max and Oliver, and a handful active delegates from the Lisk community.
The Lisk team delegate currently holds the most voting power by far.
If we as Lisk team would vote abstain in this decision, it would be possible for a relatively small percentage of voting power and delegates from the community to decide about this topic.
To really reflect, how the broader community and stakeholders feel about this decision, the required voting power should come from the community.

But, keeping the voting participation of our previous proposals in mind, it’s fair to assume, that reaching the quorum without the Lisk team delegate participating in the voting, is currently very hard to achieve. So it is very likely, that this proposal won’t meet the quorum this time ( - It is a little bit hard to estimate though, because I can imagine that this proposal will reach the most delegate participation rate so far).
Considering this, it might be necessary to discuss, if the overall quorum for DAO proposals should be lowered, as it is often already close to reach it at all. We could then create a proposal to lower the quorum, before we hold the next vote about the fate of the 100M LSK.
What do you think?

[Jujuboy]

@Mona

If we as Lisk team would vote abstain in this decision, it would be possible for a relatively small percentage of voting power and delegates from the community to decide about this topic.

This makes sense.
No one wants to risk a potential Hijack.

But lowering the Quorum also presents a similar problem. If Quorum is easy to reach, a handful of delegates could become the deciding majority especially when the team abstains.

[Mona]

I think the upcoming 100M vote can give us a good impression about the overall interest and participation in this proposal, and based on that, we will be able to estimate better how much the quorum needs to be lowered. Imho, the risk should be relatively low: The current quorum is pretty high anyways(considering we have currently about 35M vpLSK delegated on Tally), and since we increased the voting period to two weeks, the DAO community would have enough time to outvote malicious proposals, just in case.

[grumlin]

@Mona

To really reflect, how the broader community and stakeholders feel about this decision, the required voting power should come from the community.

@Mona, let’s not flatter ourselves. I’ve already said that, at this point, a real DAO doesn’t actually exist — and there are several reasons for that. First, there are very few large holders, but at the same time, many people have delegated their votes to @przemer, who actually has a very small personal stake — it all comes from the community. Second, the team and people closely associated with it currently hold an overwhelming majority. So at this point, the stake itself represents the interests of the community — after all, we’re not following a “one person, one vote” model, but rather a “one LSK, one vote” model. That means people vote with their stake. Therefore, the main task of the DAO should be to increase the amount of staked (locked) tokens, and ideally also grow the number of people actively involved. That’s why the staking system itself needs to be reformed — and I have a few ideas on how this could be done. I’ll create a separate thread later to discuss it.

@Mona

But, keeping the voting participation of our previous proposals in mind, it’s fair to assume, that reaching the quorum without the Lisk team delegate participating in the voting, is currently very hard to achieve. So it is very likely, that this proposal won’t meet the quorum this time ( - It is a little bit hard to estimate though, because I can imagine that this proposal will reach the most delegate participation rate so far).
Considering this, it might be necessary to discuss, if the overall quorum for DAO proposals should be lowered, as it is often already close to reach it at all. We could then create a proposal to lower the quorum, before we hold the next vote about the fate of the 100M LSK.
What do you think?

As for lowering the quorum — I’m against it for now. If we do that, then just three delegates (assuming Max and Oliver step aside temporarily) would be able to pass any proposal they want, which would only worsen the situation. So under current conditions, keeping the quorum at 24 million is the most optimal solution. In this setup, the team (by which I mean the top three delegates: Lisk team, Max, and Oliver) would need to secure the support of at least 3–5 other top delegates — which would at least somewhat reflect actual community support.

@Mona

I think the upcoming 100M vote can give us a good impression about the overall interest and participation in this proposal, and based on that, we will be able to estimate better how much the quorum needs to be lowered. Imho, the risk should be relatively low: The current quorum is pretty high anyways(considering we have currently about 35M vpLSK delegated on Tally), and since we increased the voting period to two weeks, the DAO community would have enough time to outvote malicious proposals, just in case.

As I already wrote above, when just 3 delegates can gather enough voting power, while it takes negotiations with 20–25 others to build any opposition — that’s not a viable setup. At this point, I’ll say it outright: the Lisk team is playing dirty.

The Lisk team has increased its voting weight to 11.33 million by either voting for themselves with an additional 2 million or by locking 666,666 LSK for 2 years. The situation has now become even worse than it was before.

Why are you doing this? You’re sinking the project with your own hands — I just don’t understand it.

@mona @shuse2 @dominic Maybe the team could stop stealing 25% of the staking rewards from the community?

[Filmmaniak]

@grumlin

That’s why the staking system itself needs to be reformed — and I have a few ideas on how this could be done. I’ll create a separate thread later to discuss it.

You want maximum dilution. What about people who are keeping their lisk on crypto exchanges for years? Should they lose even more money because fat wallets will stake and earn more? What would be the purpose for people to buy something which is losing value inflationary way?

[Jujuboy]

@system

If the proposal is approved, the 100 million LSK tokens will be burned, which means they will be permanently removed from the total supply. This action would reduce the overall LSK token supply by 25%, bringing it down to a total of 300 million tokens. The risk, however, is that it may turn out that 45 million LSK are insufficient for growing the Lisk ecosystem and Lisk DAO to a level where they have sustainable revenue.

If the proposal is rejected, the 100 million LSK tokens will be kept in the Lisk DAO Fund. These tokens are then released into the treasury from 2027 to 2033, with 15 million LSK tokens distributed annually for six years, followed by 10 million in the seventh year. Note that any funds only go into circulation if the Lisk DAO passes a spending proposal. Therefore, the Lisk DAO can decide to keep holding these tokens long term or still decide to burn a part of them in the future.

Some good clarification I believe everyone here should try to understand – I missed it at some point too.

Allocating 100M to the DAO vesting contract does not directly imply instant dilution, it means having a buffer in case we ever need it. This also means that if we eventually do not need it, tokens can be held indefinitely in the DAO contract, effectively hedging against dilution. Plus, anyone with enough vpLsk can also propose a burn in the future.

I’ve come to agree with @SuperchainEco, We need need to keep funding options open – Once burnt, you can’t get it back ever, no matter how badly need it. However, vesting means we can always propose to burn in the future if necessary, or at least vote not to spend.

@system

As a result of the Lisk DAO Season 1, the DAO was able to support Builders and LSK holders alike, and grow the overall TVL on Lisk.

This is also true. Today, Lisk is trending across platforms for all the right reasons because of the impact of Season 1. Somehow the Pioneer program has successfully drowned the voices of all the shit-posters from the last airdrop season. TVL is up because of Lisk surge and more users are excited about Lisk.

I’ve always been against dilution and I still am, even now. However, I also believe the ecosystem needs funding to grow and we must keep our options open.

If we eventually don’t need it in the future, we could still burn or simply vote not to spend them. It is not a zero-sum game here. You don’t want to Need it and not Have it!

While burning will surely create scarcity, very little real demand can be expected.

REJECTING this BURN proposal ≠ Instant dilution.
It is a robust reserve and to help sustain the growth of the Lisk Ecosystem.

[Emeka.szn]

Well said! Lisk’s growth and community engagement are key priorities. Having a reserve for sustainable growth makes sense, and we can always reassess funding needs later. Let’s focus on building a strong ecosystem. We’d probably still vote on it but i hope the majority looks at it from this angle also.

[Filmmaniak]

There will be no reserve when token price lose -500% in few months. You guys have to learn it hard way. This project is almost dead and you still push dilution forward, congratulations. Season 1 had zero impact on token price - nothing changed after it in terms of project value, it only decreased.
Lisk DAO is not announcing 100M token burn vote on purpose.

[Mona]

@grumlin

Therefore, the main task of the DAO should be to increase the amount of staked (locked) tokens, and ideally also grow the number of people actively involved. That’s why the staking system itself needs to be reformed — and I have a few ideas on how this could be done. I’ll create a separate thread later to discuss it.

I don’t think we have a strong disagreement here - it would be really great to get more people involved in governance, and I am happy to hear your input and ideas about this! I personally think we should stay open-minded and try new or alternative ways to make decisions in the DAO, to see what works best. Optimism experimented with Futarchy in their last season, and I personally think it is a very interesting approach to make decisions, which has potential for greater decentralization than traditional proposals.
I am just not sure, if this is something we can achieve in the short-term. But as said, I am open to discuss and/or try out ideas on how to increase the voting power of the community in the DAO in general.

@grumlin

The Lisk team has increased its voting weight to 11.33 million by either voting for themselves with an additional 2 million or by locking 666,666 LSK for 2 years. The situation has now become even worse than it was before.

Sorry for the bad timing and that that raised suspicions. It was just a temporary increase, and we should be down again to 9M vpLSK. We also don’t have any plans to raise the voting power of the Lisk team delegate any further. We don’t want the Lisk DAO to become centralized and therefore limit the voting power delegated to the Lisk Team delegate to 9M vpLSK.

@grumlin

@mona @shuse2 @dominic Maybe the team could stop stealing 25% of the staking rewards from the community?

The Onchain Foundation has been holding around 8M LSK since the initial creation of the Lisk network and is now staking 4M LSK of these holdings. The Foundation is receiving staking rewards like any other LSK holder and uses them to cover operational costs. No newly minted tokens are staked.

[Filmmaniak]

@Mona

Sorry for the bad timing and that that raised suspicions. It was just a temporary increase, and we should be down again to 9M vpLSK. We also don’t have any plans to raise the voting power of the Lisk team delegate any further. We don’t want the Lisk DAO to become centralized and therefore limit the voting power delegated to the Lisk Team delegate to 9M vpLSK.

Lisk is already centralised. Everybody smart can see it by checking wallet addresses and token distribution between them. Your minting to DAO increasing this disproportion over time. Noone want to join something which is owned entirely by few fat wallets. 100M token stealing from community won’t help you when token drops from 30 cents to 10 cents. You forgot to advertise and announce lisk 100M token burn vote. You are acting in your own interest otherwise announce it. It should be announced 2 weeks earlier but it’s not announced at all. You haven’t read this post: Burn 100M lisk voting exception proposal

[Jujuboy]

It’s been announced bro.
Not sure if you’re very active on X but here is one the threads I’ve seen

[Filmmaniak]

I’m tracking x.com lisk, hard to find it. Not in lisk news. I normally type lisk news in google and latest posts showing up. Jean Claude Van Damme on top so I guess it’s more important news: https://x.com/LiskHQ/status/1938513517273121275 (total parody). No info in liskhq about it meaby liskdao posted something but boys… this is total garbage. Absolute minimum effort put to keep project “alive” as always. I was fighting for good announcement month ago and it all ends in 1 small invisible post on x.com made in chatGPT in 10 seconds (trully the essence of lisk extraordinary marketing skills).

[Mona]

The proposal is now published and ready to be voted on on Tally!

Tally | Lisk | Should 100 million LSK of the DAO treasury be burned?

[dbradshaw]

“finance future endeavors for the benefit of Lisk”. Wouldn’t have been a problem if the ICO funds were still available for Lisk.

[grumlin]

@Mona

I don’t think we have a strong disagreement here - it would be really great to get more people involved in governance, and I am happy to hear your input and ideas about this! I personally think we should stay open-minded and try new or alternative ways to make decisions in the DAO, to see what works best. Optimism experimented with Futarchy in their last season, and I personally think it is a very interesting approach to make decisions, which has potential for greater decentralization than traditional proposals.
I am just not sure, if this is something we can achieve in the short-term. But as said, I am open to discuss and/or try out ideas on how to increase the voting power of the community in the DAO in general.

I’m on vacation right now, but in the coming weeks I’ll get around to it and share my thoughts. I don’t think you’ll like them, but if you look at the experience of Lido, you can draw certain conclusions about how to increase community engagement.

@Mona

The Onchain Foundation has been holding around 8M LSK since the initial creation of the Lisk network and is now staking 4M LSK of these holdings. The Foundation is receiving staking rewards like any other LSK holder and uses them to cover operational costs. No newly minted tokens are staked.

Very convenient to hide behind each other and shift the blame. Then why are you all silent about the fact that the Foundation no longer belongs to Lisk and that there are no real plans for Lisk to be funded from it anymore? It’s no coincidence you’re pushing to keep the 100 million tokens “in the ecosystem” — basically to live off them. Overall, the situation, as always, doesn’t look good.