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.