has Binance founder Changpeng Zhao (CZ) is reimagining the concept of token issuance in a new proposal. CZ theorizes a smart contract-controlled unlock for tokens designed to prevent flooding the market with new tokens.
Binance Founder Explores New Standards For Tokenomics
Under CZ’s proposal, only 10% of tokens will be unlocked for sale with the remaining 90% remaining untouched. The Binance founder says the proceeds for the 10% will be deployed for development costs, marketing, salaries, and community building.
A key feature of his “crazy idea” involves strict conditions to be fulfilled before future token unlocks. He argues that issuers must wait for six months after the previous unlock before proceeding with a new unlock.
However, the token price must have doubled its previous unlock price for over 30 consecutive days before the next unlock. According to the Binance founder, token issuers will be allowed to unlock a maximum of 5% of the total holdings each time.
While the maximum unlock is pegged at 5%, the project team has the right to reduce and delay the unlock sizes. Unlocks have the potential to send token prices crashing, accentuated by the incoming $2 billion SOL ($140.75) unlock and tumbling asset price.
“If they don’t want to sell more, they don’t have to,” said CZ. “But the maximum they can sell each time is 5%, and then they have to wait for at least another 6 months AND the price to double again.”
Incentivizing Long-Term Builds And Preventing Token Rug Pulls
Right off the bat, the upsides to CZ’s proposal are clear as a strict vesting schedule prevents early dumping. Improper tokenomics standards have fuelled a wave of exit scams in the cryptoverse with the Libra token crash leaving a sour taste in the mouth of investors.
CZ’s idea involves locking tokens with a smart contract and an independent third party controlling the keys.
“This avoids new tokens flooding the market when prices are low,” said the Binance founder. “It also gives the project team incentives to build for the long term.”
Zhao has previously expressed his displeasure over sharp practices in the space, pledging support for memecoin victims. CZ clarified that he has no plans to launch a new token and that the theory is open for discussion.
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