XIP-12 (In Development)
Percentage Allocation from Buy and Burn to Liquidity Provisioning
Author: Big Man Blastoise Status: Voting Type: Tokenomics Created: 2025-05-22 Updated: 2025-7-01 Abstract This proposal outlines a mechanism to reallocate a portion of "Buy and Burn" $XNET tokens into the token's primary liquidity pool. Specifically, it proposes that 20% of all $XNET tokens that would otherwise be permanently removed from circulation through burning mechanisms be instead directed to bolster $XNET liquidity pool(s) on decentralized exchanges (DEXs). This initiative aims to enhance market stability, reduce price volatility, and improve overall liquidity for token holders. Motivation The current tokenomics include a mechanisms for token burning via carrier offload revenue, which reduces the total supply and can theoretically increase scarcity and value. While burning is beneficial for deflationary pressure, a significant challenge for nascent and growing decentralized networks is maintaining robust liquidity. Low liquidity can lead to:
Increased Price Volatility: Large buy or sell orders can cause significant price swings, deterring institutional and larger individual investors.
Poor Trading Experience: Users may experience high slippage, making it costly to enter or exit positions.
Reduced Accessibility: Limited liquidity can make it harder for new users to acquire XNET tokens efficiently.
Limited Ecosystem Growth: A less liquid token may hinder the development of applications and services that rely on a stable token market. By redirecting 20% of burned tokens to the LP, we can address these issues without entirely sacrificing the deflationary aspect of the burning mechanism. This approach creates a dual benefit: reducing supply while simultaneously strengthening market depth and stability.
Specification The proposed mechanism shall operate as follows:
Buy and Burn Event: Carrier offload revenue payments and subsequent burn transaction.
Allocation Split: ○ 60% will proceed to the burn address and be permanently removed from the supply circulation. ○ 20% will be routed to a designated $XNET/Solana Raydium liquidity pool (LP) ○ 20% will be used for XNET Inc. operating expenses.
Liquidity Pool Integration: As much as possible will be added as Solana sided liquidity paired with market bought $XNET
Transparency: All transactions related to this reallocation will be publicly verifiable on-chain. LP tokens received will also be burned to mitigate any future removal of liquidity from the pool by the DAO or the XNET Foundation.
Benefits ○ Significant Liquidity Boost: A consistent influx of liquidity will gradually increase market depth, leading to reduced slippage and more stable pricing. ○ Sustainable Growth: Improved liquidity makes XNET more attractive to traders, investors, and external participants, fostering long-term growth and better token distribution. ○ Reduced Volatility: Deeper liquidity acts as a buffer against large price swings, creating a more predictable trading environment. ○ Partial Deflation: The remaining burn ensures that the token remains deflationary, maintaining the scarcity. ○ Community Confidence: Demonstrates a proactive approach to market health and sustainability. Considerations ○ Initial Implementation Complexity: Requires transparent methods and onchain verification. ○ Impact on Burn Rate: While 60% still burns, the overall rate of supply reduction will be 20% lower than if 80% were burned. This is a deliberate trade-off for liquidity.
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