[For Discussion] Potential adjustment to ALPACA tokenomics to support upcoming (Perp, AF2.0) and future product launches

Another addition…if the proposal passes, can we add as an addendum that all xAlpaca will be unlocked immediately? Similar to what we did with AUSD and AVs?

This way it feels like we’re giving people free choice on what to do next

Thanks for the suggestion. We’re familiar with these uncollateralized lenders, but there are multiple issues:

  1. Interest rates too high
  2. I haven’t seen them loan to DeFi companies, more like market makers with a physical establishment somewhere. They probably won’t loan to us
  3. In this market with defaults happening and upcoming, I assume they will raise their bar for collateral and the only collateral Alpaca can give them is ALPACA minted from warchest, which they probably won’t take.

I don’t think that may not be reasonable or sustainable. If someone locked up longer, they’ve been getting a higher APY. The tradeoff is the lockup, so every vote can’t come with an unlock option or the lockup is pointless

The problem here is that it’s not at all similar to raising stock. If you could issue new tokens and sell them to outside investors at market price then I might even agree with it. But this proposal would put pressure on the token price without getting new investment from outside the community.

Well, unfortunately not.

  1. In the post, the format of liquidity incentives being in xALPACA means the majority of such tokens would not be unlocked for at least one year

  2. A new token would not put selling pressure on ALPACA price, by definition

On the VC thing…
Let’s say that we raised it from VCs. We can sell to them OTC, but they will eventually sell their tokens on the same market. From them, they will also want a max 1-year cliff before unlock, so it is the same effect as 1 above; probably even worse because VCs are more likely to sell (they need to take profits) than users

With all due respect, I disagree.

This is the most significant vote we had in 2 years…you can’t compare it to others we had in the past.
Saying “not every vote can come with an unlock” is pure FUD, since if only happened once.
Furthermore, we allowed if for something like AVs, surely this is more crifical?

I think this is the perfect situation where if you want to progress with such a drastic change then you need to own up to it and let people freely decide whether they still believe in the future of the business.
This is probably best done by unlocking funds if the vote to dilute goes through with positive outcome.

If you want to keep people locked in, that invites further speculative thinking….

It’s true that this would not create immediate price pressure. But the reason why people keep buying alpaca is that it’s an inflationary token that has potential to increase it’s value over the coming years through buybacks and burns. People in the price chat have been waiting forever for emissions to finally end. Every proposal on changing tokenomics should account for that.

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I don’t think the proposal explores all options

We’re open to hearing alternatives. Feel free to suggest

Alternatively, treat xAlpaca holders as part of the beneficiaries of the 19% of new tokens in proportion to what the team gets. This will show that original investors benefit as much as the team thus locking us in for longer. Right now there’s no benefit between being locked in now vs buying tomorrow

The main benefit of locking to xALPACA is the revenue, that’s where most of the revenue goes. Something that could be in line with what you’re suggesting here is assigning a portion of the liquidity incentives to xALPACA, similar to what we do now. That could be seen as a way to reward xALPACA holders and arguably reasonable.

As for the 19, I assume you are referring to 10 from warchest and 9 from dev fund. The warchest portion isn’t team funds, that’s like an operational expense account, and you can read the uses of it in the post which have nothing to do with individuals. The 9 to dev fund is really minimal coverage for expenses, mostly staff expenses. More products come with more work that needs more people. This 9% would not even cover market salaries for all the staff at current prices, let alone the illusion some people have of anyone getting rich from this lowest-on-the-market team %. You can look at this as us being heavily invested in making the prices go up, but it’s a given that people need to eat and keep the lights on


Sorry but based on past result I can’t argue that will be the future prospect based on AUSD launch and AV launch.

Ok, I think what I said is reasonable, but if such a vote passes, I’m not against having a separate vote on whether to allow early withdrawal without the fee for some time, only to this vote. These are all things that should not be up to me or any individual

You’re right but look at it from the other perspective. No one forced us to innovate and come out with a perp exchange and all the cool stuff in Alpaca Finance 2.0, right? Can we agree that these are good things for the Herd?

If so, then we’ve established that circumstances have changed. Then the question now should be what is the best move for the current circumstances, not past circumstances. You can disagree but it’s important everyone recognizes the situation clearly

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AUSD is not doing well but to be fair, AVs are currently generating profits on ~25Mn of capital, and significantly beat the market in November. How many similar defi products are doing better than that in this market?

There is no company that hits a home run with every product, not Tesla, not Apple, not anyone. That’s how it goes.

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I mean in the aspect of locking the vaults to exclusivity to Xalpaca holders only as me as Gianni we’re against that and now it was proved that it was a great direction. As an owner you should know which proposal is great or not, not just based on sentiment and feels we deal with facts and the facts is nobody will lock their tokens and will want an exit because of changing fundamentals. So if you think you’re right do whatever you want but you’ll lose lot of support from the community. But doing right is not changing the tokens for now because nobody wanted this.

Look, I don’t have a strong stance on how you vote for the tokenomics, or how it ultimately ends up. If it ends up as no changes to tokenomics, then that’s it. My only responsibility is to make sure everyone understands the implication of that, which is we wouldn’t have fuel for growth. That lack of fuel could mean the difference between becoming a market leader on these new products, which results in huge new revenues for xALPACA, or failure. That’s it. If everyone understands, then that’s fine, then you can make an informed decision.


When the relative benefit of an alternative is very small, and the cost of changing to that alternative is close to 0, I don’t consider the alternative a “great direction.”

Ok, let’s look at what happened with the AV privatization. We privatized some AVs, which made sense in that market. Then the market got worse and they didn’t fill, so we de-privatized the vaults as we said we would in such a case (at close to 0 cost, just a vote). Now, If during the time they were privatized, they were instead not privatized, would they have been much fuller? I don’t think so given that the market was going so badly(very small relative benefit).

You can vote however you want on any proposal, no one is forcing you. If most people feel the same way, they vote the same way. There’s no conflict on that. That’s the point of this governance system. We can also discuss here first as we are currently doing.

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Thanks for the detailed post. I had a couple of thoughts.

Furthermore, issuing new tokens can actually dilute the value of existing ones. When a company issues a new batch of tokens, it essentially creates more supply without increasing demand. This can lead to a decrease in the value of the existing tokens, which can be frustrating for those who have already invested in the platform.

In the post at the top of this thread, it goes over how liquidity incentives will be issued as xALPACA, so the supply would be locked for 1 year. As for demand, the whole purpose of this is to increase demand and revenues by using the tokens on new product growth.

Overall, issuing new tokens in a bear market is a risky move that can do more harm than good. It’s important for teams to focus on building a solid foundation and creating value for their existing users rather than trying to attract new ones through short-term tactics. Instead of relying on new token issuances, teams should focus on developing their platform and creating a strong, dedicated community of users.

I agree on issuing a new token during a bear market being risky, the original post says this. The same logic does not apply to extending the supply of an existing token though.

As for the second half of the paragraph, we’ve already been doing that for 2 years, and will continue doing that. However, when you’re talking about new products, that does not invalidate the effectiveness of growth strategies and incentives because you are targeting new users, not existing users.

That’s a fair point and the reason why I asked about specifics in my first post. Let’s try to understand some of the implications of proposal 1.

10% War chest: What is that needed for? The warchest still holds a decent amount of tokens and it would be hard to sell without causing a major price impact. If it’s not needed now then we might as well exclude it for now and raise money once it’s needed.

9% Dev fund tokens: When would those be sold and what would the money be used for? Are you looking to hire more staff? Consider that the platform revenue would already go up from perp revenue especially if there are incentives from new emissions.

30% liquidity mining incentives over 10 years: Do we really need to incentivize people to use the platform for the next 10 years? I understand incentives in the first months to get things started. But shouldn’t people be willing to use a product without being paid for it?

I’m just wondering whether there is a way to get the perps started without messing with the general deflationary nature of alpaca token.

Idk if that number is right but I think you mean Warchest. It’s true we could use that as incentives but it will limit the runway for the existing products. That Warchest is like an operational expense account that is meant to last for years.

And a question to devs, what will happen to 6.3M alpaca in warchest if alpaca v2 launched? Will it transfered to other warchest or devs will have it??

We haven’t discussed this in detail so take what I say with a grain of salt. My assumption is we would combine them. Warchest would be extended with the additional emissions. The original Warchest was scheduled to last for 4 years, so it would become 10 years with the additional supporting more products.

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You see Sam – I don’t think this is a great way to dismiss arguments.

I feel like you’re dismissing several posts that point out the weaknesses in the proposal by somewhat saying “whatever mate, you can make your own proposals if you don’t like what we suggested” or “whatever, let’s focus on what im interested in right now” or “I cba exploring this option cos it’s a lot of work and I’d rather you guys to vote this proposal instead

In my opinion it’s Alpaca’s responsibility to a) explore all options and b) ensure you’re not taking advantage of people who locked in on the basis of the current product roadmap/tokenomics and c) ensure people who are invested don’t get treated as second-tier shareholders

In this case, if we’re going to go into a vote that potentially negatively impacts people who have locked their money for 6-12 months on the premise of the current roadmap/tokenomics, the “way out” should be part of the implications of the vote as that would make the vote more fair. This is a significant change to Alpaca, not a standard proposal.

In general, I reckon that putting the onus on the community to play “catch-up” and try to rush into “proposing alternative solutions” is in my mind not fair for your investors


10% War chest: What is that needed for? The warchest still holds a decent amount of tokens and it would be hard to sell without causing a major price impact. If it’s not needed now then we might as well exclude it for now and raise money once it’s needed.

Current Warchest was for 4 years. New Warchest would take into account new upcoming products and future products, and extend the runway to 10 years.

The way Warchest works is the Warchest tokens are not minted until needed, so it already functions in the form of only raising money when needed.

9% Dev fund tokens: When would those be sold and what would the money be used for? Are you looking to hire more staff? Consider that the platform revenue would already go up from perp revenue especially if there are incentives from new emissions.

It would primarily be used on staff expenses. The tokens would be paid to staff, some sell them, some hold them.

If you look around, most companies are going out of business and/or firing substantial amounts of people. That’s the reality of the market. It’s already good that Alpaca is one of the few companies that can continue operating in the green in this market, but “well” is relative. Our reality is the current funds can cover staff expenses, but that’s only when myself and other core members have been working this year almost for free or even at a loss in opportunity cost, let alone hiring new staff for new products.

So the dev fund portion can make the difference between having some marketing/BD people to grow the products or not, or more devs to develop faster. While it’s true revenues can increase, more revenues also come with more work and more resulting expenses (more customers to support, more tech maintenance, security, and operational oversight, etc)

(Btw, for anyone who wants to FUD from any interpration of the above, Alpaca’s revenues are verifiable on-chain. I’m telling you we don’t need additional funding to run Alpaca, but it will be stretched if we’re talking about investing in growing new product lines and trying to attract new users. That’s the whole point of this proposal. Don’t expect NEW PRODUCTS to grow like magical beanstalks if, as ALPACA holders, you aren’t willing to make NEW INVESTMENTS in the magic beans. You can say let’s leave it up to the rain, no farmers, no fertilizer, and that’s fine. We think it will grow much better with more support, but in such a case, we’ll sill do the best with what we have.)

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