Governance Proposal: Recalibrating Protocol Revenue Distribution and SPRK Emissions
SparkDEX3 min read·Just now--
After launching a suite of high-performance DeFi and infrastructure products on Flare, SparkDEX is proud to bring its Super-dApp full circle with the launch of the SparkDEX DAO. Going forward, the SparkDEX DAO will play an instrumental role enabling the community to guide SparkDEX’s evolution by contributing to key decision-making processes.
To kick off decentralized voting, SparkDEX is passing the torch to its community to determine how to modify its existing protocol revenue distribution breakdown. In issuing this governance proposal, SparkDEX’s primary objective is to produce the best combination of incentives and tokenomics to maximize long-term value as the project enters a new chapter.
Context: Current Protocol Revenue Distribution Breakdown
SparkDEX currently operates on a balanced protocol revenue distribution model, where 50% of all protocol revenue is used to buy back SPRK from the open market and burn it, and the other 50% is used to purchase stFLR from the open market and distribute it to SPRK stakers. In addition to this distribution, SparkDEX distributes 130,000 SPRK to stakers in weekly emissions.
To this point, the 50/50 protocol revenue distribution model has helped SparkDEX bootstrap liquidity, expand its user base, and establish a baseline level of demand for SPRK. However, SparkDEX has evolved a great deal in the last year, and has arrived at an appropriate juncture to explore whether there is a revenue breakdown that may better serve the project and its users.
As SparkDEX matures, the balance between growth incentives and long-term sustainability will only become more important.
Proposal for Modified Revenue Breakdown
SparkDEX has identified 3 unique protocol revenue distribution breakdowns to be considered for implementation. In the current model, 50% is distributed to SparkDEX’s SPRK buyback-and-burn (BBB) program, and 50% is distributed to SPRK stakers as stFLR.
A) Distribute 75% to BBB, and 25% to SPRK stakers*
B) Distribute 100% to BBB*
C) Distribute 100% to SPRK stakers*
D) Maintain Existing Model (Distribute 50% to BBB, 50% to stakers)
*All above modifications include a minor reduction of weekly SPRK emissions from 130,000 SPRK to 120,000 SPRK. This reduction will support a more sustainable issuance model that strengthens SPRK.
Impact and Implications
Staking rewards incentivize users to stake SPRK in order to secure periodic yields, whereas burns support the underlying value of SPRK, reducing staking risk. This relationship between emissions and value strength is a fundamental balancing act managed by all DeFi protocols — and of course, their communities.
Ultimately, SparkDEX’s goal is to have a strong community of SPRK stakers that benefit optimally from protocol activity. Determining how best to incentivize staking plays a critical role in maintaining the health and robustness of SparkDEX’s Super-dApp, and driving growth for its user base.
Casting Your Vote
The SparkDEX community is asked to decide between adopting one of the above revised protocol revenue distribution breakdowns, or to maintain its current model. Below are the 4 available voting options for this proposal. The option that receives the largest number of votes will be implemented.
- A) 75% BBB / 25% Staking Rewards, 120k SPRK in weekly emissions.
- B) 100% BBB / 0% Staking Rewards, 120k SPRK in weekly emissions
- C) 0% BBB / 100% Staking Rewards, 120k SPRK in weekly emissions
- D) No Changes — 50% BBB / 50% Staking Rewards, 130k SPRK in weekly emissions
Users can cast 1 vote for every xSPRK they hold, independent of whether it is staked. To acquire xSPRK, users must first earn SPRK through staking, or via swaps. Once users have SPRK in their wallet, they can stake SPRK to receive xSPRK on a 1:1 basis using SparkDEX’s SPRK Staking page.
A period of 7 days will be allotted for a community governance discussion, until voting begins on Wednesday, May 13 at 11:00 AM UTC (a snapshot of SPRK holders will be taken at this exact time as well). Voting will span 4 days, concluding on Sunday, May 17 at 4:00 PM UTC.
Closing
This proposal is not only about tokenomics and incentives, but about putting the SparkDEX community first. For the next chapter of SparkDEX to be more successful than the last, an engaged, informed, and motivated community will make all the difference. SparkDEX encourages community members to share perspective with one another, inquire directly with the team to answer any questions, and conduct adequate research prior to voting.
