“Not all treasure is silver and gold, mate.” Captain Jack Sparrow
By definition Economic Sustainability refers to practices that support long-term economic growth.
Many AMMs provide interests and yields on staked products to protocol investors and holders, ultimately benefitting the community. That said, we don't believe it is economically sustainable to rewards PALM in pools and farms with only third parties token involved (such as BNB, BTC, BUSD, etc), since users would receive PALM tokens as an interest and would automatically be incentivized to dump them in the markets resulting in increased selling pressure.
Many yield farm projects try to offset the devaluation of their tokens with a 4% burning fee on deposit, but we strongly believe this is not enough to prevent token inflation in the medium-long term.
A buccaneer's example:
If platform X creates a BNB pool that rewards users 0,7% daily ROI in token X with a deposit burning fee of 4%, after just 6 days, minted tokens will exceed burned ones [0.7% (Daily ROI) * 6 (Days) > 4 % (Burning fee on deposits)].
The key for a sustainable, perpetual deflationary token is a well designed ecosystem, where the burned tokens balance the minted ones:
- Launching farms and pools where the PALM token is always involved to incentive PALM long term holding, thus guaranteeing a more sustainable business model.
- Integrating Vaults and Traditional Market Involvement will help exponentially grow volumes, transactions and staking on the Bay, resulting in higher amount of burned PALM.
We are also working on adding innovative burning systems to our treasuries.
Aren't you excited, Pirate?