Revised Proposal: MultiversX Economics in the Context of Market Cap and Competition
This counter-proposal prioritizes survival and fiscal discipline, addressing the new economic paper through the lens of our current market reality ($300M Market Cap) and competitive environment (SOL).
1. MVX’s Competitive Edge: The Sharding Bet
Our core technical advantage is sharding. While competitors like Solana are currently faster and more user-friendly, the long-term bet for EGLD is that only sharding provides the necessary scalability when global adoption inevitably chokes the throughput of monolithic chains.
-
Existential Goal: Our economic model must be designed for survival until the market reaches this point of congestion and users are forced to seek true scalability.
-
The Problem: We cannot afford a “growth budget” that risks dilution at our current valuation.
2. Economic Model: Solvency Before Ambition
The model must be based on a non-dilutive budget cap, driven by the need to secure the network, not by aspirational spending.
| Category | Recommended Inflation Rate | Rationale |
|---|---|---|
| Total Annual Tail Inflation | 5.0% of Circulating Supply | The maximum rate to avoid severe dilution and maintain token value. |
| 1. Staking / Network Security | 3.0% (60% of Budget) | This is non-negotiable priority for network security (∼6% APR @ 50% staked). |
| 2. Core Operations & Ecosystem | 2.0% (40% of Budget) | Maximum budget for all R&D, marketing, and grants. This equates to ∼$6M USD annually. The team must size operations to this reality. |
3. Immediate Budgetary Constraints: No Funding for New Vehicles
Given the ∼$6M USD annual budget ceiling from the 2.0% inflation:
We have NO budget to responsibly allocate for major new financial initiatives like the Growth Dividend Fund, the ETF vehicle (DAT), or other liquidity-boosting funds.
These initiatives are designed for a mature, well-funded ecosystem. Implementing them now requires either unacceptable inflation or liquidating existing foundation reserves without adequate transparency, both of which are toxic to community trust and token value. The focus must be on core operations, not new financial engineering.
4. Transaction Fee Policy
Transaction fees are a utility function, not a revenue source.
-
Fees must remain at the lowest possible level—just above the anti-spam threshold.
-
Fee Allocation: All minor fee rewards should be directed to the validators for block processing.
-
Developer Incentives: Smart contract creator rewards (royalties) should be eliminated. Applications must be incentivized to build their own sustainable tokenomics and business models. Subsidizing development through the core network budget is a failure of fiscal discipline.
Conclusion: The path to relevance for MultiversX is through extreme fiscal discipline, leveraging our technological edge, and surviving the current market cycle. The proposed spending on ambitious new funds is unaffordable.