TL; DR:
- Many hodlers of QuickSwap’s native governance and utility token have suggested that $QUICK is undervalued compared to other similar tokens
- We would like to start a discussion about the possibility of doing a token split to multiply QUICK’s total supply (currently, QUICK’s max supply is 1 million)
- While we still believe that scarcity is important, a year and a half into the project, we now realize that unit bias is critical and increasing the supply does not reduce its scarcity
- We value your input, which is why we’re introducing this discussion before launching a governance vote
- We would like to move quickly to discuss and (we hope) pass this proposal so that we can move forward with the next phases of our planned tokenomics changes, which will be discussed in further proposals
- Please read through this entire post carefully before forming an opinion
- Once you’ve read through the post carefully, visit our Reddit discussion forum to ask any questions and/or discuss with the community: https://www.reddit.com/r/QuickSwap/comments/t4bck5/governance_proposal_temperature_check_token_split/
Dragonites, we come to you today to introduce a discussion about what we believe will be the most important governance decision our DEX has ever voted on. Below, we will outline a potential plan for changing QUICK’s tokenomics. While this discussion will focus on increasing QUICK’s total supply, this is only part 1 of a longer 3-pronged plan to change QUICK’s tokenomics moving towards a fully decentralized DAO Model.
The discussion we’re introducing today is only about the possibility of doing a 1:100 or 1:1,000 token split. This would mean that for every 1 QUICK you now hold, you would hold 100 QUICK or 1000 QUICK after the split. QUICK’s maximum supply would increase from 1 million to 100 million or 1 billion.
Acknowledging Unit Bias
When we envisioned Polygon’s first native DEX and its governance and utility token, we had the bitcoin scarcity model in mind. 1.5 years into our operations, however, we now realize that while scarcity is important, so is the token’s psychological price threshold. People would rather own 1,000 tokens out of a 1 billion max supply than 1 token out of a 1 million max supply even though both represent the same fraction of ownership.
Put another way, unit bias — or the tendency to prefer to own more of a less scarce asset — is an important metric which is why as stock prices grow it is common to do stock splits. The equivalent for QuickSwap — a decentralized project — would be the community voting and deciding on a token split. The core idea is to open up the audience of QuickSwap to include those who are concerned with price unit bias, which is a large part of the population. At this point we have all heard friends and family say things like “I want to buy QuickSwap, but it seems too expensive for me”. Or “But it probably can’t grow much because it already went up so much right?” While those of us who have been in the industry long enough know that logically, this shouldn’t matter, for many people it does.
For example, at the time of this writing, $40,000 could buy 1.03 BTC, 14.95 ETH, 106.84 BNB, 252.64 QUICK, or 26,941 MATIC. Which of these assets performed the best over the last year?
*fixed maximum supply
So what does this data tell us? Several things!
MATIC performed best of these five assets by a long shot. Obviously, at QuickSwap, we agree that MATIC is very valuable, but we don’t think it’s a coincidence that the asset people could get the most of performed the best. This is due to unit bias, and it’s why we want to increase QUICK’s max supply with either a 1:100 or 1:1000 token split.
How would the token split work?
As a community-governed DEX, the first step in making any major change is to discuss it with you, our community and get a gauge on whether you like the idea or not. If you do, we’ll move to the next phase — a governance vote in which QUICK holders, stakers, and liquidity providers will get to formally weigh in. In the case of the token split, we’re hoping to move swiftly so that we can start the process for the next stages in our tentative roadmap. Note that the QUICK holders always make the final decision.
If the community were to vote in favor of this proposition, we would work diligently with CEXs where QUICK is listed and protocols where QUICK is integrated to ensure that the new QUICK token is listed swiftly. We hope to discuss timeframes and other details for converting QUICK to the new QUICK token and other details like what denomination to go with in the official Reddit discussion post. For every 1 QUICK a person put into the converter contract, s/he would receive either 100 or 1000 QUICK, depending on what the community decides upon. That 100 or 1000 QUICK would have the same dollar value that 1 QUICK had at the time of the conversion.
While 1 QUICK equals $158.16 now, 100 new QUICK or 1000 new QUICK would equal $158.16, and 1 new QUICK would equal $1.66 or $0.167. We believe that this token split could have a major impact on QUICK’s adoption, as lower priced tokens appeal to a broader audience. To illustrate, let’s take a look at some other popular DEX tokens’ prices, market caps, and max supplies.
Unique users from dApp Radar: https://dappradar.com/rankings/protocol; TVL from DeFi Llama: https://defillama.com/
QuickSwap has almost the same 24 hour trading volume of Trader Joe, yet the JOE token has almost three times the market cap of QUICK. This leads us to believe that unit bias is playing a significant role here.
If QUICK’s supply were 100 million instead of 1 million, QUICK’s market cap would remain at $69.97 million, but QUICK’s price per token would be approximately $1.66. Likewise, if QUICK’s supply were 1 billion instead of 1 million, QUICK’s market cap would remain at $69.97 million, but QUICK’s price per token would be approximately $0.17.
How would the token split affect me?
The beauty of this is that a token split would hardly even affect you, except to possibly increase your personal wealth. If the QuickSwap community votes in favor of this proposal, QUICK holders will need to transform their QUICK from the version we use now to new QUICK, which would have either 100x or 1,000x the supply. Details about how exactly this process works would be released as soon as they’re available; however, from previous token splits, we do know that the process is relatively simple. There will be a conversion contract where holders could transform their current QUICK to a multiple via the new QUICK.
Over time, all liquidity pools, staking, and syrup rewards pools would be transferred to support the new QUICK token.
What’s the potential downside here?
The only real downside to doing a token split is that we would have to create a new token contract address and the potential of security vulnerabilities does exist. Additionally, there is no promise that the new QUICK token will perform as we hope it will.
What’s next?
Make sure you visit our Reddit discussion forum as your favorite team and community discuss the possibilities. If the community seems to be on board, we’ll release a formal governance vote in a few days. If that vote passes, the QuickSwap team will work diligently to complete all of the integrations with CEX’s and our strategic partners and get the token split complete ASAP so we can introduce the next discussion on our path towards full decentralization.
Twitter | Telegram | Announcements | Medium | Discord | Reddit
By QuickSwap Official on March 1, 2022.
Exported from Medium on May 2, 2023.