Overview
Since the launch of the TINY token in July 2024, Tinyman has witnessed remarkable growth across multiple fronts. This includes:
- A steady rise in active governors, surpassing 2,600 in recent weeks.
- A growing number of on-chain TINY holders and liquidity providers.
- Steadily rising trading volume, hitting nearly $100 million USD in November.
These developments highlight the platform’s expanding footprint within the Algorand ecosystem.
Approximately 7,000,000 TINY tokens are currently distributed each month as governance and farming rewards. These incentives have been key drivers of participation and liquidity growth. However, they have also contributed to steady sell-side activity, which may influence the token’s market dynamics and its potential for value appreciation.
To address this, we propose implementing a buyback and burn program funded by 20% of Tinyman’s trading fees. This initiative aims to:
- Create additional demand for TINY by reducing its circulating supply.
- Counteract inflationary pressures from monthly token emissions.
- Generate excitement and engagement within the broader Algorand ecosystem.
By aligning TINY’s value with Tinyman’s success, this program provides a direct benefit to tokenholders, enhancing the token’s utility and contributing to the platform’s long-term sustainability.
Liquidity providers will not be affected by this proposal.
We are proposing to allocate 20% of the fees currently directed to the Tinyman treasury for the buyback and burn program.
Here’s a breakdown of the current fee structure to clarify:
- A 0.3% fee is applied to all swaps.
- 5/6ths (0.25%) of this fee goes to liquidity providers (LPs) as rewards.
- 1/6th (0.05%) of the fee is allocated to the Tinyman protocol (Treasury).
This means that the fee distribution remains unchanged for LPs, and only a portion of the treasury’s share is used for the buyback and burn initiative.
Abstract
This proposal seeks approval to allocate 20% of Tinyman’s trading fees to a buyback and burn initiative. Under this program:
- Tinyman will purchase TINY from the open market using allocated trading fees.
- These purchased tokens will be permanently burned, reducing the total circulating supply.
The program will capitalize on Tinyman’s growing trading volumes, aligning tokenomics with the platform’s growth trajectory and fostering long-term value for the TINY token.
Objective
The primary objectives of this initiative are to:
- Reduce inflationary pressure on TINY.
- Increase its scarcity.
- Drive greater engagement around Tinyman and its native token.
Market Opportunity
1. Rising Trading Volumes
Tinyman currently experiences daily trading volumes of approximately $10,000,000 USD, driven by growing interest in ALGO and other popular ASAs in the Algorand ecosystem. The platform’s increasing liquidity and trading activity create the perfect environment to implement a buyback program without disrupting operations.
2. Favorable Market Sentiment
Recent innovations, such as the liquid staking feature, have bolstered Tinyman’s utility and revenue streams. By leveraging this positive momentum, the buyback program can amplify its impact while maintaining financial sustainability.
Proposal Details
Program Structure
- Allocation: 20% of all trading fees collected by Tinyman.
- Mechanism: Use the allocated fees to buy TINY tokens on the open market.
- Burning: All purchased tokens will be permanently burned, reducing the circulating supply.
Financial Model
Trading Fee: Tinyman charges a 0.05% fee on all transactions.
Example Calculation (Based on Current Trading Volume):
- Daily Trading Volume: $10,000,000 USD.
- Allocation to Buyback: 20% of trading fees.
Daily Buyback Fund:
10,000,000 USD×0.0005 (0.05%)×0.20=1,000 USD/day10,000,000USD×0.0005(0.05%)×0.20=1,000USD/day
Monthly Buyback Fund:
1,000 USD/day×30 days=30,000 USD/month1,000USD/day×30days=30,000USD/month
Impact on TINY Supply:
At the current TINY price of $0.04, the monthly fund would purchase and burn:
30,000 USD/month÷0.04 USD=750,000 TINY/month30,000USD/month÷0.04USD=750,000TINY/month
Annual Impact:
Over 12 months, the program would burn:
750,000 TINY/month×12 months=9,000,000 TINY/year750,000TINY/month×12months=9,000,000TINY/year
This would offset approximately 10.71% of the annual emissions from governance and farming rewards, significantly reducing inflationary pressures on the token.
Benefits of the Buyback and Burn Program
1. Price Appreciation
- Reduces circulating supply, increasing scarcity.
- Directly counters inflationary pressure from token emissions.
2. Increased Visibility and Recognition
- Establishes TINY as a deflationary token.
- Enhances community confidence and enthusiasm.
3. Improved Tokenomics
- Balances token emissions with trading fee revenue.
- Aligns TINY’s value with Tinyman’s operational success.
4. Sustainability
- Treasury Development: 80% of trading fee revenue will support Tinyman’s treasury, ensuring robust long-term growth.
- Supplementary Revenue: Revenue from features like liquid staking will offset buyback program costs, ensuring financial sustainability.
5. Community Engagement
- Demonstrates Tinyman’s commitment to tokenholder value.
- Reinforces Tinyman’s position as a community-first decentralized exchange.
Implementation Steps
- Approval: Secure community consensus through this governance proposal.
- Execution: Allocate 20% of trading fees to the buyback program starting January 2025.
- Transparency: Publish monthly updates detailing tokens bought back and burned.
Potential Risks and Mitigation
Market Impact: Significant buybacks could lead to temporary price volatility.
Mitigation: Distribute buybacks evenly over the month to minimize market disruption.
Conclusion
The proposed buyback and burn program represents a strategic move to strengthen TINY’s tokenomics, enhance user confidence, and solidify Tinyman’s position within the Algorand ecosystem. With current favorable market conditions and rising trading volumes, now is the ideal time to implement this initiative.
Voting
- Vote “YES, let’s do it!” to approve the allocation of 20% of trading fees to the TINY buyback and burn program.
- Vote “NO, this is not the way.” to oppose this initiative.
- YES, let’s do it!
- NO, this is not the way.
Let’s shape the future of TINY together!