Thank you @ROAM you for the thoughtful response.
The required template for submitting a proposal makes this sound more complicated than it is. The TLDR:
- Current system: 20% of fees are used to buy TINY and then burn that permanently.
- New proposal: 10% of fees are used to buy TINY and then burn that permanently, the other 10% are used to purchase and distribute USDC, or used to purchase TINY and then lock that TINY for the same duration of the governors already locked TINY, which is very similar in outcome to burning but provides more direct value for the TINY holder. It also provides an auto-compounding mechanism, a often requested feature.
This proposal is very purposefully meant to be Different than the existing TINY rewards system. This is meant to be a New incentive to buy and lock TINY as the existing system contributes to constant unremitting selling pressure daily and weekly as many users sell their rewards distributed in TINY. The proposal encourages more locking of TINY over time than the current system does. Swap fees are not collected in TINY and claiming in USDC does not cause TINY sell pressure. If a user claims in TINY, it automatically locks in governance as an auto-compounding feature, rather than allowing the user to sell the TINY.
In more detail:
1) Different source of value, different behavioral outcome
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Fees are not collected in TINY. Protocol fees accrue in the assets being traded (i.e., input/sell asset), and pools forward accrued fees (in both assets) to a configurable fee_collector. That’s the basis for routing fees to a splitter/distributor. (docs.tinyman.org)
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GP#3 currently allocates 20% of the protocol’s 0.05% fee share to buy TINY and burn it; LPs’ 0.25% is untouched. Our amendment keeps the fee structure intact, but splits that same 20% into 10% burn + 10% to governors. (Tinyman Governance Forum)
Your “keep it simple” variant (“10% burn + 10% buy TINY and add to weekly TINY rewards”) re-enters the reward stream as liquid TINY, which is functionally a new emission channel. Many users who want other ASAs or USDC will sell those TINY rewards each week, continuing the structural sell pressure that GP#3 was created to counter. In contrast, our design lets governors choose:
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Claim in USDC (no sell pressure on TINY, immediate utility), or
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Auto‑compound: convert their share into TINY and lock it atomically for the same remaining duration as their current governance lock (increasing locked supply; cannot be immediately sold). Lock semantics (no withdrawal during lock) are documented in the Governance Vault. (docs.tinyman.org)
This is not “the same incentive.” With weekly TINY rewards, users who prefer stables or other ASAs must sell TINY to get them. With USDC claim, the users receive a stable value without any TINY sell pressure. And with auto‑compound, they increase locked TINY in the same atomic group as the claim—no interim window to sell.
2) “End result is the same” — it is not (microstructure & net‑flow math)
Let’s compare net buy/sell pressure using GP#3’s own volume example:
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Daily volume $10M → protocol share 0.05% = $5,000/day.
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GP‑#3 allocation 20% → $1,000/day. (Tinyman Governance Forum)
Now compare three cases:
A) GP#3 (baseline today)
- $1,000/day buy & burn → $1,000/day buy pressure, $0 sell.
B) “Simple” variant (your suggestion)
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$500/day burn (buy $500 → burn).
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$500/day buy TINY → distribute as liquid TINY rewards.
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If β is the fraction recipients sell on claim, sell pressure = β·$500/day.
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Net = $500 (burn buy) + $500 (reward buy) − β·$500 = $1,000 − $500β.
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C) Proposed amendment (USDC or auto‑compound)
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$500/day burn (buy $500 → burn).
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$500/day to governors with choice:
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α = fraction choosing auto‑compound → buy = α·$500/day; sell = 0 (locked).
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(1−α) = fraction choosing USDC → buy = 0, sell = 0 (neutral to TINY).
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Net = $500 (burn buy) + α·$500.
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When is (C) superior to (B)?
(C) − (B)=500(α+β−1).
If α + β > 1, the amendment has higher net buy (and lower sell). In practice, weekly liquid TINY rewards often see meaningful sell‑through (β well above 0.5), while a solid cohort will auto‑compound (α > 0). Under those conditions, (C) dominates — less structural sell pressure and more TINY locked over time.
Even when α is moderate (say α=0.4) and β is typical for weekly emissions (β≈0.7),
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(B) net = $1,000 − 0.7·$500 = $650/day,
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(C) net = $500 + 0.4·$500 = $700/day, with zero incremental sell.
Our design trades some immediate headline “buy” for a significant reduction in automatic weekly sell pressure and a mechanical increase in locked supply.
3) “But this reduces TINY pool volume” — by design, and that is OK
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USDC claims are intentionally price‑neutral for TINY. They deliver simple, stable value users understand, and do not force TINY sells to realize that value. The reduction in churn (weekly claim‑and‑dump behavior) is more beneficial to price quality than the incremental “volume” created by selling reward TINY for stables.
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Auto‑compound creates recurring buy‑and‑lock flows that raise the locked ratio and lower free float—an effect closer to burn in the short/medium term, while keeping a pathway for future governance alignment. This provides more Direct value to holders.
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The fee structure and LP economics do not change: 0.3% total fee; 0.25% to LPs; 0.05% to protocol. This amendment only splits the already‑approved 20% of the protocol share (GP#3) between burn and governor share. (Tinyman Governance Forum)
Volume that comes from forced reward sells is low‑quality order‑flow for a governance token. We’re optimizing for healthier supply dynamics and stickier governance, not raw volume.
4) “No dev work” vs “bounded, worthwhile dev work”
- Tinyman’s protocol already supports fee forwarding to a fee_collector and public fee claim mechanics. Directing that into a splitter + distributor (with a claim toggle) is incremental and bounded work rather than a ground‑up redesign. The value of removing structural sell pressure and adding an auto‑lock path justifies this scope. (docs.tinyman.org)
5) Why this is purposefully different from existing rewards
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Existing governance rewards are TINY‑denominated (a planned multi‑year emission curve) and can be sold freely at claim—this is the sell‑pressure GP#3 sought to offset. (docs.tinyman.org)
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The new stream is fee‑funded, choice‑based, and either neutral (USDC) or supply‑tightening (auto‑locked TINY) at the moment of claiming. That’s the point: a new incentive and a new path to accumulate locked TINY without increasing liquid TINY handouts.
TL;DR
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Not the same outcome. Paying governors from fees with a USDC or auto‑lock TINY toggle cuts routine sell pressure that comes from TINY‑denominated distributions.
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Users who want stables can take USDC without selling TINY; users who want to accumulate can auto‑compound into locked TINY atomically.
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We keep burn (10%) and keep fees & LPs unchanged, while adding a persistent mechanism to grow locked supply and improve price quality over time. (Tinyman Governance Forum, docs.tinyman.org)
Bottom line, this proposal gives TINY governors more direct value, reduces TINY selling pressure, and encourages regular ongoing locking of TINY to maintain these rewards, which is different than distributing additional liquid TINY users can immediately sell.