Proposal: FUEL Token Vesting Restructure and Liquidity Enhancement

General
21

Definitely agree with everything above :ok_hand:

3 Likes
22

Full support. Fuel support.

3 Likes
23

Agree Fully with the Proposal

2 Likes
24

It seems like this suggestion is almost too late — $FUEL has already hit $0.011, tomorrow it will get lower again. It’s such a shame that this proposal was posted over 72 hours ago and none of the team members or contributors did not bother to comment on it or provide any insights.

Sad

4 Likes
25

If they believe in their project then they can still buy back the token. Strongly believe this.

100m FDV is literally nothing if you compare it to other L2s. An entire tech stack built from scratch that powers the future of finance should be valuated much more…

2 Likes
26

Full support for this proposal. Changes must happen.

3 Likes
27

Need this proposal approved asap

4 Likes
28

Thank you for the proposal @AgentChud, providing my response below.

1. Immediate Vesting of Purchaser Tokens

The core motivation of having the VCs in a 2y release, with no staking for locked tokens, was to give new community members better opportunity with staking at the opening of the project, in maximal fairness to the new community members.

However, I very much agree with your points broadly. An additional benefit would be the additional crypto economic security boost to having this portion be able to stake.

The negatives would be as follows:

  1. (high severity) Significant downside market pressure

  2. (moderate severity) New users would have a reduced staking reward, likely much closer to to the inflation rate

We conducted internal modeling with our advisors, who are experts on this, and it showed massive significant downside pressure (in the order of magnitude of 50-70%), which I doubt is what most of the community would want.

I’d be very concerned about this option as I don’t think it answers more of the important problems Fuel needs to solve for.

2. Price Floor Implementation

I can’t comment or endorse this manoeuvre, but I can provide some scenarios in a hypothetical market with a single buyer to help walk through our thinking here.

In a hypothetical market, with a potential 33% release:

  1. Unlock 33%, then create support (high risk)

  2. Create support, then unlock 33% (high risk)

  3. Create support, don’t unlock 33% (moderate risk)

The first option would likely create the most interesting results, but has a high risk of failure.

The second option has the biggest risk of failure, as the support would likely get taken out by the unlock, and the buyer would be out of luck and have less capital to work with.

The third option is the most boring option, but may help provide a confidence boost.

3. Enhanced Liquidity Provision

I can’t speak to any specific actions we could or would take here. But I can say that, as a part of ongoing efforts to support our ecosystem, we have supported providing liquidity for key pairs in the past.

So this kind of thing is not outside of our wheelhouse.

I want to thank the community for their input here. I understand people want action, so the team will be putting some things in place as soon as possible over the next week (1-10 days).

Focus on Developer Milestones / Other

Regarding what I think are some of the core problems we face today:

  1. Fuel does not yet have a central product/experience that showcases the infrastructure’s power or potential yet.

Much of the existing ecosystem is still very early and is only analogous or worse to existing experiences on other chains. This will not be enough to drive user growth or traffic to Fuel. It’s simply not interesting enough yet.

Bako, for example, does a great job in many respects as a reliable product leveraging Fuel’s unique native features, but it’s core infra as a wallet – not something that will turn heads in the current landscape.

I’m grateful for the ecosystem and many apps are making great progress, but it’s early and there are still a lot of growing pains.

Solving for this (i.e. the “why Fuel”) also means its becomes a lot easier to explain Fuel to others (think GMX for Arbitrum), showcase its potential to other developers, improve marketing/mindshare funnels, drive user growth for the ecosystem and most importantly, actually solve problems for users in and outside of crypto today.

  1. Additionally, FS-1 has not been very effective at driving user growth, as there are much more competitive programs out there and without an anchor product/experience actually driving user growth, the program largely just retains existing capital but not much else.

  2. Our marketing and branding doesn’t yet match the engineering prowess, boldness and clarity of the underlying infrastructure. It neither attracts attention nor represents us – yet.

  3. The community has broken moderation practices (namely due to the mods being under resourced), Discord has become a vortex of negativity and without better profiling of community members, it’s become hard to tell apart different members and what they uniquely bring to the community, or how to best address their needs.

The team is working on everything above and I’ll be addressing these areas and more in detail in my next blog post. The post aims to provide a blueprint of Fuel’s high level strategy for the next few quarters and bring everyone in on how we want to roll Fuel out to the masses.

9 Likes
29

Nick, appreciate the thoughtful response. These are some middle ground thoughts of mine off the top:

Potential Middle Ground:

  1. On Vesting Strategy:

middle ground could be:

  • instead of immediate full vesting, implement a shorter vesting period (6-12 months instead of 24)

  • create tranched releases to prevent massive sell pressure

  • implement a staking mechanism for vested tokens to incentivize holding

  1. On Price Support:

  • rather than a direct price floor, implement protocol-owned liquidity (POL)

  • create incentivized staking programs with lockup periods

  • focus on organic price discovery while maintaining some stability

Counterpoints:

  1. On Market Psychology:

  • current situation with underwater investors could be more damaging long-term than short-term price pressure

  • uncertainty over 24-month vesting might be worse than controlled release

  1. On Liquidity:

  • cautious approach to liquidity provision might be overcautious

  • without adequate liquidity, product development might not matter as much

Middle Ground Approach:

  1. Modified Vesting Structure:

  • reduce vesting to 12 months

  • implement quarterly unlocks instead of daily

  • add staking incentives for locked tokens

  1. Balanced Liquidity Strategy:

  • implement smaller but consistent liquidity provisions

  • focus on key trading pairs

  • create incentivized LP programs

  1. Product Development Focus:

  • set clear milestones for flagship product development

  • improve community communication about technical progression

  • balance immediate market concerns with long-term development

  1. Community Management:

  • implement better Discord moderation

  • regular updates on development progress

  • clear communication about tokenomics decisions

2 Likes
30

Thanks for the response Nick, I can tell you put a lot of thought into this.

If unlocking VCs has been modeled and impact is potentially that significant… it could definitely be a good idea to hold off on doing so / allow current holders to continue farming fuel emissions uncontested.

Good to hear you guys have provided liquidity for eco / key pairs in the past. If Mira is too risky or too niche for now, just providing some baseline passive liquidity on eth mainnet (uniswap) is acceptable. There are a lot of potential fuel stakers who don’t operate on CEX and seeing that fuel is an on chain experience in itself, it’s important that the “on chain” community has the same opportunities to buy / sell that cex users have.

The whole idea behind the “price floor implementation” is that you can buy back the entire fuel allotment from ico/ido for half the funds you raised… Just knowing this wall is there / what it’s capable of absorbing will be a big boost to holder confidence.

The Focus on Dev Milestones / other section is particularly good. You’ve acknowledged your weaknesses and demonstrated an understanding of what it takes to get this ecosystem off the ground.

Overall, I’m pleased with this and look forward to any action you’ll take in the next 10d (hopefully sooner rather than later).

5 Likes
31

Hi Nick!

I see that the team has done some work & introspection about the it’s strengths & weaknesses, but the fact of the matter is that aggressive reflexivity towards the downside has undone any efforts for incentivising liquidity within the ecosystem for liquidity provisioning.

Suffice to say - 8 consecutive red weekly candles doesn’t necessarily scream inspiring confidence for users, when these drawdowns seemingly have started eclipsing memecoins of no perceived value.

The pre-Ignition & S1 program itself hasn’t appear to have yielded any reasonable success - considering protocol rewards were skewed deeply towards idle liquidity, heavily towards NFT’s (& some undisclosed, non-verifiable KPI parameters).

The end-result of the following moves have been as follows :

-Reduction in onchain TVL from 65.12M ATH to a mere 15.62M, marking a 76% decrease.

  • Reduction in Fuel bridged TVL from 318.14M to 83.31M, marking a -73.8% decrease as well.

The stats for the following are available on Defillama.

This has certainly not gone unnoticed as other notable people in the space such as Taran, Chainyoda, Mikko Ohtamaa (some chiefly invested in the ecosystem have rightfully pointed out as well).

The community’s statements & assessment- even at the expense of broken moderation rules is only symptomatic of prevailing sentiment that has gripped the altcoin sector as a whole, and Fuel is certainly no exception.

These are deep uncharted waters & I support the pioneers trying to navigate through these difficult circumstances - but based on statements made above @AgentChud - it seems the Fuel team is very well capitalised to navigate through years to come.

At the same time - there is some deeper reflection needed in the mistakes that happened along the way, with effective remediation plan that the community should be enthusiastic hearing about, namely in interoperability :

  • Fast bridging & multi-asset support bw L1 & L2’s (Jumper - Relay.link, Hyperlane, native solution)
  • Incentive alignment with skin in the game KPI’s.
  • Deeper liquidity provisioning on L1, Fuel or strategic agreements with L2’s on POL (Base, Aerodrome)
  • Spot/perp listing arrangements on high demand DEX’s/CEX’s (Hyperliquid, Coinbase, Bithumb) & in emerging markets (Korea) , discussions with liquid funds willing to take exposure.
  • Staggered vesting or increasing the vesting tenure.
  • Reduction in sequencer staking rewards, instead of Cosmos high-inflationary style emissions (value accrual poison).

I highly believe that Fuel has promising future, but without investors exhibiting long-term confidence & conviction, absent any structural changes in tokenomics, limited incubation - capitulation & decline in adoption will only be a self fulfilling prophecy.

Best of luck, hoping to hear about these structural improvements & changes soon.

6 Likes