DIP-1: Reduction of DXYLN Emissions to a Sustainable Fixed Rate

Summary

This proposal seeks community approval to significantly reduce DXYLN emissions by lowering the annualized emission rate from 45.20% to 3.27%, resulting in a fixed issuance of approximately 100,000 DXYLN per week.

In addition, the current 1% weekly emission decay mechanism will be discontinued following implementation of the new emission schedule.

The objective is to improve long-term token sustainability, reduce inflationary pressure, strengthen value accrual to existing holders, and align emissions with the protocol's current growth stage.

---

Background

The current DXYLN emission model was designed during the protocol's bootstrapping phase to incentivize liquidity provision, participation, and ecosystem growth.

Under the current configuration:

• Annualized emission rate: 45.20%
• Weekly emission decay: 1%
• Emissions gradually decrease over time through the decay mechanism

While this structure was effective during early growth, the protocol has now reached a stage where continued high emissions may create unnecessary inflation and token dilution.

Reducing emissions allows the protocol to transition toward a more sustainable economic model while maintaining sufficient incentives for ecosystem participants.

---

Motivation

The proposed reduction aims to:

• Significantly decrease token inflation
• Reduce sell pressure generated by emissions
• Improve long-term sustainability of the token economy
• Increase scarcity of newly issued DXYLN
• Better align incentives with long-term protocol growth
• Simplify emissions through a predictable fixed weekly issuance model

---

Proposed Changes

Option A - Aggressive Reduction (Recommended)

• Annualized emissions reduced from 45.20% to 3.27%
• Fixed emissions of 100,000 DXYLN per week
• Remove the current 1% weekly decay mechanism
• Emissions remain constant unless modified by future governance proposals

Option B - Moderate Reduction

• Annualized emissions reduced from 45.20% to 5.00%
• Fixed weekly emissions adjusted proportionally
• Remove the current 1% weekly decay mechanism
• Provides a more gradual transition while still significantly lowering inflation

Option C - Conservative Reduction

• Annualized emissions reduced from 45.20% to 7.00%
• Fixed weekly emissions adjusted proportionally
• Remove the current 1% weekly decay mechanism
• Maintains stronger incentive distribution while reducing overall inflation

Option D - Maintain Current Schedule

• No changes
• Retain annualized emissions of 45.20%
• Continue applying the existing 1% weekly decay

---

Expected Impact

If Option A is approved:

• Annualized emissions decrease by approximately 92.8%

• Weekly emissions become fixed at 100,000 DXYLN

• Long-term token dilution is substantially reduced

• The protocol moves toward a more sustainable emissions framework

---

Voting Options

Option A

Reduce emissions to 3.27% APR, issue 100,000 DXYLN per week, and remove the 1% decay mechanism.

Option B

Reduce emissions to 5.00% APR, remove the 1% decay mechanism.

Option C

Reduce emissions to 7.00% APR, remove the 1% decay mechanism.

Option D

No change to the current emission schedule.