Dear [@Binance , @Richard Teng & @Binance Labs ] Team,
I hope this letter finds you well. I am writing to express my concerns and provide suggestions regarding the listing of coins that unlock a significant 100%-1000% supply after the launch of token with a small circulating supply. Specifically, I refer to the scenario of 2 coins e.g. 140%+ ($PYTH ) @Pyth Network and 750% ($AEVO ) @Aevo of their initial current circulating supply unlocked after being launched last month.
Concerns Regarding Sudden Supply Unlocks
The primary concern with coins that suddenly unlock a large portion of their supply is the potential for significant market disruption. The following points outline the key impacts:
1. Market Dilution and Price Volatility: A sudden influx of new tokens can lead to severe dilution of the existing circulating supply. This often results in a sharp decline in the token's price, leading to significant losses for current holders.
2. Investor Confidence and Market Stability: Unexpected supply unlocks can undermine investor confidence, leading to increased market volatility. This instability can deter new investors and harm the reputation of the cryptocurrency market as a whole.
3. Regulatory Scrutiny: Large and sudden supply changes may attract regulatory scrutiny, as they can be seen as manipulative or unfair to retail investors. Ensuring transparent and predictable tokenomics is essential for maintaining regulatory compliance and fostering a healthy market environment.
Recommendations for Supply Unlock Regulations
To address these concerns, I propose the following regulatory framework for coins listed on @Binance
1. Transparent Tokenomics: All projects should be required to provide detailed and transparent information about their tokenomics. This includes the total supply, initial circulating supply, and a clear, time-bound schedule for any future supply unlocks.
2. Gradual Unlock Mechanisms: Instead of allowing sudden, large-scale unlocks, projects should implement gradual unlock mechanisms. This could involve monthly or quarterly releases of a small percentage of the total supply, reducing the impact on the market.
3. Lock-Up Periods and Vesting Schedules: Introduce mandatory lock-up periods and vesting schedules for the team, advisor, and early investor tokens. These periods should be clearly defined and disclosed, ensuring that these stakeholders cannot flood the market with tokens immediately after the launch.
4. Community and Stakeholder Communication: Projects should be required to communicate any planned supply changes well in advance to the community and stakeholders. This includes detailed announcements explaining the reasons for the unlock and its expected impact on the market.
5. Regular Audits and Compliance Checks: Implement regular audits and compliance checks to ensure that projects adhere to their stated tokenomics and unlock schedules. Non-compliance should result in penalties or delisting.
Conclusion
By adopting these regulations, @Binance can enhance market stability, protect investors, and uphold its reputation as a leading cryptocurrency exchange. These measures will not only mitigate the risks associated with sudden supply unlocks but also foster a more transparent and trustworthy ecosystem for all participants.
Thank you for considering these recommendations. I am confident that by implementing these measures, @Binance can continue to lead the way in promoting fair and sustainable practices within the cryptocurrency industry.
Sincerely,
- JACK
X: CRYPTO JACK (Crypto_Sekho)
TG: CRYPTO JACK (Sekho_Crypto)
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