Changpeng Zhao (CZ), former Binance CEO, has proposed an innovative tokenomics model. Prioritizing long-term development and sustainable growth, the new token issuance model prevents token circulations on unfavorable market conditions.
Former Binance CEO, Changpeng Zhao, popularly known as CZ has introduced a unique model for token issuance, focusing on long-term project growth without compromising market speculation and early sell-offs. The model prevents developers from unlocking the tokens based on price fluctuations and specific time periods, instead the token will be unlocked only when the price doubles the previous unlocking price.
The new model hovers the crypto projects to make a profit from long-term markets rather than short-term speculations. With this innovative tokenomics tokens will be unlocked only during favorable conditions.
CZ clarified that the model was made to be discussed in the crypto community and he himself has no plan to launch a token. The newer approach will be more beneficial for crypto projects that aim at long-term sustainability than gaining from mere hype.
The model highlights CZ’s vision to support innovation rather than making movements on existing blockchains. If the proposed model gets adopted and succeded, a new model for token supply management will become established, paving the way for a new industry standard for token issuance.
CZ Innovative Tokenomics Model In Brief
According to the tokenomics model proposed by CZ, only 10% of the total tokens will be unlocked at the time of the token generation event. Next token unlocking will only happen if the market shows favorable conditions. The prerequisites for future unlockings include,
- Each unlocking will take place six months after the previous unlocking.
- The token price should be at least double the previous unlocking price for more than 30 consecutive days.
- On every unlocking event, no more than 5% of the total supply can be unlocked.
For example, if a token gets launched in January at a price of $1, the next unlocking will only occur if the price doubles, ie priced at $2 for 30 consecutive days. If the price rise happens by July, ie after six months from the initial unlock, 5% of the total supply can be unlocked. If the price reaches $3, which means more than double, in August, the next unlocking will be in March, but only when the price reaches $6 and maintains the value for 30 days.
CZ Model To Inentivise Long-Term Projects
The new model encourages token generation that poises long-term value, preventing developers from unlocking tokens during unfavorable market conditions, such as low prices. Keeping the unlocking period fixed, that is 6 months after the previous unlock, eliminates the chances of arbitrary changes by the developers.
Prioritizing security, the tokens will remain locked in a smart contract controlled by a third party. The team has the sole right to delay or slow down the unlocking, however, no increase or decrease in unlocking time is possible. This strategic approach prevents impulsive market upheavals and delivers incentives to the team to monetize for long-term growth.
In a market filled with unhealthy tokenomics and manipulations, the new token issuance model acts as a foundation for crypto projects that aim for long-term growth and sustainability.
