Proposal: Spreading the 75% Reduction Out Daily & Reducing Sell Spikes
Background
Meow mentioned in the latest JUP Really that the Jupuary allocation would be staked at first, but that it could be claimed on day 1 at a 75% reduction (25% of the allocation). The reductions would last for one year for direct claim.
We understand here that the longer you wait, the less the 75% reduction becomes and the higher % of allocation you get. This would continue throughout the year until it would reach 0% reduction and 100% allocation you could claim after 1 year.
Making the 75% Reduction Gradual & Daily
There is a specific implementation of this 75% token reduction I would like to propose, which would significantly reduce impact of newly introduced JUP tokens.
This suggestion is made assuming we would indeed start at 75% reduction for day 1 claim and making it last ~ 1 year before it’s 0% reduction, as Meow suggested.
My suggestion is to have daily reductions of 0.2% for 375 days (starting at 75% and ending at 0%). Simplified math: 375 days x 0.2% = 75%.
Example of daily 0.2% reduction decrease
Here is an example of what monthly token releases would look like in comparison to daily. Below chart shows a visualisation of the Daily 0.2% Reduction Decrease and Token Introductions VS 6% Monthly.
My proposal is to reduce the reduction daily by 0.2%. In other words, the 75% is decreasing daily by 0.2% until it reaches 0% after 375 days.
The blue line shows an example of what that could look like in terms of new tokens being introduced to the market, verses the alternative (which seems not ideal).
- Blue line
= Daily reduction decrease / allocation increase of 0.2% (resulting in daily introduction of the tokens into the market; preferred outcome) - Red line
= Monthly reduction decrease / allocation increase of 6% (resulting in monthly introduction spikes on a single day, non-preferred outcome)
Full explanation of the idea
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To decrease the impact of tokens entering the market, it’s helpful when the sale pressure would not be concentrated in a short timeframe, but instead spread out throughout time over as many days as possible.
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It would be much less favourable if all sell pressure comes on a single day of the month or quarter (in case of monthly or quarterly unlocks).
- If there would only be a quarterly or a monthly unlock option (with 18% or 6% reduction), many people would be unlocking all on the same day (the day in the month when the unlock takes place).
- This would add more sell pressure than buy pressure, potentially causing a sharp price decrease on a reduction / unlock particular day.
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So instead of doing a 6% reduction per month or 18% reduction per quarter, we could do a 0.2% reduction daily. If you make the reduction and unlock daily starting at 75% deduction and reducing it daily by 0.2%, you would effectively be spreading out all the sell pressure over 375 days (1 year).
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So day 1 unlock is 75% reduction, day 2 is 74.8% reduction, day 3 is 74.6% etc, day 4 is 74.4%, day 5 is 74.2%, day 6 is 74%, day 7 is 73.8% etc. Every day would be a 0.2% reduction. until after 375 days you reach 0% reduction / 100% allocation.
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When starting at 75% and reducing it by 0.2% per day, after 375 days (roughly one year) you’d arrive at 0% reduction (full allocation). The reduction per month would equal 6% (30 x 0.2%), or 18% per quarter (90 x 0.2%). But the important point of my proposal is that it happens daily, so it’s spread out.
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Because it’s spread out per day it has even less impact in terms of concentrated sell pressure. It would be much better to have daily unlocks and reductions and spread it out throughout every single day of the 1 year period.
Potential implementation of the proposal
This should be easy to implement for the team. It’s a very simple math, converted into a small piece of code.
Start at 75% reduction (25% allocation) and the allocation would increase 0.2% (reduction would decrease) every day until it reached 100% on day 375.
You just don’t want thousands of people claiming and potentially selling on a single day, instead of it being spread out over many different days.
Here is the simple math formula (made using ChatGPT):
Here is a python code example (made using ChatGPT) reflecting this math:
`initial_reduction = 75 # Start at 75% reduction
daily_decrease = 0.2 # Reduce by 0.2% each day
days = 375
for n in range(1, days + 1):
reduction = initial_reduction - (daily_decrease * (n - 1))
allocation = 100 - reduction
print(f"Day {n}: Reduction = {reduction}%, Allocation = {allocation}%")
`
Summary of the logic of the proposal
I propose daily introductions of JUP into the market (instead of weekly / monthly / quarterly). This would be done by increasing the claimable amount by 0.2% per day, starting at 25% until it reaches 100%. Viewed the other way around; the reduction starts at 75% and becomes 0.2% less every day until it is 0%.
This would contribute to JUP price stability, and help avoid sharp price decreases by unnecessary spikes of sell pressure.
The 75% reduction decreases by 0.2% per day, and the claimable allocation increases daily by 0.2%. This would support a more spread out daily introduction of the new JUP tokens (instead of it all being concentrated on specific days).
The reduction starts at 75% on day 1 and would get 0.2% less per day, until after 375 days (a little over one year) it would reach 0% reduction (full 100% allocation).
