Airdrop Proposal for Astro Tokens on Luna V2 (Dilution and Burn)

I would like to propose an idea for the distribution of Astro tokens on the Luna V2 chain. Please note all percentages, ratios and round numbers are provided for illustrative purposes and are entirely adjustable and up for debate.

I will start the idea in a manner similar to the Astroport Medium article proposal, with a pre-depeg snapshot taken at Terra Classic block 7544910 (2022.05.07 23:00:04+08:00) and a post-depeg snapshot taken at Terra Classic block 7790000 (2022.05.27 03:59:51+08:00). Astro tokens will be airdropped on a 1:1 basis for all tokens held at the time of the pre-depeg snapshot and they will also be airdropped on a 1:1 basis for all tokens held at the time of the post-depeg snapshot. This will of course result in a fairly substantial dilution of the Astro token. In order to mitigate this over time, I propose we implement a burn mechanism whereby all Astro tokens sold will be subject to a 5% burn rate. The burn rate will remain in place until the max total supply of tokens returns to 1 billion which was, I believe, the original intent of the protocol.

So just to use some rough and dirty numbers, lets say there are 110 000 000 Astro tokens currently in circulation. So 110 000 000 Astro tokens would be airdropped to the pre-depeg snapshot holders and 110 000 000 Astro tokens would be airdropped to the post-depeg snapshot holders. The 1 000 000 000 original Astro tokens will also remain (more on this in a moment) and so the max total supply of Astro tokens at the time of the V2 launch will be 1 220 000 000. All tokens airdropped could be subject to a 6 month cliff and a 1 year vesting period. The intent is to keep the Astro community engaged in the protocol and also to encourage and reward investors who choose to hold their tokens long term. The burn rate on sold tokens is intended to act as a tax and so the initial dilution of the Astro token is eventually paid for by sellers/shorter term holders. The burn rate could also be made to decrease over time or on a per token burned basis (ex start at 10% and decrease to 0%). The remaining 1 billion tokens would be allocated in the same manner on the Luna V2 chain as they were on the Luna V1 chain. This means that Astro tokens will be available for a new lock drop, similar to the original lock drop, which will undoubtedly be needed to provide some initial liquidity.

There appears to be a vigorous ongoing debate in the Discord forums on how many tokens should be allocated to pre-depeg vs post-depeg holders. This is also up for debate along with all the other numbers I have presented here and should be decided upon by the community. My intent more simply is to propose a sort of dilution and burn strategy to attempt to bridge people to a new chain whilst hopefully preventing any long term negative impacts to the valuation of the Astro token. I’m also not entirely sure what impact a burn rate on sold tokens would have on liquidity pool providers and I am hoping that a mechanism could be put in place to mitigate any negative effects that might occur there. Thank you for taking the time to read this and please let me know what you think.

It also may be helpful if it were possible for someone on the Dev team could comment on whether implementing a burn mechanism like the one I’m suggesting is even a possibility. Thanks.

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