Very sensible proposal and well thought through, thanks for putting this together Doug. I’m overall supportive of the buyback and-burn concept.
Some notes:
Timing: Agreed that it’s not an urgent priority. However, if we were to do this, I’d encourage doing it sooner rather than later, so orchestrators can adjust their operating models to account for the reduced fees. If we wait until after fees have increased substantially, then imposing this tax would mean a larger bite out of their margins, with a more uncertain outcome.
Recycling fees: Agreed that the (perceived) issues with recycling fees have more to do with narrative than actual concrete harm. Also, recycling fees isn’t a perfect pass-through either: gas still costs (~0.15% per PM ticket as of this writing) so there is still an erosion of value the more that fees are recycled.
Additionally, burning buy-backs may help counter some negative perception around token inflation and LPT being “dumpy” with more structural incentives to sell but (currently) few to buy.
Naming: “network tax” vs @b3nnn “protocol fee”. Slight preference for “tax” just because it’s a distinct term from the “fees” that we have been using to refer to network revenue. Perhaps “network cut” since we already have “treasury reward cut”. I also like “fee cut” although that’s already used to refer to the orchestrator’s take.
Non-performing orchestrators: Going a bit OT, but since non-performing orchestrators were mentioned… Agreed these aren’t necessarily causing any harm right now. However, as demand for the network grows - hopefully along with the value of LPT - the barrier to becoming an orchestrator is likely to increase. Existing orchestrators do a great job of sourcing GPUs, but we also want to make the network accessible for new entrants with additional hardware. Otherwise, we risk harming the network’s ability to scale at the moments when we need it the most. There are of course various levers to manage this which are out of the scope of buyback-and-burn, but only highlighting that the concern around non-performing orchestrators are not totally unfounded.
Misc: Presumably there are a couple of moving parts for this proposal to take effect aside from implementing the tax itself - eg a team to handle DEX liquidity and manage the buy-backs? Lots of details to hash out there but I’m supportive of this overall. Looking forward to learning more about it.