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Aerodrome
@aerodrome
What do people in DeFi get wrong about issuance (e.g. token emissions and unlocks)? Maybe everything. 🧵👇
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Aerodrome
@aerodrome
The third installment of Dromos' exploration of the MetaDEX just dropped, this time breaking down the nuanced topic of issuance. Some key points from the piece:
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Aerodrome
@aerodrome
DeFi Has a Problem Understanding Issuance From emissions to block rewards to liquid team allocations, there are many mechanisms for token issuance in DeFi, but the result is always the same: an increase in circulating supply. Why, then, are some forms divisive and others not?
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Aerodrome
@aerodrome
Dilution by Any Other Name DeFi needs a framework to evaluate issuance and its effects. In other words, a way to honestly and consistently think about *dilution* (i.e. any event that triggers a change in proportional ownership), a near-ubiquitous concept in centralized systems.
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Aerodrome
@aerodrome
Not All Dilution is Created Equal As a general rule, dilution is positive when it catalyzes growth and maximizes utility by strategically redistributing ownership shares to active, vested stakeholders. Because when the pie grows, everyone benefits.
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Aerodrome
@aerodrome
Traditional Dilution Strategy Rewards Insiders That's why, in centralized systems, dilution tends to flow ownership toward insiders (who are often, but not always, active contributors) over outsiders (e.g. passive shareholders).
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