Last week we completed the third community vote at LocalCoinSwap. This vote was to determine how we adapt the LCS token model in relation to the upcoming non-custodial platform implementation, and changes in worldwide crypto regulation. A great facet of the LocalCoinSwap project is that the community of token holders have an active say on important decisions in how the project develops and operates through the democratic blockchain voting system.
There were 2 options for the vote:
Option 1 - Change the token model to a buyback and burn model
Option 2 - Retain a dividend token model
A record number of votes were cast in comparison to previous community votes with almost twice the amount of people voting. Each 1 LCS token was allocated 1 voting token (LCSV3). At the time of the vote closing, there was a total of 21,635,322.28 votes cast. Given that the current team abstained from this vote, this represents over 41% of the total tokens available for voting. Of these, 79.13% voted in favor of the buyback and burn, and only 20.87% voted to remain with a dividend model.
Option 1 - Buyback and Burn is the winner!
Rather than dividends being paid in fractional amounts of multiple cryptocurrencies (that are often to small to even withdraw from the platform), LocalCoinSwap will now periodically buyback and burn LCS tokens on the open market. This process will create a forced buyer situation for the LCS token and consistently reduce the total supply.
How this works:
- 20% of platform exchange fees will be used to buyback LCS tokens on an order-book exchange
- The buyback will occur at a pre-announced time and date each quarter using a market order
- Tokens purchased through the buyback will be burned, thus constantly reducing the supply of LCS
LocalCoinSwap will look to reducing the period between the buybacks, and, when a level of profitability is reached such that the 20% buyback amount is less than 100% of profits, another vote will be held to determine the future of the token model.
The team will be consulting with the community on the preferred platform for the buyback to take place. Whatever is chosen, it will be a platform with a publicly viewable order book for the sake of transparency and will be announced ahead of time.
It is important to note that no one will be forced to sell their LCS. Those who choose to take part in the buyback will have to deposit their LCS on the designated exchange and place limit orders at the time of the buyback. People are free to buy and sell LCS before, during, and after the buyback as usual.
All LCS holders will still have the opportunity to take part in future votes and will now hold a deflationary asset as the total supply of LCS will be constantly reducing. The LocalCoinSwap team will continue to explore other utility for the token in the LocalCoinSwap ecosystem. We are currently exploring the prospect of using LCS to pay trade fees on the non-custodial platform among other possibilities.
Thank you to all the community members that voted and helped to guide the project into its next phase!
What comes next?
Now that the LCS token model has changed to a buyback/burn model, the token holders will help to determine what effect this has on the community venture fund (CVF). The original purpose of the CVF was to collect dividends that could then be used at a later date for activities voted on by the community. Now that there will not be dividends distributed, the CVF can no longer operate in its original intended form. Some ideas for the community venture fund tokens are as follows:
- A complete or partial burn of the tokens
- An airdrop to current holders
- Alternative uses such as community development, prize giveaways, etc.
We would love to hear your feedback on what you would like done with the CVF!
If you have any suggestions or other questions that you would like the team to cover in the upcoming AMA, please submit them through the LCS AMA Question Submission Form.