Introduction
The K9 Finance DAO is committed to building long-term value for KNINE holders through deflationary mechanisms and sustainable tokenomics. Currently, the circulating supply of KNINE is approximately 689 billion tokens, with a market cap of around $1.33 million. Meanwhile, BONE, the gas token for Shibarium, is priced at around $0.133. High supply and market pressures have contributed to the stagnation of both token prices. This proposal aims to temporarily redirect validation fees to create a double burn event, reducing the supply of both KNINE and BONE, thereby increasing scarcity and potential value for holders. This aligns with previous successful burns, such as the 410 million KNINE burn in May 2024, and with recent community discussions on strategic deflation.
Proposal Details
Timeframe: For one week, all BONE fees generated by the K9 validator will be collected and not distributed as rewards to KNINE participants. Instead, they will be allocated to the burn mechanism. This is a short-term measure to minimize disruption.
Allocation:
50% of the collected BONE will be burned directly, reducing the overall BONE supply and benefiting the Shibarium ecosystem at large.
The remaining 50% will be exchanged for KNINE on a decentralized exchange (e.g., via DogSwap or another Shibarium DEX) and then burned, reducing the KNINE supply.
Rationale: This 50/50 split mitigates potential downward pressure on the BONE price during the swap, as only half is used for market purchases. This creates deflation in both tokens without overly relying on market liquidity, which is currently low for KNINE.
Estimates: Based on the current TVL of approximately $1.97 million (equivalent to ~14.8 million BONE delegated) and a maximum staking APY of ~2.08%, the validator generates approximately 6,000 BONE in weekly fees for distribution (after allocating 5% to the treasury). Thus:
Total raised: ~6,000 BONE.
50% BONE burn: ~3,000 BONE (worth ~$400).
50% exchanged for KNINE: ~3,000 BONE used to purchase approximately 208 million KNINE (at the current price of ~$0.000001925), which will then be burned.
These values ​​are estimates and depend on network activity; actual values ​​will be reported transparently after the event.
Expected Benefits
Price Increase: Reducing supply through burns can create upward pressure on the prices of KNINE and BONE, especially in a low liquidity environment.
Community Hype: This event can generate excitement, similar to previous burns and competitions, encouraging more staking and participation in the DAO.
Ecosystem Alignment: Supports Shibarium’s deflationary goals and rewards long-term holders without introducing new issuance.
Precedent: Builds on previous successful initiatives, such as the 2024 mega-burn and the proposed buy-burn-lock events for 2025.
Risks and Mitigations
Risk: Staker Dissatisfaction: Pausing rewards for a week may frustrate active stakers who rely on yields.
Mitigation: Offer a small compensatory airdrop (e.g., a 5-10% bonus in KNINE or BONE from the treasury) to affected stakers after the burn. Limit the event to one week to minimize the impact.
Risk: Market Volatility: The swap may cause temporary price drops if liquidity is insufficient.
Mitigation: Execute the swap gradually throughout the week through automated tools or multi-stage trades to avoid large losses.
Risk: Low Participation: If fees are lower than expected, the impact of the burn may be minimal.
Mitigation: Set a minimum threshold (e.g., 4,000 collected bones) to proceed; otherwise, revert to normal distributions.
Note: This is just an idea I had and Grok elaborated on. It can be ignored or improved and adopted.