Abstract
This proposal introduces a mechanism to use STON.fi protocol fees to regularly acquire STON and GEMSTON tokens from the open market. The aim is to define the operational details for handling protocol fees, aligning with the whitepaper's general outline but specifying the inclusion of GEMSTON, which is integral to STON.fi tokenomics. Specifically, all collected protocol fees would be converted into STON and GEMSTON, with a portion burned and the remainder held in the treasury. This systematic approach seeks to strengthen the utility of STON and GEMSTON, maintain a diversified on-chain treasury, and reinforce the tokens' role in the protocol's economic design.
Description
Summary
This proposal introduces the initial mechanism for using STON.fi protocol fees to acquire STON and GEMSTON tokens from the open market regularly. A portion of the purchased tokens may be burned as described in the whitepaper.
The STON.fi whitepaper outlines the general mechanics of handling the protocol fees but does not provide implementation details. This proposal specifies those details and additionally proposes including the GEMSTON token in the treasury acquisition process, as it is an inherent part of STON.fi tokenomics.
Motivation
STON.fi already accumulates protocol fees. However, the DAO has not yet defined how these fees should be used.
By enabling systematic treasury acquisitions, the protocol can maintain a balanced and diversified on-chain treasury in STON and GEMSTON, strengthen their utility, and align the fee mechanism with the protocol’s long-term economic model.
Details
- All protocol fees (in various tokens) should be converted into STON and GEMSTON
- A portion of the acquired tokens should be sent to the burn contract
- The remaining acquired tokens should be kept in the treasury for future use
Impact
Benefits
- Reinforces the role of STON and GEMSTON at the core of the protocol’s economic design
- Creates a transparent and DAO-controlled approach to manage the protocol fees
Trade-offs / Сonsiderations
- Allocating too much to burning may limit resources for future incentive programs
- The acquisition should consider market depth and liquidity conditions
Additional context
Sections 13.3 and 13.4 of the STON.fi whitepaper explain that protocol fees are collected in various tokens, automatically converted into STON via the Fee Converter contract, and then routed to the Fee Distributor, which forwards them to destinations defined by the DAO.
The whitepaper also describes a deflationary model where protocol fees are used to acquire STON from the market, but operational details are left for the DAO to specify, which this proposal aims to address.