A growing treasury
As a decentralized protocol, no one person has the power to shut KLAP down once it is launched. As long as there is a non-zero amount of assets lent/borrowed on KLAP, the treasury will continue to grow, as the protocol takes a small fee on the interest rates. The treasury receives 80% of all fees on the protocol.
At some point down the line, Ve holders can vote and decide to allow KLAP holders to burn & redeem the treasury funds for their KLAP. For example, if someone holds 1% of the total supply of KLAP, they could burn all of their KLAP to redeem 1% of all treasury funds.
This does a couple things:
- "Unlocks" the treasury funds that have been accumulating fees in tokens listed on KLAP (likely BTC, ETH, USDT, USDC, DAI, etc) and makes it a liquidity backstop.
- Sets an arbitrage-able "floor" for KLAP's FDV. If KLAP's FDV dips below the NAV of the underlying treasury funds, someone could buy KLAP until the FDV is equal to the treasury NAV. Then, they can burn and redeem their cut of the treasury to complete the arbitrage.
- Unlike other protocols (especially Ohm forks) where treasury NAV can become meaningless when there is no way to redeem the tokens for the treasury funds and the treasury funds are backed by the protocol token itself, KLAP's treasury will be fully backed by majors and stablecoins. Therefore, the protocol continues to generate real value over time (no short-term ponzi) and this value can go directly to the token holders.
- KLAP becomes deflationary. Those that burn no longer have a claim to the future revenue and value generated by the protocol. Therefore, the "pie" for other KLAP holders increase, making the remaining KLAP more valuable.