“stake to earn fees” vs “buyback and burn”

From my understanding there are two different type to reward loyal users of an ecosystem.

* stake to earn fees
* buyback and burn

What do you like better and why? Personally, I like the former since it locks up supply but I haven’t made up my mind.

Also i hear that the reason why Maker (and Uni, and others) don’t revenue share is because that directly makes them a security. They are shielding DeFi from the eyes of SEC and preventing an outright Security label to ban them.

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10 thoughts on ““stake to earn fees” vs “buyback and burn””

  1. I prefer stake to earn fees if it’s Trader Joe style. They are a DEX and a portion of the fee from every trade is sold for $USDC and given to people staking $JOE. I love that.

    USDC is pretty close to “cold hard cash” and I’d much rather get that than the usual “we just print up more native token and are constantly inflating the supply” approach that others use.

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  2. It doesn’t matter. They are both ways to kurb inflation so the real question is “how bad are the tokenomics and the inflation of this particular coin for having needs of buybacks?”

    Earning fees on the other way it can be healthy to reward holders for staking governance tokens when the project has a good usecase

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  3. They are sort of different things .

    Stake to earn is a way of locking in holders by having them stake their tokens for a passive reward. There is usually lock in times for staking (not always)

    Where as buyback and burn is something that’s done by the devs to pump up the price of the asset and take those bought tokens out of circulation by burning them .

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  4. Buy back and burn is so boring. Team literally are just rinsing their funds becoming exit liquidity for token holders.

    That money is way better off used on dev time, marketing, expanding team .. literally anything to further the project 🤷‍♂️

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  5. Most users prefer the revenue share model as it’s easier to see the direct impact of protocol usage, the buyback + burn mechanism is somewhat of a legal cheat code. Burns are a little inefficient as they can be front-ran by MEV bots and even ordinary users. In addition it’s challenging to execute burns for cross-chain dapps without losing money to introducing arbitrageurs.

    MakerDAO has been trying to transition away from the burn model, but that’s still at the governance stage.

    From your previous post it sounds like you’re building something so I’d advise you to compare existing protocols in your category and how people react to their revenue sharing mechanism (if any).

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  6. It is, for sure, stake-to-earn. Who doesn’t like that? A great choice for the community and also the project IMO. Actually staking on Dafi protocol, Thorswap and a host of others.

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  7. Regulations are incoming to DeFi, and the body language of SEC is making it even more obvious, with the way XRP lawsuits keep going, I can’t but accept reality.

    Would go for stake to earn, supply locked and price inadvently appreciate, the likes of Alliance block saw the Defi regulation ddibacle earlier, so they have a Trustless identity verification TIDV feauture in place aalready

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  8. Well, both strategy might be effective depending on different factors.

    Personally, I’m for projects that offers both, like CryptoXpress for example which has stake to earn for it’s token XPRESS while also planning to hold annual buy back and burn mechanism for the next 3yrs.

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