Let’s not forget that the more STX these people in power print for themselves, the more network voting power they’re effectively giving themselves to control the direction of any future SIPs and therefore the direction of the network.
400,000,000 STX.
This proposal introduces a new mechanism for capital formation for the STX TREASURY: the issuance of STX Bond Tokens—a decentralized analog to traditional sovereign and corporate bonds. These tokens will allow the TREASURY to raise substantial funds in a structured, transparent, and market-friendly way while simultaneously offering opportunities to both institutional and community participants.
-The STX TREASURY will issue STX Bond Tokens during defined issuance windows.
-Bonds are sold at a discounted rate, e.g., 0.50 STX per 1.00 STX face value, with a 3-year lockup and a defined maturity structure.
-Minimum entry for primary buyers is set high (e.g., $100,000) to attract VCs and institutional investors.
-These investors will receive locked STX tokens with a guaranteed maturity value, aligning incentives for early participation.
-A secondary market will be established for the trading of these bond tokens.
-This enables smaller participants and the broader STX community to buy in at any amount, promoting equitable access.
-VCs and institutions gain early liquidity by selling bonds on the open market, which reduces the risk premium they would typically demand.
-Price discovery occurs naturally, and market forces balance the discount rate over time.
-By enabling retail community members to purchase discounted STX bonds via the secondary market, we promote a more inclusive fundraising model.
-This approach can lead to greater community acceptance, as the opportunity to benefit from discounted tokens is not reserved for institutions alone.
-Efficient Capital Formation : Attracts substantial upfront capital with a clear lock-and-release structure.
-Market-Driven Discount Optimization : A liquid secondary market reduces the need for steep discounts to attract early participants.
-Liquidity for Early Investors : Institutions can realize returns earlier through flipping, aligning incentives without long-term sell pressure on STX.
-Community-Friendly : Retail investors can participate fairly, improving trust and transparency in TREASURY fundraising.
I like this proposal and would vote YES with my STX.
My quick rationale:
Stacks has all the necessary pieces now to act and compete as a true Bitcoin L2. (Not using the maxi definition). That said, the competitive landscape of other L2’s, off-chain solutions and rollups in heavy development makes these next 12-18 months extremely important to grab market share.
The org entity structure right now seems to make it hard to be efficient with both time, capital, and staying clear of legal trouble. Recentralizing some of these tasks will be useful to go fast in this current season.
On the 3 counterpoints I see most cited.
Ultimately.
Send it!
It’s STX szn.
As an early investor of Stacks, I’ve seen a lot of arguments recently and a lot of investors complained about the proposal yesterday. I also fully oppose the proposal to print 400 million STX for operating Stacks and paying developers. SIP031 will be remembered as a mistake in Stacks history.
In the crypto space, changing the total supply is a red flag, as it violates decentralization. If new investors realize the total cap can be changed, it not only dilutes value but also hurts future investment decisions.
Stacks is moving toward decentralization as even founder Muneeb Ali acknowledged. Printing 400 million STX to boost the DApp ecosystem or pay developers directly contradicts that direction as the Founder suggested, For instance, during the Alex hack, the team refused to block hacker addresses for decentralization and trust. If that’s the standard, changing the total supply should not be on the table.
Low liquidity should not be resolved this way. If Hiro truly cared about liquidity and the DApp economy, why didn’t the team intervene during the Alex hacking incident by freezing the chain?
Touching total cap means for this reason, onchain operator can touch the cap anytime when they need in the future again under any circumstance. You should not solve the issue by touching decentralized contract either.
Potential investors will see this as a huge risk.
Look at those advocates for this proposal,
Jude, one of Hiro team, that needs to pay off developer’s salary
Zest Founder, that directly take a benefit for the support of DApp
Leo Founder, same reason.
Investors are not here to pay off team’s salary and sacrifice their economic value to boost third-party dapp (Zest, Leo etc) operators. It’s operator’s fault to make the current situation and they need to take a responsibility not deferring it to investors.
Total supply can be thought as a contract between investors and token issuers. People and I believe Blockchain exists to prevent dilution by central entities and to build trustless systems.
This is now a matter of trust between investors over the world and Stacks.
I hope this proposal should not hurt decentralization of Stacks.
@mark07 I understand your concerns about the precedent of changing supply (there’s a whole philosophical discussion we can have around that but based on conversations i’ve had with plenty of holders and investors most absolutely view growth of the ecosystem as paramount) but I want to correct a few things from your post that are not accurate
1) “Jude, one of Hiro team, that needs to pay off developer’s salary”
Once again this is inaccurate on two counts:
(a) Jude doesn’t work for Hiro, he works for the Stacks Foundation
(b) neither Hiro nor the Stacks Foundation receive tokens from this SIP and in fact we are both contributing tokens to the new treasury
2) You wrote that “during the Alex hack, the team refused to block hacker addresses for decentralization and trust” and “If Hiro truly cared about liquidity and the DApp economy, why didn’t the team intervene during the Alex hacking incident by freezing the chain?”
This is also not accurate on two counts. First off, Hiro has no control over the chain, we’re not even a miner on it. Second, hacker addresses absolutely were blacklisted by all the applications and places it could have moved during the hack which is why much of the money sits onchain still and hasn’t moved.
I am divided in opinion on this SIP. I can see the tremendous value this additional financial injection can bring into the ecosystem but I have concerns predominantly around the governance. I wanted to get varying perspective so I asked Claude Sonnet 4 to analyze this SIP-031 proposal from four different perspectives; a lawyer, tokenomics expert, serial entrepreneur, and Stacks community/investor. I included current community concerns about supporting initiatives.
Major Legal & Governance Red Flags:
Verdict: Legally risky structure with insufficient governance protections.
Tokenomics Concerns:
Missing Analysis: No comparison to current treasury holdings, burn mechanisms, or alternative funding models.
Verdict: Tokenomics appear unsustainable below $2 STX, with significant dilution risk.
Execution & Builder Concerns:
Builder Perspective: Most successful blockchain ecosystems grew organically. This feels like trying to buy ecosystem growth rather than earn it.
Verdict: High risk of capital misallocation without addressing core competitiveness issues.
Community Trust Issues:
Community Concerns:
Instead of this massive treasury, consider:
The proposal reads like institutional investors trying to use community tokens to fund their preferred projects while maintaining control. The Nomiks analysis, while technically sophisticated, assumes unrealistic market conditions and doesn’t address the fundamental question: why would this capital deployment succeed where others have failed?
This SIP represents taxation without representation for the Stacks community.
Hi Alex,
Thank you for correcting them.
I appreciate your kind answer and hard work for Stacks.
Thank you sir.
appreciate your open engagement back on this - its what makes this community great
To your questions,
(1) Yes, anytime you have more tokens there will be some more market pressure BUT there’s a very clear plan of how to do that responsibly and with minimal impact (see the entire economic report that was commissioned to that effect) and if the tokens and funds are deployed well, the growth of the ecosystem will outweigh it many times over. There’s obviously some risk to everything but there is a much great risk in us not going big.
(2) The Stacks Foundation doesn’t have control of the network either, no one does. It’s a decentralized network and what matters is what the miners and signers choose to do.
In the case of the ALEX hack, Muneeb didn’t block a SIP anymore than any one else did, when others proposed it, he gave his opinion on it, as did many others, and community sentiment was against it. The same is true here, if the community does not want this SIP to happen, then the SIP doesn’t happen.
I just want to say 2 things about the emissions + treasury, though the operations centralization is also worth looking at, as core Stacks devs + a lot of the leadership could fall under the new operations entity.
If done well, I think this can be successful. I think we can even theoretically rationalize not increasing the supply again after this. I think as Bitcoin is going mainstream, and we don’t want to miss this, this could be the right time, and strategy unless another solution comes to us. I also want to see this inflated supply clearly identified to CMC and CG and all of them lot, and others, if it’s immobile/in the treasury.
Is it absolutely necessary? By not doing this, are we better off? That is, is there a chance that our core was the decentralization + Bitcoin going more mainstream + Stacks core getting better? And we don’t need this? Or even, that this might take away from that? And looking back at this decision, would we rather have stayed the course and eventually raised funding required for builders and liquidity in DeFi?
Net net, this is a very comprehensive SIP that I am still going through, but all in all I am optimistic, cautious and still waiting to see some of the bigger players come out with their support and their enthusiasm in dealing with a future like this.
Thank you again for the answers.
(1) If everything went well as planned, I don’t think stacks would have been into the current situation. Nobody can predict future and market dynamic especially in the crypto space. Furthermore, for the Nakamoto & sBTC development, there are several delays unexpectedly. Even well planned approach, I think changing total cap is still risky. Maybe I hope there is a threshold stop emitting under a certain condition where entity agree to stop at some point
(2) I still think the proposal seem to sacrifice and hurt too many things that Stacks(&blockstack) has achieved today. I’ve been investing stacks relying on stacks with the vision that stacks has persisted. Touching total cap really means a lot
Thank you
First time voicing something through the forum. Most of you know me through Bitcoin Pepe on Stacks blockchain, some of you might have never seen my name. Sorry for some spelling / writing errors or misinterpretation, as a foreigner it’s sometimes a bit harder to understand everything.
My initial way of going through things like these SIPs is through some reading and listening to both sides of the coin (token),- people with positive feedback / responses and negatives. After; I try to form a possible narrative and/or outcome. The more information and data I see, I can adjust accordingly.
At this moment; I feel torn- mostly because I see some stuff that doesn’t feel right. Stated below - can alter my questions / opinions after the Twitter spaces tomorrow by mrwagmi and Alex.
Why does the mint have to be done in a way that can dilute the token (short term) - but harms the trust (in general decentralization and the community / team overall). Are there no other options - like funding through current holding (most likely because those tokens can be dumped whenever wanted by possible investors?). As an example; some need liquidity to get on CEX’s (that helps the eco to get more liquidity in easier, but also support to get track API for CMC and CG for easier listings there- same for dexscreener)
Are the possible raised funds / grants going to be 99% transparant (like, excluding personal expenses, but including reasoning and logical ideas behind the expenses for the project)
Is there going to be support for memes- although I understand some might not want a lot allocated to memes because investors might find that too risky and having no control)
The endowment is excluded from stacking opportunities?
The endowment is going to be elected by?
How is the accountability setup? By law or? Especially if it’s setup in a foreign country with other laws it diminishes the whole idea. Risky plays are needed, but some basic outlines for logical spendings are a must too. Too much gray area for them to play with feels more on the ‘unsafe’ side rather than the ‘it will be alright’ feeling.
How can manipulations, no favoritism and/or safety be ensured if the whole crypto market is full of controlled entities (by whales / KOLs and others)
Is there a full strategy on how it’s ensured the newly minted tokens can’t be dumped, partial vesting possible for payouts?
Why not go for partial non-STX funding? Payouts in non-native tokens and/or a split payouts in multiple other assets? Most will be spent on dollars or other types of money anyway (to pay bills and such).
Example: Builders can get stablecoins for salaries, BTC for liquidity, or wrapped assets tied to protocol metrics. 50% stable, 30% bitcoin, 20% STX
Or go for a fully wrapped token that is backed by investors in dollars?
Maybe let community comment / score proposals (by using non-botted methods) before an actual vote by the endowment committee?
I can’t stress this enough, but transparency about the spendings almost into full detail is a MUST to keep the trustworthiness alive. Positivity and community have always been the upsides to Stacks, don’t underestimate that. This would be a big step for Stacks (in a good way) to do it right. My head does say go for a partial non-STX endowment so dilution / devaluation is less risky. ~22% increase over 5 years is a lot and credibility is at stake.
Don’t forget
“can’t be evil.”
I’d like to share a figure that I think represents the perspective one must adopt to appreciate what this SIP is proposing:
There are two pie charts. The area of each pie chart represents the total value of STX, before and after the successful application of this SIP (not to scale). The orange slice on the left represents how much of the total supply of STX I’m imagining you own now. The orange slice on the right represents how much of the total STX you would own after this SIP is ratified and successfully executed. Even though you would own less of the total STX, your slice’s total area (how much value you hold) is appreciably bigger.
I mentioned in my above comment that I think this SIP has some trappings of a Series B round. Here’s what I mean by this. Stacking, sBTC, and BTC DeFi have arguably demonstrated product-market fit, so the next step is to get more people using them. How does one do this, knowing that these products have a potentially large but as-of-yet untapped market? And, how does one do this before the competition wises up? In all cases, the answer is to focus time, energy, and resources on user acquisition – to get these products in front of as many users possible, as quickly and cost-effectively as possible, such that the revenue gained by adding more users exceeds the per-user acquisition cost.
The thing is, user acquisition is expensive up front, no matter what the strategy is. Growth isn’t free – developer time isn’t free, marketing isn’t free, product integrations aren’t free, business partnerships aren’t free, and so on. And yet, sustainable growth is on the critical path to widespread adoption; there’s no way around it. Indeed, veteran founders spend more time working on their products’ distribution than its tech, since a product with great tech but bad distribution will inevitably be crushed by a competing product with passable tech but great distribution.
In principle, this isn’t a novel or controversial concept. Traditional startups execute Series B rounds once they find product-market fit, and they do so by issuing new stock. If Stacks was a traditional company, and had the kind of product-market fit we see now, it would be trying to raise a Series B round post-haste to finance user acquisition.
Now, the Series B analogy isn’t perfect. Stacks is a blockchain project ecosystem, not a company. There is no board of directors, there are no shareholders, and there is no stock (and thus no liquidation preferences or conversions). This SIP does not attempt to change this (and cannot change this), so it’s not possible to do a Series B round in the literal sense.
The closest option we have to achieving the ends of a Series B round is to “emulate” one. This SIP proposes one way to do so, and is distinguished by being heavily informed by the needs of Stacks builders (who, by building on Stacks, bring more users into the ecosystem). Builders have lots of good ideas about what is needed to grow the ecosystem, so I think a SIP which tries to fund ecosystem growth should be written with their needs in mind. And, this SIP delivers on that!
If you believe that Stacks has found product-market fit, and would do a Series B round if it were a traditional company, then if I were you, I would give this SIP some serious consideration. The changes proposed here are a natural adaptation of how startups grow their businesses after finding product-market fit.
Only commenting on the Leo parts here just for clarity. We haven’t taken a single penny in any kind of funding from Stacks for either Leo or stxtools.
Also going forward, (if the SIP were to pass), we haven’t had any discussions with regards to any future support either.
I agree Stacks is not Bitcoin. Nor am I saying it should be. But forcing dilution is not the answer for funding. In fact, I believe the answer is in the opposite—capital will increase organically as scarcity increases transparently and predictably. Stop printing, start halving.
I appreciate your balanced perspective, @jude. I also understand why Stacks is establishing entities outside the US, it provides operational flexibility that regulatory constraints have previously limited, particularly for marketing initiatives. @cuevasm and his team have done phenomenal work driving growth despite these restrictions.
My main concern involves governance of these funds, particularly regarding builder support and project selection. Many of us know projects with DINO governance, and I worry this could happen here if positions are filled by individuals who favor what influential entities want to see built, especially with the focus on DeFi builders. While I understand liquidity is paramount for this category, was something like a liquidity layer (similar to Deepbook on Sui) considered? Would that have reduced the total STX minting required?
I respect the tokenomics analysis and the research behind it, but the document limits tough-case scenarios and how markets actually behave. The analysis claims that limiting new tokens to $360k USD per five days will keep median price impact below 2%. However, we’re in a “bull market” with positive Stacks news, yet price dropped from $3.02 in December 2024 to as low as $0.29 just this month (May) due to market forces. In a bear market, this could become problematic, potentially requiring more than 360k STX sales if price falls below $1.
From my understanding, this tokenomics requires price maintenance above $3.84-$4. How feasible is maintaining $4 in a contracting market?
I’m not questioning the network’s tech stack or what builders are creating. Could funding be structured in tranches? While potentially expensive from a regulatory perspective, if the market sees traction and growth, support could materialize. If price maintains above $4 and new builders/token holders join, additional tokens could be absorbed more effectively.
I want to emphasize that I support ecosystem growth and recognize the competitive pressures Stacks faces. However, the combination of governance uncertainties, market dependency risks, and significant dilution scale requires a more cautious approach. The strategic need is real, but the execution framework needs refinement to protect both the ecosystem and token holders.
I fully understand that funds raised years ago are very small in comparison to what other projects raised. And I also fully understand that being underfunded and operating under very specific and unique legal constrains pose a lot of problems and limit what can and what can’t be done by this or that entity.
What I don’t understand is why these problems weren’t clearly communicated earlier - for me it is the first time I hear someone openly stating that lack of sufficient funds and compliance concerns are such a big problem and they have to be addressed now, not 2,3,4 years ago.
Sure, there were comments stating that Foundation have limited resources therefore it has to be picky when it comes which initiative or project will receive support (IMHO it should be picky regardless of much funds it has). But never We are heavily underfunded in comparison to our competitors and because of that we struggle and can't compete with them. Nor Due to legal constraints caused by SEC-qualified sale we can't perform, nor participate in following activities: .....
And because of that I asked these 3 specific questions.
I don’t know what steps were taken (if any) by key entities to try mitigate these issues.
Conducting SEC-qualified sale was a deliberate choice, so I think it will be fair to assume that everyone involved in that process were fully aware about all its implications. Which means the answer to my 2nd question should be… “We did this to ourselves. Deliberately” And because such answer doesn’t build confidence I thought there might be something else that I’m missing, and decided to ask.
And I still don’t know what other solutions were considered.
If we sidestep from lack of funding and legal constrains there is one more thing…
When key contributors operates independently and they duplicate each other efforts throwing big pile of money at them won’t solve the problem. You can’t replace open communication with $. And you won’t enforce it even if you create another entity, or put everyone in the same room. It doesn’t work like that.
Tycho GM sir - You mention DeFi activity and the lack there of in the Stacks Ecosystem.
Some key cornerstones to DeFi activity (to name a few beyond legacy TradFi) include staking, staking rewards, liquidity mining or liquidity farming and governance voting.
Many of the leading protocols on Stacks do not have a token. Zest, Hermetica, Bitflow, StackingDAO and Granite do not offer most of these DeFi activities that historically attract users.
Should our ecosystem at least offer these DeFi activities to attract users before comparing the stacks ecosystem to other ecosystems with these activities?
Raise the sBTC cap to 10.000BTC, mint 50M/100M $STX for marketing and product development. That’s my vieuw on the SIP-031. 500M STX is just too much.