SIP-031 Treasury Model for the Sovereign Individual: Empowering Choice in the Stacks Ecosystem

In the realm of decentralized finance, where the word “governance” too often hides the specter of collectivism, a new paradigm emerges: one that enshrines the sovereignty of the individual. The proposed treasury model for the Stacks ecosystem is not merely a technical refinement; it is a moral revolution. It breaks with the democratic fetishism that plagues most DAOs and aligns instead with the unyielding logic of individual freedom.

The Essence of the Proposal

At the center of this model is a profound recognition: that value belongs to the one who creates it, and capital should only be directed by those who own it. Under this model, annual STX emissions, akin to a treasury or public funding mechanism, are not centrally administered or allocated by majority vote. Instead, they are distributed proportionally to STX holders, each of whom retains full authority to:

  • Allocate their share to categories they value (e.g., development, marketing, grants),
  • Split their allocation across multiple targets as they see fit,
  • Or burn their share entirely to prevent dilution and remove capital from potential misuse.

A System Based on Allocation, Not Voting

It is crucial to draw a sharp line between individual allocation and collective voting.

In voting-based models, participants are bound by majority rule. The individual’s will is subordinate to the mob. But this treasury system is not a vote. It is not a consensus. It is a mechanism of personal judgment. You are not asked to convince others to share your values, you are asked only to act on them with the share you own.

“The smallest minority on earth is the individual. Those who deny individual rights cannot claim to be defenders of minorities.”

There is no permission required. No negotiation. No dependence on groupthink. You choose. You fund. Or you withdraw. Entirely.

Advantages of the Individual-Centric Model

  • Empowerment Through Choice: You are not a subject of a treasury; you are its sovereign allocator. Your share is yours to direct, undiluted by consensus or bureaucracy.
  • Safeguard Against Misallocation: The ability to burn your share is a weapon against inefficiency. It disciplines the ecosystem by denying capital to mediocrity.
  • Market-Aligned Incentives: Like a rational investor in a free market, you fund what you judge valuable. You withhold support from what you judge wasteful.
  • No Tyranny of the Majority: Unlike DAO votes where the many override the few, here the many act individually. Each person’s decision is final over their capital.
  • Enhanced Transparency and Accountability: Projects must earn allocation from multiple rational actors, not win popularity contests. This cultivates merit, not manipulation.

Parallel with Real-World Governance

In traditional states, taxation is coercive. Your wealth is taken, then spent without your consent. This model redefines that paradigm. Emissions, like tax revenue, are created, yes, but their destiny is determined voluntarily by each participant. It is taxation but much less coercion. Public funding without expropriation. A system that honors consent.

This is not just more efficient. It is more moral.


`                    +------------------------+
                    |   Annual STX Emission |
                    |  (e.g., SIP-031 pool) |
                    +----------+--------------+
                               |
                               v
             +----------------+-----------------------+
             |                                   |
             |   STX Holder Proportional Share   |
             |      (based on % ownership)      |
             +----------------+------------------------+
                               |
          +-------------------+-------------------------------+
          |                                             |
          v                                            v
+-------------------------+                                    +----------------------------+
|  Choose Funding Targets |              |     Burn My Allocation     |
|-------------------------|                                      /-------------------------------|
|  % to Development       |              |  Burn STX share directly   |
|  % to Marketing         |              |  -> Reduces supply         |
|  % to Community Grants  |              |  -> Prevents dilution      |
|  (etc., any categories) |              +--------------------------------+
+-----------+-------------+
            |
            v
+----------------------------------------------------------+
| Funds Distributed to Targets                    |
|  via Smart Contracts                            |
|  (based on individual choices not a majority vote|
+---------------------------------------------------------+
`

This is not a mechanism of governance. It is a marketplace of vision. A battlefield of ideas where each person’s capital follows their judgment.


Conclusion: The Moral and Practical Superiority of This Model

This treasury model is not just a better way to fund the growth of the Stacks ecosystem, it is the only way compatible with the ethics of decentralization. It aligns incentive with judgment. It punishes passivity and rewards clarity of purpose. It respects each participant as a sovereign being, not a gear in a collective machine.

Let us embrace this model not as a technical upgrade, but as a moral imperative. For it is only through the supremacy of the individual that any system, financial or political, can be truly just, truly free, and truly great.

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:hammer_and_wrench: Proposal: Handling Inactive Treasury Allocations via Merit Queue & Burn Mechanism

To ensure that capital in the Stacks treasury is never left idle, this proposal introduces a clear process to reclaim and repurpose STX that goes unused due to user inactivity. The system is designed to encourage timely participation, reward initiative, and prevent treasury bloat or inefficiency.


:repeat: Core Rule: Inactive Funds Are Reclaimed After 6 Months

Each STX holder receives a proportional share of the annual emission. They have 6 months to either:

  • Allocate it to ecosystem categories (e.g., development, marketing, etc.), or
  • Burn it voluntarily.

If neither action is taken, their share is considered inactive and automatically reclaimed.


:white_check_mark: Reallocation Path 1: The Merit Queue

Inactive STX is first funneled into a structured, transparent queue of project proposals submitted by builders.

:clipboard: How It Works:

  1. Project Submission
    Builders submit funding proposals detailing use of funds, delivery timelines, and public milestones.
  2. Earned Signaling by Active Participants
    Only those who actively allocated or burned their own STX emission earn non-transferable signaling tokens. These tokens are used to signal support and rank proposals in the queue.
  • These non-monetary tokens cannot be bought, traded or transferred.
  • This ensures that only engaged users influence funding priorities.
  1. Top-Down Distribution, With Strict Thresholds
    After 6 months:
  • Funds flow down the ranked list, but only if a proposal’s full requested amount is met.
  • If a proposal is partially fundable (i.e., not enough STX is available to meet the requested total), it is skipped.
  • Unspent funds at the end of the queue are burned, permanently removed from circulation.
  1. Transparency
    All proposals, rankings, allocations, and burns are on-chain and auditable.

:arrows_counterclockwise: Reallocation Path 2 (Optional): Public Auction

An alternative to the Merit Queue for unused STX can be reallocated via a public auction open only to verified builders.

:jigsaw: Auction Rules:

  • Participants place STX bids to acquire the right to use the inactive funds.
  • Only verified builders (those with completed past proposals or successful delivery history) are allowed to participate.
  • The STX used to bid is burned, not recycled.
  • Winning bidders must commit to deliverables within a fixed timeline. Failure results in blacklisting or permanent ban from future auctions.

Why Burn the Bid STX?

  • Creates real economic cost for acquiring unused capital.
  • Enforces accountability and reduces supply, benefiting all STX holders.
  • Prevents circular treasury flows or accumulation without utility.

:lock: Summary of Safeguards:

Component Rule
Inactivity Timer 6 months to allocate or burn before funds are reclaimed
Merit Queue Entry Full request must be met for project to receive funds
Signaling Tokens Earned only via allocation or burn activity; non-tradable
Queue Remainders Leftover STX is burned
Auction Eligibility Only prior builders with track record and deliverables can bid
Auction STX Outcome All STX spent in bids is burned

:dart: Why This Works

  • Eliminates dead capital from the treasury.
  • Incentivizes timely participation from all STX holders.
  • Prevents inefficient micro-funding by requiring full proposal funding.
  • Ensures only qualified contributors gain access to idle funds.
  • Burns any unused value, preserving long-term scarcity and token integrity.
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The two cases below are similar, right?

  • Individualism: Start with 100M STX Emission → 70% choose funding, 30% choose burn → 70M STX Emission
  • Collectivism: Start with 70M STX emission → 70% vote yes, 30% vote no → 70M STX Emission

Similarly, if the majority can estimate the percentage, they can just start with a higher number.

  • Individualism: Start with 143M STX Emission → 70% choose funding, 30% choose burn → ~100M STX Emission

The problem you’re trying to solve is very difficult. That’s why we have a system like this (democracy is the least bad form of government). Even in Bitcoin, if the majority of the nodes adopt a proposal, the minority will have no choice but to follow, or they will be left behind.

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We could add a section to the governance, that would allow NO voters to rage quit. Something like a buy-back program. This provides an incentive to create a SIP that all or as many as possible would accept. If not the proposal would be expensive for the YES voters.

Voter of 10m STX want to rage quit a the current price let’s say 1000 sats/stx, then the remaining holders would need to distribute 100 sBTC (that is 2% if current sbtc supply) in exchange of burning 10m STX.

It would result in a smaller piece of a smaller pie for stx holders.

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It’s possible if there are current holders who still have money and are willing to gain more exposure. They would be ok to propose a SIP like that. It’s like buying shares from others, with specific details about who and at what price.

But if we’re all running out of money, there would be no SIP at all. I will always vote NO because I don’t have money to pay. :scream:

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The two cases below are similar, right?

  • Individualism: Start with 100M STX Emission → 70% choose funding, 30% choose burn → 70M STX Emission
  • Collectivism: Start with 70M STX emission → 70% vote yes, 30% vote no → 70M STX Emission

Similarly, if the majority can estimate the percentage, they can just start with a higher number.

  • Individualism: Start with 143M STX Emission → 70% choose funding, 30% choose burn → ~100M STX Emission

“If the community knows 30% burn their share, next time we can just vote to start with 143M, so after 30% burn, we still emit 100M.”

You assuming 30% will be static, next time it could be 50% burning or more by people protesting because they raised from 100M to 143M to offset the burn.

: But that’s not a problem with the individual treasury model, it’s a vulnerability of governance inflation.

You are absolutely right in your description of the threat:
If the governance system retains authority to arbitrarily change future emissions, then yes, it can dilute any discipline enforced by individual allocation.

But this doesn’t discredit the individual treasury model.

It exposes the core governance layer as the inflation vector.


:warning: Here’s what’s really going on:

  • The individual treasury model enforces capital discipline at the distribution level.
  • But if governance still controls the total emission cap, it can override that discipline with new emissions.

That’s not a failure of the treasury model.
That’s a failure of emission governance.


:jigsaw: The Real Fix: Separate Emission Policy from Treasury Allocation

If governance can always vote to mint more to offset burn:

  • No treasury system, individualist or otherwise, can stop inflation.
  • You will always end up with a politicized, inflationary treasury.

To make the individualistic model work long term, you must lock the emission schedule, or cap treasury issuance per cycle.

Otherwise, any discipline you introduce through burn gets undone by “well-meaning” majority votes.


:white_check_mark: So, what can be done?

  1. Fix the base layer:
  • Cap emissions algorithmically (like Bitcoin).
  • Or cap treasury share as a percentage of fixed emission.
  • Take the “how much to issue” decision out of governance hands.
  1. Let individual allocation govern only the distribution.
  • Treasury receives X STX per cycle (no more).
  • Each holder decides how their share is used or burned.
  • No need to estimate burn or forecast anything.
  • If 30% is burned, it stays burned, no printing it back in later.

:end: Conclusion

The argument doesn’t invalidate individual allocation. It proves its strength, and highlights the need to constrain governance over issuance.

Without that, no model can prevent future majorities from undoing past discipline.

:pushpin: The problem isn’t individual allocation. It’s discretionary monetary policy.

If we don’t want inflation-by-vote, we shouldn’t enable inflation-by-vote. Individual allocation is the safeguard. Governance emission voting is the threat.

You’re conceding the core issue: that treasury misallocation, inefficiency, and dilution are real risks. But then you default to an old-world solution: “It’s hard, so we stick with democracy.”

and you’re right that Bitcoin requires majority consensus (51%+) to change its rules. But that’s exactly why your analogy between Bitcoin’s consensus and treasury governance doesn’t hold.

:x: False Analogy: Bitcoin’s Majority vs Treasury Voting

In Bitcoin, the 51% rule applies to protocol-level consensus, like validating blocks or enforcing halving. But here’s the key:

Bitcoin’s monetary policy isn’t governed by regular votes. It’s fixed.

It hasn’t changed in over a decade, and any attempt to change it would trigger massive resistance, potential forks, and loss of trust. The 21M cap is not a political variable, it’s the foundation of Bitcoin’s credibility.

By contrast, vote-based treasury systems allow routine emissions changes, including:

  • Adjusting how much is distributed
  • Changing allocation rules
  • Potentially inflating to meet political goals

So while Bitcoin’s monetary rules are deliberately rigid and protected from majority tampering, a vote-based treasury puts capital at the mercy of every cycle’s political majority.


:white_check_mark: The Individual Treasury Model Mirrors Bitcoin’s Strengths

What the individual allocation model does is apply Bitcoin’s philosophy to treasury governance:

  • Fixed issuance or capped treasury budget (like Bitcoin’s fixed supply) (something we already talked about here )
  • Opt-in allocation per user (like voluntary node participation)
  • Burn for dissent (like refusing to follow a soft fork)
  • No one can override your decision, just like no node can be forced to accept invalid blocks

It’s not anti-democracy. It’s anti-inflation-by-individual choices. Just like Bitcoin (is an individual choice which node software each bitcoiner runs.)

Allow NO voters to rage quit via buy-back funded by YES voters."

Counter:
This introduces capital asymmetry and makes voting decisions non-neutral:

  • Now, a YES vote carries financial liability, you’re not just supporting a proposal, you’re on the hook if others reject it.
  • That creates risk aversion, distorts votes, and introduces perverse incentives:
    • “I like this proposal, but I won’t vote YES because I don’t want to pay off NO voters.”
    • “I’ll vote NO not because I disagree, but to trigger a buyback and exit at a premium.”

:pushpin: This turns governance into a financial battlefield, not a mechanism for coordination.

Also, note the irony:

To preserve minority rights in a vote system, they’re proposing a mechanism to buy them out, because their voice can’t otherwise be enforced.

That’s exactly what the individual treasury model solves by default:

  • No one needs to rage quit.
  • No one is forced to fund anything they didn’t explicitly support.
  • No STX holder needs to be bought out or diluted.

It’s already opt-in at the capital level.

If you hate having choices, you hate freedom @muneeb

I think the 51% rule also applies to monetary policy, similar to validating blocks and enforcing halving. It might be catastrophic to increase the 21M cap now, but it might not in the future. It’s what people believe. The majority of Bitcoin nodes can adopt the change, and the minority follow. If not, the minority will be another fork.

Bitcoin majority votes are determined by the number of nodes (hash rates). Stacks SIP votes with STX. Nothing is fixed, and they are both collectivism.

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No, Bitcoin and Stacks are not collectivist in the same sense, and pointing to Bitcoin’s 51% consensus rule as proof of collectivism misunderstands what that rule governs and how it functions.

In Bitcoin, the 51% consensus is a mechanism to maintain shared rules, such as block validity and the issuance schedule, not a tool to routinely change them. While it’s technically true that a majority of miners and nodes could agree to change the 21 million cap, in practice, doing so would almost certainly trigger a hard fork and destroy Bitcoin’s foundational trust. The monetary policy is protected not by code alone, but by a deeply embedded ideological consensus. It is an immovable norm unless extreme, system-threatening conditions emerge.

This makes the 51% rule in Bitcoin structurally inert for monetary policy changes, it exists, but cannot realistically be used. That is not collectivism in any meaningful or operational sense. Is defensive consensus.

Yes, both systems have collective decision-making processes at some level. But what matters is what those decisions control.

In Bitcoin, no collective decision can reallocate your BTC. Ownership is enforced cryptographically. In Stacks, SIP votes can determine where treasury capital goes, including over objections of minority holders.

This distinction is critical. Bitcoin protects individual capital rights at the protocol level. Treasury systems like Stacks can override those rights through majority voting. That is not a technical nuance, but a structural difference in how power operates.

More importantly, Bitcoin does not allow the majority to vote on how your BTC is spent. Ownership is protected by cryptographic keys, not political mechanisms. You opt into consensus rules, but your capital cannot be reallocated by vote.

In contrast, Stacks governance through SIPs is active, discretionary collectivism. A majority of voters can regularly alter economic rules, change how emissions are distributed, and redirect treasury funds. The result is a system where capital flows are influenced by politics rather than individual decision-making.

The individual allocation model solves this by removing capital allocation from the governance layer. It preserves individual control over emissions and eliminates the need for predictive estimates or majority approval. This creates a treasury structure that mirrors Bitcoin’s ethos of minimal trust, fixed rules, and individual sovereignty over capital.

I don’t think you’re applying the concept of collectivism correctly.

Collectivism means subordinating the rights of the individual to the will or interests of a group. It implies that the individual’s judgment, property, or autonomy can be overridden by majority decision or communal decree.

Bitcoin has never taken any action that meets that definition. Specifically, it has never violated or overridden individual property rights. There has never been an expropriation of funds in the name of the group. Ownership in Bitcoin is protected absolutely by cryptographic keys, no collective vote can move, reassign, or repurpose your BTC.

Bitcoin’s issuance is not an act of collectivism. New BTC is created through a permissionless, rules-based process that rewards miners for securing the network. This is not discretionary. It is algorithmic. It does not redistribute existing capital or override anyone’s control over their holdings.

That is categorically different from a system like SIP-based treasury governance, where a majority can vote to allocate treasury funds, including funds that were created and held collectively, regardless of individual consent. That is collectivism, because it empowers the group to direct capital that individuals may not wish to fund.

Bitcoin protects property. Treasury votes can override it. That’s the dividing line.

How do you see this work in practice?

A project wants to build a bridge over a river, estimated to require X amount of money. 10% of individuals burn their share and the bridge has a gap, not usable for 100% of individuals.

In the next round, the 90% finally release the extra missing 10%. Can the 10% of individuals who burnt still use the finished bridge?

To me, this looks very similar to rage quit. In your model, holders might make similar evaluations whether to support the project based on how many individuals would not support the project.

Rage quit models create incentives to only propose projects that have a support by a large majority of individuals.

No, this is not true, you are misapplying tax logic, by burning their share, the 10 percent reduce the supply of STX. They prevent dilution. This directly benefits everyone who holds STX, especially the 90 percent who funded the project. Their contribution is not to the bridge, but to the monetary integrity of the system Burning is a public good, NOT tax evasion. I’ll explain further:

Burning Isn’t Tax Evasion, It’s the Structural Fix for It

There’s a common misconception that in the individual treasury model, someone who chooses to burn their share while others fund a public good, like a bridge, is “free riding.” But that confusion stems from misapplying real-world tax logic without recognizing how this model is structurally different.

Let’s correct the analogy with precision.


The Correct Analogy: Income Tax, Inflation, and Our Treasury Model

In the traditional system:

  • Income tax (or any other tax) takes money directly from you and uses it to fund roads, bridges, schools.
  • Inflation takes value from your money indirectly, by increasing the money supply and reducing your purchasing power. Economically, they are both taxes, one visible, one hidden.

Now consider the income tax evader. He uses loopholes to keep his money. He doesn’t fund the roads, but he still drives on them. This is the classic free rider. He keeps his capital while others fund the public goods he uses.

Now compare that to our treasury model.

Here, no one is allowed to keep their share. You cannot stash it. You cannot defer it. You cannot use your treasury share to speculate or enrich yourself directly. You only have two choices:

  • Use your share to fund public goods (like the bridge).
  • Or burn it, permanently removing it from supply, thereby increasing the value of everyone else’s STX.

That would be like telling the income tax evader: “You don’t want to fund the bridge? Fine. But you cannot keep your money either. You can either pay your share to build it, or we burn your dollars to strengthen everyone else’s.”

That’s what this model does. It doesn’t allow hoarding. It eliminates the equivalent of tax shelters. It forces every participant to either contribute to growth or contribute to scarcity.


Why This Isn’t Free Riding, It’s Fiscal Discipline

In this model, someone who burns their share is not evading the system. They are taking a loss to prevent dilution which benefit everyone’s STX holdings. That is not freeloading, it is a deflationary sacrifice. It benefits every STX holder by reinforcing scarcity and long-term trust in the token’s supply discipline.

The traditional system allows capital to hide. This one doesn’t.

The traditional system allows non-payers to benefit. This one demands that every share either fund or be destroyed.

It’s not a loophole. It’s an elegant fix.

In the real world, inflation and income tax are both forms of wealth extraction, one through legislation, one through monetary debasement. Both are taxes.

But while traditional systems allow people to keep their wealth and still benefit from others’ payments, this treasury model eliminates that possibility. No one keeps the capital. They must either contribute it to a project, or remove it from circulation for everyone’s benefit.

This is not a system where free riders thrive. It is a system where responsibility is unavoidable.

This treasury model gives every participant three choices:

  • Fund a proposal and expand utility.
  • Burn your share and protect scarcity.
  • Do nothing and let active participants reallocate your capital after a fair window.

  • IT DOES NOT HAVE A FOURTH OPTION “keep your share” which is what the income tax evader does in the example I gave.

No, it is completely different to rage quit. Here are the differences.

Feature Rage Quit Model Individual Allocation Model
Pooled treasury Yes: members deposit funds into a shared pool No: each person holds their own share of emission, no shared treasury exists
Voting system Yes: majority vote decides what gets funded No: there is no voting, each person allocates individually
Timing of control Post-vote: you can rage quit only after a proposal passes Pre-allocation: you never surrender control in the first place
Exit consequences Rage quit lets you leave with your funds before execution You never need to “exit” because your funds are never committed without consent
Who decides what gets funded The majority vote Each individual decides for their own share
Can your capital be overruled by others? Yes: if you don’t rage quit in time No: no one can spend your share but you
Behavioral incentive Protect yourself if you disagree with the group Act on your own judgment from the start—no permission or group consensus needed

These are even more concerning differences that makes rage quit awful:

Feature Rage Quit Model Individual Allocation Model
What happens when you reject a proposal? You withdraw your share of the pooled treasury and keep it You cannot keep your share; you must either fund a public good or burn your allocation
Do you retain the capital? Yes: you exit with your funds intact No: if you reject all proposals, your only option is to burn your share, benefiting others by reducing supply
Can you opt out and enrich yourself? Yes: you may preserve or use your capital later No: there is no private retention of treasury capital; all emission must be used or destroyed

Why This Matters

This model completely eliminates the problem of opt-out exploitation.

In rage quit systems, a participant can:

  • Disagree with the majority
  • Rage quit
  • Keep their funds
  • Wait to re-enter or spend it elsewhere, potentially benefiting from infrastructure others paid for

That is classic free rider behavior. The system allows capital to exit, then return opportunistically.

In the individual allocation model, that path does not exist.

If you disagree with all current funding proposals, you can abstain, but your treasury share cannot be hoarded. You either:

  1. Fund a public initiative you support
  2. Burn your allocation, sacrificing personal gain to preserve token value (and therefore everyone’s else).

There is no exit to private gain. There is only contribution through creation or deflation.

Also, that doesn’t mean that burners are not paying for the bridge. They still bear the cost of funding through inflation, because they hold STX, they absorb the dilution created when others fund. And by burning their share, they reduce total emission, softening that dilution for everyone else, including funders. Inflation and deflation effects are shared, so no one escapes the economic consequences. There are no free riders, only different forms of contribution.

Edit: Also, in that bridge example, if the funding goal isn’t met, the system shouldn’t hold partial funds and try again later to get the remaining funds that it needs. That’s not how it should work. If a target isn’t fully funded, the funds (shares) should be returned to the individuals who allocated them. Any new attempt to fund the project must start from scratch. This prevents capital from being locked in limbo and ensures that only clearly - supported projects proceed.