- Zhao’s proposal limits token unlocks to ensure crypto market stability.
- Tokens unlocked only if price doubles and holds for 30 days.
- CZ clarifies he’s not launching a token, just sparking discussion.
Changpeng Zhao, the founder of Binance, has proposed a new token unlock mechanism aimed at preventing the market from being flooded with new tokens during periods of low prices. This model ensures that tokens are unlocked only under specific conditions to provide stability to token prices. Zhao’s proposal is designed to prevent early dumping and incentivize long-term growth.
Zhao’s Innovative Token Issuance Proposal
Under CZ’s proposal, only 10% of the total token supply will be unlocked at the time of the launch. The funds from this initial release will be used for development, marketing, salaries, and platform expansion. The remaining 90% of the tokens will remain locked until certain conditions are met.
Subsequent token unlocks will only happen if the token price has doubled compared to the previous unlock price and remains at that level for 30 consecutive days. Each unlock event will be capped at 5% of the total token supply. These measures ensure that tokens are not flooded into the market too quickly to preserve price stability.
The proposal includes a six-month gap between each unlock to ensure that crypto projects do not unlock tokens too frequently. If the token price does not meet the required conditions, no new tokens will be released. Zhao emphasized that project teams will have the discretion to delay or reduce unlock amounts, but they cannot accelerate or exceed the set unlock limits.
Proposal Prevents Token Dumps and Crypto Exit Scams
Zhao has clarified that he is not planning to launch a new token under this model. Instead, he has shared the proposal to spark discussion within the cryptocurrency community. He believes this model could prevent the market from being flooded with new tokens, which often leads to price crashes and a loss of investor confidence.
The proposal has been met with interest by some in the crypto community because it promotes long-term growth and reduces the speculation behaviour. The model aims to promote sustainable development and prevent market volatility by limiting token unlocks to strict conditions. Zhao’s idea also seeks to reduce the risk of exit scams that have plagued the space in the past.
The proposal relies on smart contracts and third-party control of the unlock keys to ensure transparency and security. This could lead to greater investor confidence in token releases and improve the overall credibility of tokenomics. Zhao’s approach is could enhance a more structured and sustainable process for managing token releases.
Zhao’s proposal could reshape the future of token issuance. If adopted, it could encourage long-term development and reduce the negative effects of early token dumps.