PROPOSAL: Remove the FLOKI transaction tax and burn the bridge tokens

The purpose of this proposal is to let the DAO decide on two critical issues that affects Floki’s future:

1. The original Floki cross-chain bridge.
2. The 3% tax on the FLOKI token.

Let’s start with the cross-chain bridge…

When the current team took over and relaunched the Floki project, the FLOKI token was initially launched on the Ethereum blockchain with a total supply of 10 TRILLION tokens.

Shortly after, however, based on community sentiment and data we decided to expand the FLOKI token to the BNB Chain — a decision that has paid off massively with the BNB chain currently having 5 times more holders than the ETH chain.

To expand FLOKI on the BNB chain, we had to launch another contract on the BNB chain with its own total supply of 10 trillion tokens.

However, we needed to ensure two things with the launch of the BNB contract:

1. That FLOKI’s total circulating supply at any given time NEVER exceeds 10 TRILLION tokens which is Floki’s firm maximum circulating supply.
2. That there needs to be a way for users to sync their tokens from the ETH chain to the BNB chain and vice versa — without the circulating supply changing.

To achieve both of the above, we needed a cross-chain bridge. The project had a little over 600 billion tokens (6% of the supply) in its treasury on the ETH chain at the time. We used these 600 billion tokens to “seed” the bridge on the ETH chain (effectively locking it away to activate the bridge!) while the rest of the supply on the FLOKI contract on the BNB chain (with the exception of what was burned and given to initial liquidity providers for the chain) were used to seed the bridge on the BNB chain. This resulted in an equilibrium where the total circulating supply never exceeded 10 trillion tokens, because users who want to bridge their tokens from the ETH chain to the BNB chain had to lock it first in the ETH bridge before being able to withdraw it from the BNB bridge and vice versa, essentially removing the token from the circulating supply on one chain and adding it to the circulating supply on the other chain, effectively maintaining equilibrium and ensuring circulating supply never exceeds 10 trillion tokens.

It’s been almost two years since the cross-chain bridge was launched, however. Within this period a few things have happened:

1. FLOKI has had more of a balance in the distribution of tokens between the ETH and BNB chain, with more people locking their tokens on ETH and taking it out on the BNB chain. As a result of this, while the majority of the supply is still on the ETH chain there is now such a balance that the absence of a bridge would not threaten the stability of the project.
2. More exploits and data have emerged to show how much of a threat cross-chain bridges could pose, especially if they hold a significant amount of a token’s supply. In fact, Ethereum founder Vitalik Buterin expressly disapproves of bridges and believes they could “create a systemic contagion that threatens the economy on [an] entire ecosystem.” Data from leading blockchain data aggregator Token Terminal, also shows that bridge exploits account for half of ALL DeFi exploits, and is responsible for over $2.5 billion in lost assets over the past two years. In fact, Floki narrowly dodged a bullet about a year ago when our main cross-chain bridge was briefly exploited. Thankfully we quickly disabled it and the impact was limited.

In Floki’s case, an exploit on our main cross-chain bridge would have a catastrophic impact on the project since this bridge currently holds 55.7% of what should be FLOKI’s total circulating supply (even though it is supposed to be locked/inactive, an exploit could quickly change that). This is A LOT of tokens, and that’s more than enough to drain the project’s liquidity pools and essentially destroy the project if exploited.

In light of this fact, we feel it would be in the best interest of the project to permanently disable our main cross-chain bridge and BURN the tokens in the bridge if the DAO votes in favor of doing so.

Removing the FLOKI transaction tax

The second part of this proposal involves removing the 3% buy/sell FLOKI transaction tax.

In the very early days of the project and at the peak of the bull market, this transaction tax generated millions in revenue that helped with operations and growth and ensured Floki’s survival. However, with the bear market and the resulting drying of transaction volume the tax has become redundant and is barely achieving its purpose: barely generating more than $30,000 in some months, which doesn’t even scratch the surface of the project’s operating expenses.

More importantly:

We’ve gotten a lot of feedback about the transaction tax, paid attention to industry sentiments about it, and carefully looked at the data and our conclusion is that the tax is currently causing the project more harm than good and significantly limiting its growth and adoption. Many people (both individuals and institutions) would NOT engage with a token with a high transaction tax.

In fact, a good (and recent!) case study showing just how much of an impact a transaction tax can have on a project’s adoption is the Luna Classic (LUNC) cryptocurrency. The LUNC community initially voted to introduce a 1.2% tax on each LUNC transaction in an attempt to make the chain deflationary. According to available data, the introduction 1.2% transaction fee (which is much lower than Floki’s current 3% tax) resulted in LUNC’s on-chain transaction volume dropping by a massive 91.67%. The community would later vote to repeal this transaction tax and reduce it to a more conservative tax of 0.2%.

We’ve been very clear from the get go that our aim is for Floki to become the most known and most used cryptocurrency in the world. This is an ambitious goal that will require full commitment from Floki’s hundreds of thousands of holders. However, this goal would not be achievable with a hefty transaction tax in place.

As such we would like to propose a “removal” of this tax to the Floki DAO. More specifically, we would like to propose reducing it drastically to a 0.3% tax — which is more or less “removing” it. Uniswap and other decentralized exchanges have a default tax/fee of 0.3% for using their exchange and we believe, based on data we have, that reducing the Floki transaction tax to the same makes it insignificant/sufficient enough to allow more people to readily engage with the FLOKI token without being put off by a heavy transaction tax. We would also be reviewing data after this reduction to see if there is a need to completely set the tax to 0.

The proposal to remove the transaction tax in the FLOKI token isn’t something we’re putting forward lightly; this is something that we’ve debated and considered for over a year, sometimes very passionately, but the extended bear market has given us more data points to consider in favor of removing the transaction tax sooner rather than later.

How would Floki survive?

The key question you might have right now is: how would Floki’s operations and growth continue with the removal of the transaction tax?

Firstly, we would like to clarify that the transaction tax was barely generating any revenue during the bear market. So having it in place won’t make much of a difference to operations in light of the current volume in this market.

Secondly, as initially explained above, the project had 600 billion tokens which was initially used to seed the Floki bridge on the ETH chain. This essentially locked up the token, making it inaccessible. By disabling and burning the bridge, these tokens can be returned to the Floki treasury and used for operational purposes if necessary: 250 billion of these tokens would immediately go towards a multisig and reserved for the Valhalla treasury/ecosystem when the game goes on mainnet while the remaining 350 billion tokens would go to the Floki multisig treasury for operations and growth if needed in the future.

Please note that Floki’s total supply would NOT exceed the originally advertised 10 trillion tokens even with this option.

Furthermore, Floki continues to focus on building out its utility products such that these products would eventually become the main source of revenue for the project in the future.

So this proposal has two options:

1. Burn the bridge tokens, return the project’s 600 billion tokens used to initially seed the bridge, and remove the transaction tax. With this option a total of 4.97 trillion tokens (currently worth $54,670,000) will be permanently burnt. Floki’s total circulating supply will remain under 10 trillion tokens.
2. Maintain the status quo; i.e. don’t burn the bridge tokens and don’t remove the transaction tax.

If this proposal passes, the team will announce a date to execute this and enforce the will of the DAO.

Two key things to note:

If the DAO votes in favor of burning the bridge tokens, we would like to highlight two key things:

1. There would be a “buffer period” for people who hold significant sums of FLOKI tokens and would like to bridge their ETH tokens to BSC prior to executing the burn. We understand that the decision to burn the bridge tokens is a very significant (and permanent!) decision and the ETH chain has a higher percentage of circulating supply, so we would be happy to help large holders who want to bridge over to BSC do so manually before the burn. We’re also discussing with our exchange partners who might need help bridging tokens to the BNB chain.
2. This vote would not apply to the FLOKI bridge at Multichain.org which currently holds less than 2% of the tokens total circulating supply as that isn’t too significant to pose any serious threat to the project and allows for smaller bridge transactions for users who still want this feature.