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Just minutes ago Aurora DAO has approved the update to AURORA token economy, marking a major milestone in the project development. The proposal was already heavily discussed by the community, but let me summarise it in this thread...
First of all, here's the link to the in-depth description of the update and the relevant discussion:
forum.aurora.dev/t/aurora-token-economy-2-0/2166
There are multiple constituents of the updates and let's dive deeper into each one of them.
First, with each transaction happening on any Aurora-related contracts (i.e. Aurora Mainnet, Rainbow Bridge, Aurora Silos) AURORA tokens would be burned. This makes AURORA a deflationary token.
The funds for the buyback and burn of AURORA are coming from the feature of NEAR protocol: 30% of the NEAR gas fees consumed for the transaction execution are transferred to the contracts that are called. Later this NEAR will be used for a slow buyback and burn.
Due to the specifics of the AURORA setup, at the moment this won't be automatic, since the true burn requires bridging of AURORA to Ethereum over the Rainbow Bridge.
This consumption use case of AURORA puts it on par with many other L1 base tokens (NEAR, ETH, for example). However, allows for great UX, since everything is done in the background.
Second, around 1 year ago AURORA staking was introduced. The goal of staking is the implementation of the decentralised governance. With current update, the staking rewards are fixed. And, thus, predictable for stakers.
A total of 50M AURORA is allocated to staking rewards. The bitcoin-style exponentially decreasing schedule is chosen. Every quarter staking rewards will go down with decrease of x2 every 4 years.
Third, initially announced Community Treasury now has a tangible way forward. The governance mechanism for it would be a well-established $CURVE-style VE model.
AURORA stakers would lock their AURORA tokens and will be able to vote on the distribution of Community Treasury funds every week. The place for applying for the community funding would be a governance forum.
The Community Treasury governance front-end would be implemented in aurora.plus, alongside staking. Though, as always, anyone is welcome to develop their own frontends, for example through NEAR BOS.
Smart contracts for Community Treasury will be developed by Aurora Labs in cooperation with experienced teams from the Aurora Ecosystem. Obviously, open source and at the highest security standards as with any core product of Aurora ecosystem.
Forth, the unlock of the AURORA tokens to the Aurora Council DAO is now specified. It covers now the period of the following 5 years.
Lastly, the cumbersome boost coefficient is removed.
Here are the things to expect within the actual implementation of the update:
In the shortest timeframe (~1 week), the staking rewards would be updated according to the new distribution schedule. As well as the total supply of AURORA, displayed in CMC, CoinGecko and other resources.
Soon after (~2 weeks), the buyback and burn mechanism would be installed with publicly shared info on the burning stats.
Implementation of the VE model for Community Treasury would take time, however, due to its' vast usage, no major problems are expected. I encourage Aurora Ecosystem to monitor the development on github.com/aurora-is-near/ and contribute with reviews.