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CZ’s Token Model Idea

Overview

CZ, the founder of Binance, recently introduced a new token issuance mechanism designed to regulate market supply through price thresholds and time-based constraints. This model aims to reduce selling pressure while encouraging project teams to prioritize long-term development. While CZ acknowledges that this approach is not a universal solution, he believes it offers advantages over the conventional fixed unlock schedule. He also hinted at potentially supporting select projects that implement this mechanism, sparking renewed discussions on token economic models within the market.

Key Features of the Unlock Mechanism

According to CZ’s proposal:
• Initial Unlock: At the time of issuance, 10% of the total tokens will be released to the market, with funds allocated for product development, marketing, and payroll.
• Subsequent Unlocks: Future token releases must meet strict conditions:
• A minimum six-month gap between unlocks.
• The token price must double the previous unlock price and remain stable for 30 days.
• Each unlock cannot exceed 5% of the total supply.

Benefits and Safeguards

This structure provides project teams with flexibility, allowing them to delay or reduce token unlocks to mitigate selling pressure. However, safeguards are in place to prevent manipulation:
• Teams cannot shorten the unlock period or increase the unlock percentage.
• Tokens will be locked via smart contracts, with unlock permissions managed by a third party to ensure transparency and fairness.

Potential Risks and Limitations

While this model offers market control advantages, CZ acknowledges that no token model can fully eliminate risks. Concerns include:
• Project teams could still cash out the initial 10% and abandon the project.
• Startups may fail at different stages despite controlled token unlocks.
Thus, while this mechanism can improve market stability, it is not a guaranteed path to project success.

Market Impact and Future Outlook

Although still in the discussion phase, some projects may experiment with this model, and CZ has expressed interest in supporting select implementations. However, not all projects adopting the model will automatically receive his backing. He remains keen to observe how this mechanism performs in real-world applications and its potential impact on token issuance trends.

Comparison to Traditional Markets

This model shares similarities with stock market strategies aimed at long-term incentives and reducing selling pressure—particularly in stock option vesting and controlled share issuance. However, it retains distinct crypto-native elements, such as price-based unlocks and smart contract-enforced lockups.

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