Yesterday @babylonlabs_io Co-founder & CTO @baby_fisherman introduced a governance proposal for Programatic Deflation of $BABY via an auction mechanism. In the proposed mechanism, BSN rewards sent to Babylon Genesis will not be distributed to BABY stakers. Instead, they’ll be auctioned off onchain. Bidders use BABY to buy the rewards, and the BABY used in winning bids is burned. We believe that this is an important move for Babylon's token-economics, and will create structural demand for the native token, which is also crucial for Staked BTC APY, and also for attracting additional BTC to the protocol. The most analogous example of a similar mechanism working is @eulerfinance's Fee-Flow model. Their elegant mechanism is proof that this model works, and helps the token capture value. As a validator in the Babylon network, we support this proposal, and will continue to be supportive of proposals that maximize token value accrual via robust mechanisms for long-term sustainability and growth of the network.

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