$KARATE Token Burning and Staking mechanism proposal

Hello karate Combat Community,

I’d like to propose the addition of a $KARATE token burning and staking mechanism, let me explain how this could be implemented in an easy way:

Right now, once an event is over, users who voted on the winning fighters earn a % of their voted KARATE tokens, and Fighters themselves, winning the fight or losing the fight, also earn KARATE tokens for their participation.

But what if a small fee % is taken on these earned KARATE tokens after each event, from each winning user/fighter and burned half of it, and use the other half to fund a staking pool, to reward future $KARATE token stackers.

This would add deflationary value to the KARATE token, plus, it will allow the league to offer staking rewards to KARATE token stakers, fully funded by this small fee % they take from winning users.

At the end of the day, it’s Up Only Gaming, with no way of actually loosing any of your tokens when voting, I see no reason why people would be against taking a very small fee % on each of our (and fighter’s) KARATE winnings and use that fee for something good.

Something good? Let’s dive into the positive points:

  • Staking Incentives: By directing half of the fee to a staking pool, it would provide continuous rewards to users who stake their KARATE tokens. The Staking pool will be refueled after each event, making it a very sustainable option. Plus, offering Staking to Karate Combat users could potentially lower the selling pressure that the KARATE token has been facing after each event.

  • Higher Returns: As the staking pool grows with each fee collected after each event, the rewards distributed to stakers would increase, making staking more attractive to both current and potential users.

  • Token Burning: Burning half of the fee tokens would reduce the total supply of KARATE tokens over time, creating a deflationary effect. As the supply decreases, the value of the remaining tokens could increase, benefiting all token holders.

  • Value Appreciation: The deflationary pressure on the token supply could drive demand and value appreciation, making KARATE tokens more attractive to investors and users.

  • Balancing Supply and Demand: The dual approach of funding a staking pool and burning tokens helps balance the supply and demand dynamics of the KARATE token, ensuring a healthier economic model.

  • Active Participation: Users are more likely to engage actively with the platform if they see tangible benefits from winning (staking rewards) and long-term value appreciation of their tokens.

  • Community Growth: An attractive staking mechanism and deflationary tokenomics can help grow the community as more users become interested in the benefits offered by holding and participating in the KARATE token ecosystem.

  • Performance-based Fees: Implementing fees on winners aligns economic incentives with performance, encouraging participants to strive for excellence. Winners would be rewarded not just with their prize, but also through potential increases in token value over time due to the deflationary mechanism.

  • Network Transparency: The use of the Hedera’s technology ensures transparency in fee collection, distribution, and burning processes, building trust among users regarding the fairness and integrity of the system.

  • Clear Value Proposition: Clearly defined use of fees (staking rewards and token burning) provides a straightforward value proposition to users, enhancing the attractiveness of the KARATE token ecosystem.

Conclusion:
Implementing a small fee on every winning user, with half funding a staking pool and the other half burned, could offer substantial benefits for the Karate Combat ecosystem. This dual approach enhances user engagement by providing continuous staking rewards and fosters long-term value appreciation through a deflationary mechanism. By incentivizing users to stake their tokens and actively participate, it drives community growth and ensures economic sustainability. Additionally, the transparent and fair allocation of fees builds trust among users. Overall, this strategy could create a more vibrant, committed, and financially robust ecosystem, aligning the interests of participants, investors, and the league itself.

Thank you for taking the time to read my dual-proposal. I truly think this could change the game for the Karate Combat league and for the current and future token holders.

Feel free to share your thoughts below!

Greetings,
Level Up Trading

7 Likes

Awesome proposal mate, it’s clear this took some thought. Wholeheartedly agree :100:

3 Likes

I like your idea for staking and burning. I think its definitely needed. At the moment the $karate token is very inflationary with high emmissions, and supply currently outpacing demand for the $karate token, which currently appears to be having a detrimental effect on the price. We know there is demand for $karate given its utilities ( and i think utilities should keep being developed to increase demand), however the supply side of the equation is currently outweighing the demand aide. A deflationary model will create scarcity in the $karate token, and could help tip the supply /demand scale of the equation to the demand side and could help support the $karate price. A healthier $karate price = a healtier league and bigger project growth = more revenue for the project and better pay for fighters meaning bigger fighters could join the league. Its in everones best interest to have a healthy $karate token price.

I would like to add, that the mechanism for the token burning need not only be from fees. I would say that an even more powerful and healthier mechanism would be a buy back and burn mechanism. In this mechanism, a portion of the project’s revenue os utilised to buy back $karate from the market and burn it. This will serve a dual purpose by having a positive impact on the $karate when tokens are continously bought on market, and then a longer term scarcity impact when tokens are removed from circulation, which also is healthy for positive price action. Going one step further, this mechanism could also fuel the staking pool (instead, or, in addition to your proposed fee) - maybe half of the buyback is used to burn, and the other half used to fuel the staking pool. Obviously only a small portion of the project revenue should be utilised for this mechanism, to ensure enough revenue is still there continue to grow the non-crypto aspect of the league.

Thank you.

2 Likes

Very much appreciate you sharing your thoughts about the proposal! I started thinking about it once I saw them looking into adding staking. I truly believe this is the most sustainable way to introduce a staking pool, plus adding a burning mechanism at the same time, both with help the league and the $KARATE holders.

1 Like

Thank you for your reply! Yes, you hit the needle on the head! Thanks

2 Likes

I think almost everyone is aligned on staking. The working group that was voted on in KICK-8 will definitely take this suggestion into consideration.

But I’m not sure I see yet the logic at the macro level of reducing UOG $KARATE rewards to burn half and give the other half to passive stakers. There’s def a narrative there but I don’t know if it’s quite strong enough to carry out the work required.

We do have a very exciting development in mind for passive stakers though. But it’s not ready yet to discuss publicly.

4 Likes

Hi OnlyLarping, have you read my comment above regarding the burning mechanism? There need not be a fee to token holders for the mechanism, i agree, its not the best idea - personally i am against fees. Rather a (sustainable) portion of the project revenue should instead be used to buy back $karate on market, and then burn (or a portion also used to feed staking pool).

I recognise the move towards staking, and i agree that will bring more stability to the token. However staking alone, without scarcity/demand can be damaging and not yield the desired effect. Scarcity is acheived by reducing the total supply of an asset, which in return increases the demand for said asset. To acheive scarcity burning (reduction in supply) is required.

2 Likes

I appreciate you taking the time to reply to my proposal, and I am glad to hear that the working group will look into my suggestion for the staking mechanism.

So just imagine if 1% is taken from ALL rewards after each event, half of that fee is used to fill up the staking pool, and the other half is burnt, with more and more users joining the Karate Combat App, I could really see that 1% fee have some positive impact on the overall League, it’s token holders and the $KARATE token price.

Again, there is no reason for people to complain about this tiny fee as they are earning KARATE token for free anyway, just by winning. They have nothing to lose, yet, this proposal could really benefit everyone.

Thanks again for reading through it all, I appreciate you!

3 Likes