Thanks for starting this discussion systematically, @secparam! I agree it’s not a blocker, and also that it’s good to try start figuring it out nonetheless.
I’ve always been dubious about the “constant market cap” hypothesis, which assets that if units of a cryptocurrency are burned/minted then (all other things being equal) the price will increase/decrease to keep the market cap unchanged. This hypothesis is elegant, but do we have empirical evidence that it’s true, or any models that imply it for an asset whose value is not clearly grounded in fundamental underlying value?
I’m doubly dubious that this holds when the supply change is not known! How would the value of ZEC increase in response to a shielded transaction burning some ZEC, if no one (but the transaction’s sender and recipient) even knows that the ZEC was burnt?! Arguably there would be some long term effects in rejiggering supply and demand, but how can we predict it’s magnitude and why would we think it will exactly correspond to the secretly burnt amount, so as to preserve constant market cap?
Put otherwise: if you had 1% of TSLA, and today you withdrew it as paper certificates, and burned them, but didn’t tell anyone — do you think the TSLA price would increase, and moreover by exactly 1% and within a reasonable timeframe?
Let alone for something for which “revenues” and “book value” can’t even be defined.
we could burn a fixed percentage of the asset value itself in a transaction, this would leave some of the asset sitting in the reserve pool Maybe for AAMs or other wrappepd setups, its possible to capture this leftover money and pay it out to miners/ the chain.
Cool direction, but i don’t quite follow: if we don’t publicly know how much of the asset value was burnt (which somehow affects the AMM liquidity pool for the asset?), then we can’t compute how much excess there is in the liquidity pool that can be disbursed.