Prioritize Burn over Accumulation from Taker Fees

Proposal Discussion
1

This proposal adjusts the distribution of taker fees by:

  • Increasing the buyback allocation of non-OSMO taker fees from 45% to 75%
  • Increasing the burn allocation of OSMO taker fees from 50% to 75%.

These changes aim to enhance token value accrual and align with the long-term sustainability goals of the Osmosis ecosystem.

Current Parameters

Taker fee collection occurs on the token that enters a trade; non-OSMO tokens are currently split:

  • 55% Accumulation in the community pool
  • 45% Buy back OSMO

This split was last adjusted in Proposal 881 to support the accumulation of BTC liquidity.

OSMO collections, both directly and via buyback, are then split

  • 50% Distributed to Stakers
  • 50% Burned

This parameter was last adjusted in Proposal 903 as a burn mechanism.

Proposed Parameters

This proposal would:

  1. Change the non-OSMO taker fee split from

    55% Accumulate / 45% Buyback → 25% Accumulate / 75% Buyback

  2. Change the OSMO fee split from

    50% Distribute / 50% Burn → 30% Distribute / 70% Burn

These changes increase the share of taker fees used for market purchases of OSMO, increasing direct buy-side pressure. The reduction in community-pool accumulation reflects a view that reserves are growing sufficient for ongoing strategic use.

The increased burn share reduces token supply at a faster rate while preserving meaningful staker rewards from revenue.

Impact

This calculation assumes that the OSMO portion of taker fees is 25%, which is currently typical but may change over time.

Destination of Taker Fees Before After Change
:fire: Burned OSMO 29.4% 56.9% +93.7%
:wrapped_gift: Distributed to stakers 29.4% 24.4% -17.0%
:money_bag: Accumulate (community pool) 41.2% 18.7% -54.5%

Target Onchain Date: 3rd July 2025

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