Establishing a Hard Cap on SSV Token Supply

Proposals DIP (DAO Improvement)
1

Summary of Proposal
This proposal advocates for setting a fixed maximum supply for SSV tokens to prevent unlimited inflation, which devalues holdings and undermines long-term sustainability. Currently, SSV has no hard cap, allowing indefinite minting—this must change to align with sound tokenomics and investor confidence.

Proposal Details

We propose three concrete steps to enforce responsible tokenomics:

1. Set a Fixed Maximum Supply

  • Cap Maximum SSV supply at 13 million tokens
  • This ensures no further arbitrary minting, similar to Bitcoin’s 21M cap or Ethereum’s post-merge deflationary model.

2. Lock Future Minting Rights in a DAO-Controlled Contract

  • Move remaining unminted tokens (if any) to a time-locked, multi-sig contract.
  • Require DAO approval for any future minting (e.g., for staking rewards or ecosystem grants).

3. Implement a Deflationary Mechanism

  • Introduce token burns via:
    • A % of protocol revenue (e.g., 5-10% of fees).
    • Unused treasury funds (e.g., excess reserves).

Non-Technical ELI5

Right now, SSV can print unlimited tokens, which makes each token worth less over time (like printing too much money). This proposal locks the total supply at 13M SSV forever, so no one can create more out of thin air. It also burns extra tokens to keep SSV scarce and valuable.

Motivation for Proposing

  • Unlimited inflation harms long-term holders by diluting their stake.
  • Inflation of SSV hurts coin holders too deeply.

Reasons Supporting the Proposal

:white_check_mark: Prevents devaluation – No more surprise inflation.
:white_check_mark: Boosts investor confidence – Predictable supply = stronger price floor.
:white_check_mark: Aligns with crypto best practices – BTC, and top altcoins use hard caps.
:white_check_mark: Encourages responsible governance – DAO, not a small group, controls future supply.

Poll

Should SSV implement a hard cap of 13M tokens and burn supply?

  • Yes – No more inflation; protect holders.
  • No – Keep unlimited minting options.
  • Abstain – Need more discussion.

Next Steps

If passed, this proposal will proceed to on-chain voting, with a 30-day discussion period for adjustments.

Let’s make SSV scarce, valuable, and community-controlled! :fire:

3 Likes
2

When will this endless inflation end?

3

Strongly agree this proposal !!
SSV token must have a hard cap !!

4

Yes, they should do it

5

Strongly agree this proposal !!
SSV token must have a hard cap !!

1 Like
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@BenAffleck @fod Please seriously consider implementing this proposal as soon as possible: mint as many SSV tokens as needed in a single tx and renounce admin rights. A very high hard cap can be set to ensure that it doesn’t materially impact the existing plans, but it will significantly influence the market price. This is the only way for SSV to potentially kickstart a positive flywheel effect.

2 Likes
7

This topic was already addressed in the other post here:

You all are welcome to continue discussing it with me and others, but what you posted here was already responded to there (and you all chose not to continue the discussion).

Repeating for each of your suggestions:

  1. We can’t do this because it’s how the DAO voted to fund the project. If you give this suggestion, you must also propose a viable alternative funding mechanism.

  2. Mints are only done when they are directly approved by a DAO vote. No one has the authority to mint tokens without it.

  3. We are already burning 100% of collected network fees.

Obviously, everyone wants inflation to be minimized. That’s not the problem here, and you can’t just say “stop inflation”.

8

Too many things were discussed in that thread, but I just want to clarify one key point: we need to set a hard cap for the SSV token.

Projected Annual Expenses:

* 2025: $12,760,000
* 2026: $14,088,539
* 2027: $14,180,349
* 2028: $14,277,838 (hereinafter: “Four Year Budget”)

The team wants $60M for a 4-year budget, then mint 10M SSV tokens upfront (at the current price of $6) in a single transaction. After that either give up admin control or guarantee no further minting for the next 4 years.

The DAO can then vote on when and how much of the pre-minted SSV to sell to the market(or Ventures) — for example, on a quarterly basis.

This is the only way I can think to build trust and create a real positive price flywheel — while still fully covering the SSV team’s funding needs.

Short-term pain is better than long-term suffering.

2 Likes
9

The current economy model is unsustainable. The current market value of SSV is 80M USD, while the total four year budget is 60M USD. Why can’t SSV generate cash flow from its operations?

11

I appreciate the thoughts. I’m open to having a strategy that limits the total supply. But personally, I still think the existing strategy is favorable (I’m only one opinion, and I hope others give theirs too). When we get to the point where we are confident that our revenue can support everything (we are not there yet), then I think reducing our dependence on minting makes more sense.

Right now, I think the only thing you gain from what you are proposing is that the Total Supply listed on CoinMarketCap becomes fixed (for ~4 years)… maybe I’m underestimating how valuable that is, but I don’t see it as that important, at least compared to other properties.

You don’t gain certainty with Circulating Supply (the quantity that matters much more, in my opinion), and most importantly, you don’t change the rate that tokens are sold on the market. In my opinion, fixing the total supply will not decrease inflation or help the token price at all right now. There is no “short-term pain vs long-term pain” because you cannot escape the long-term pain of needing to sell tokens.

I would actually argue that doing a single huge mint would increase inflation. It will be easier for the DAO to spend more because the tokens are already available ready to be spent. I think that’s the opposite of what we want, and I think needing to face the reality of minting each time encourages the DAO to be more frugal.

Also, by fixing token supply, you lose the funding flexibility that an evolving project might need. In this industry, being agile is extremely important. SSV reached mainnet less than two years ago, and we’re already moving in a previously unexpected direction with SSV 2.0. We might feel like we can predict the next year or two, but beyond that, who knows. I don’t think it’s wise to give up such a powerful funding tool this early. But as I mentioned, when our revenue increases, this changes the calculation.

@YunTing

Why can’t SSV generate cash flow from its operations?

We are, but it’s not enough to support everything securely yet. Revenue is increasing quickly though, and especially with SSV 2.0 coming soon, we will get there. Also note that we are burning 100% of our revenue, so we are already offsetting our minting with our revenue (“repaying” what we are “borrowing”).

So although I agree that inflation needs to decrease, I don’t think fixing the supply should be our first solution. Instead, I think the discussion should be around cutting costs and increasing revenue. And I think how you do that is launch SSV 2.0 as soon as possible, phase out the Incentivized Mainnet Program (replacing the extra rewards with SSV 2.0 income), and grow aggressively.

12

Summary:
Repurchase SSV now can benefit both the price and future operation of SSV. Issuing more SSV at historic low price is not a wise choice, unless the team think SSV is overvalued now.

Yes, the project burns its 100% revenue, but the revenue even can’t maintain the operation of SSV for more than two months. Why this project has so high expenses, while the revenue is so low? SSV should have a new plan to cut its budgets or increase its revenue; otherwise, its operation will be unsustainable.

Moreover, I wonder whether the team cares about the investors in crypto market? Many of them lost more than half of their wealth because of investing in SSV.

I think SSV SHOULD reconsider its inflation model. For example, SSV issued many tokens at $5, which is a historical low price. Hence, SSV has to issue more tokens to maintain their operation, and it gives the market a very bad signal showing that SSV might be overvalued (if you know the signal theory in stock market, you will know what I am saying).

Therefore, I think monthly inflation might not be a good choice as it will hurt SSV when it experiences its low price period (namely, now).

For now, the team should repurchase to enhance the confidence of investors. In the near future, If the price of SSV goes to its historic high, then the team can make profit through selling the repurchased SSV coins.

2 Likes
13

Yes, spending a budget of 15M USD annually is incomprehensible(The Ethereum Foundation will sell a total of 12.6M USD worth of Ethereum in 2024), and I believe it lacks transparency. This greatly harms the holders of SSV.

On the technical side, we believe SSV is doing the right thing, but the minting plan severely undermines confidence. I think the DAO should consider this carefully.

3 Likes
14

@fod
We want to make the spent expenses of SSV more transparent. I want to ask where we could find the accounting statements of SSV for these days operations. We want to know how does our money go, as we are the coin holders.

As Praxis mentioned, the budgets of SSV is abnormally high, even close to ETH budgets.

After we knowing how the money was spent, we can know how to cut the expenses effectively and make the operation of SSV more sustainable. Recent token economics model of SSV is unsustainable as it four year budget nearly equals to its total market value.

As stakeholders of SSV, I believe all of us want to solve these problems and make SSV more transparent.

15

Hey @everyone, :waving_hand:

As for the budget, see [DIP-26] ssv.network DAO Four-Year Budget (2024-2028) for a statement over the next 4 years. Also, see the detailed budget breakdown here:

For a breakdown of the R&D budget see [DIP-31] Development Roadmap and Project Promotion Services for 2025-mid-2026 by SSV Labs. Note the percentages next to each deliverable.

If you seek details of past spending, every single transaction is listed here:

If you want to see tokenomics stats, including network burn, mints, circulating, and total supply, the dashboard is the go-to place:

As for future sustainability, we have presented SSV 2.0, which answers the questions you have and aims for ultra-sound SSV and DAO sustainability without the need to mint. SSV 2.0 is expected to hit testnet next week.

Every penny is trackable, and every decision is linked to a DAO vote. I do think we’re one of the most transparent and democratic DAOs out there.

Let’s keep thoughts coming, but please make sure to understand the current context and future plans.

—Ben

2 Likes
16

PS: We aim to present another proposal next week, which gives everyone the chance to bring forward such ideas and get support to convert it into a full-fledged proposal that can be voted on, but it requires an addition “Temp Check”.

Worth keeping an eye on it here on the forum.

3 Likes
18

I don’t think we have the funds to repurchase much SSV, unfortunately. We’re already minting to support operations and development.

Yes, the project burns its 100% revenue, but the revenue even can’t maintain the operation of SSV for more than two months.

We unfortunately can’t just snap our fingers and increase revenue, as nice as that would be :slightly_smiling_face: However, note that revenue is increasing quickly, and it is expected to overtake costs (which will negate the supply increase from minting). Also don’t forget that our revenue currently scales with ETH price. Are there any changes that you propose to help with this?

the budgets of SSV is abnormally high

I agree. I think spending is too high. But if you care, please read over the budget and new proposals and see if you have further suggestions for what to cut. Many people have been hard at work trying to reduce costs. As @BenAffleck posted, the people involved do their best to be transparent, but I know that it’s a lot to follow.

I think SSV SHOULD reconsider its inflation model.

Do we have a viable alternative funding model right now? If so, please suggest it. I haven’t seen one mentioned. However, I think we will soon be able to depend more on our revenue.

I wonder whether the team cares about the investors in crypto market

Of course they do. Everyone wants the token price to be high and hates that it’s low, and many contributors are holders (myself included). But also, don’t neglect the wildly successful growth we have accomplished recently, and don’t discount the value that this (and SSV 2.0) will soon add to the token. We’re simply in a transition, following a period of aggressive self-investment to fuel strategically-motivated growth that is about to unlock the next chapter for SSV.

@praxis

19

We are all optimistic about ssv2.0 and believe that ssv2.0 can bring us huge income. The team must have this confidence. My idea is: can we pay less salary to the team before ssv2.0 is successful (when the agreement income is low), and then compensate for the part of salary that was not paid before after the success (the agreement income is enough to cover the cost) (it can include interest, bonuses, etc. as compensation)

1 Like
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agree. And if the management team are confident with SSV 2.0, they should repurchase.

23

Thank you for all of your feedback and suggestions! I’ll try to answer the main concerns raised

Minting

I like the idea of minting ahead of time to fund an agreed-upon budget. It will make life easier and more predictable. In this thread, Fod articulated well the biggest issue with this approach, which is, no way to fund the DAO afterwards. Ostensibly, even if the huge chunk gets minted and the contract “burnt”, as some projects have done, a DAO can always decide to bypass this decision down the line in various ways (new token, conversion, upgrading the contract, etc.)

The biggest minting driver we currently have is the Incentivized Mainnet (IM), which we’ve used extensively to support growth. Based apps (bApps) are the only path to phasing out IM and replacing it with a sustainable model that delivers even greater rewards to stakers.

If we can gradually reduce our reliance on IM over the next few years, we can significantly cut back on new token minting.

Budget

The challenge—always—is creating a budget in the face of a very volatile market. One way to mitigate that is by “over-minting” SSV tokens to create a buffer for unexpected costs.

DAO Cash Flow

We currently have 107.9K registered validators, generating 248K SSV in fees per year—roughly 2% of the total supply. That’s actually pretty remarkable!

Screenshot 2025-05-07 at 13.00.42
Screenshot 2025-05-07 at 13.00.421630×632 55.6 KB

(Those numbers are not verified by me, mostly ChatGPT generated. They do give a good reference).

I expect based apps to significantly boost this number—and here’s why:

Right now, we charge around 1% of ETH staking APR. That’s not a lot, given that staking margins are already tight. However, bApps can deliver net-new rewards to stakers—creating value-added yield—which means we can charge much higher fees.

I’d expect around 10% in fees on bApp rewards.

To match the current rewards rate (248K SSV), the network would need to generate roughly $15M in bApp rewards—which is very, very conservative.

In reality, I expect bApps to generate hundreds of millions of dollars in rewards over the next few years.

SSV.Labs Dev Grant

I know the grant we requested is substantial. We created the proposal as part of our annual (actually, two-year) planning cycle.

We, internally, extremely value the community feedback that we received. Based on this feedback, we have:

Added a very granular effort breakdown of how much work we believe we will expand on a per feature basis.
Added a commitment to the API maintenance according to the proposal.
Continue our support of the ambassadors/divers and their program.

I’m very bullish on bApps—I believe they represent the future of staking and ETH value capture at large.

We wanted to be aggressive in developing them, and that requires a larger team.

The market isn’t great right now. We are fully tuned to it. If the market downturn persists, we’ll absolutely take action. But for now, I’d like to stay focused on building aggressively, regardless of market conditions.

Do note, if you were to look at the projected DAO budget in DIP-26, that the requested grant was only approximately 800k USD worth of SSV more, over a time of a year and a half. Despite the planned budget, no company can adjust to market conditions instantaneously, and delivering high quality products consistently, requires predictability and stability in financing these efforts.

In terms of the amount being high, as noted in the proposal, this amount does not come close to covering the costs of the team.

We try our best to be very attentive to feedback and requests coming from the DAO. If you’d like to have additional questions answered in a more lively discussion, I plan to attend the next DAO all hands, currently scheduled for the 22nd of May. Please, feel free to list them here so none is lost.

Finally
On a different note, but an important one, every DAO is a collaboration of many different parties, and I’m very happy to see that all initiatives are heavily scrutinized by the DAO and especially the core contributors. Thanks to them, this has become one of the most successful projects in the industry thus far.

1 Like
25

Dear CEO of SSV,

Thank you for your time and response. As one of SSV’s most important stakeholder groups, we investors have the following concerns regarding SSV:

1. If the team plans to peg future token issuance to fiat amounts, in unfavorable market conditions, the price of SSV tokens may continue to decline. This would mean SSV would need to issue even more tokens, which could significantly impact existing token holders’ interests. Large-scale SSV token issuance could also push SSV’s price into a death spiral (specifically: the lower SSV’s price falls, the more SSV needs to be issued; the more SSV is issued, the greater the selling pressure becomes, driving SSV’s price even lower). We are unsure whether the team has considered this scenario and whether any countermeasures are in place. As investors, we are particularly concerned that the substantial token issuance planned for early July 2025 might occur when SSV’s price is low, which could severely damage our interests.

2. Thank you for listing the P/E ratios of some projects. The P/E ratio reflects market investors’ expectations for each project’s future prospects. A lower P/E ratio does not necessarily indicate greater sustainability but may suggest limited market interest in the project, so a low P/E ratio might not be a positive signal.

Moreover, for sustainable development, I believe that cost coverage ratio (Income/Expense) is currently more critical for SSV. At present, SSV’s annual revenue is only 248K SSV (approximately $1.7M USD), while the annual budget is nearly ten times that amount. Even under the most optimistic assumptions—assuming fee rates rise from 1% to 10% (as mentioned in your response) and ignoring competition (e.g., Obol)—revenue would barely cover expenses. The disproportionately high expenditure relative to limited revenue is a major concern for us as investors. We worry that the project may continue relying on token issuance, diluting holders’ value to sustain operations.

3. Lastly, from a broader perspective, I hope SSV considers token holders’ interests alongside R&D efforts. Repeated large-scale token issuances could erode holder confidence, potentially driving them toward competing projects. Damaging holders’ trust could ultimately harm the SSV project itself.

We all want SSV to thrive, and we urge the team to carefully balance development costs with token holder interests in decision-making.