No Demand, Excessive Supply: A Critical Call for Strategic Burn Before the 43% Inflation Hit

Ideas Bank
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1. Title

Why Invest in PYTH? A Proposal for Strategic Burn and Supply Re-adjustment to Overcome the 43% Inflation Crisis

2. Abstract

In a saturated market of over 20 million tokens, why should investors choose PYTH? Our technology is outstanding but our tokenomics is failing. This proposal demands three critical actions: Direct burning of reserved supply, re-adjustment of the upcoming catastrophic unlock schedule, and a total transition from the current buyback model to a “Buyback-and-Burn” system.

3. Rationale

[The Hard Reality: Supply vs. Demand]

Since the token’s launch, we have witnessed a persistent downward trend because every time new supply entered the market, demand failed to keep pace. This is, frankly, a failure of the team’s initial tokenomics and distribution planning. With a staggering 43% of the total supply scheduled to flood the market this year and next, how can we attract new investors?

[The May 19th Nightmare]

We are facing a nightmare: 2.13 billion PYTH tokens are scheduled to unlock on May 19th. For long-term investors, the continuous price decline has moved beyond disappointment to a stage of profound frustration and fear. Staking rewards are a “drop in the bucket” compared to the massive loss in principal value. The community, which has remained patient until now, will no longer sit idly by as their holdings evaporate.

4. Proposed Plan and Feasibility

We urge the Pyth DAO and Council to implement the following three pillars:

• Proposal 1: Direct Burn of Reserved/Foundation Supply

Following the successful precedents of BNB and XLM, the DAO should permanently burn a significant portion of the non-circulating/foundation-held supply. This is the strongest signal the team can send to prove they will not “dump” on holders and are committed to long-term scarcity.

• Proposal 2: Supply Re-adjustment of the Unlock Schedule

The current unlock schedule, especially the 2.13B tokens on May 19th, must be re-evaluated. The planned inflation is far too aggressive compared to current market interest and demand. We demand a significant reduction in unlock volumes or an extension of the vesting period to align with market reality.

• Proposal 3: Complete Transition to a ‘Buyback-and-Burn’ Model

While the 33% buyback news was positive, we question whether the current buyback volume has any meaningful impact on the actual token price. Simply storing tokens in a treasury does not remove sell pressure. We demand an immediate transition to a model where every repurchased token is permanently burned to ensure a visible deflationary effect.

We were well aware of the unlock schedule, yet we held onto the hope that the price would find a reasonable floor and stabilize. However, witnessing the relentless and bottomless decline leading up to today, we have come to a painful realization: This is a clear failure of the team’s supply-side planning. The inability to balance the influx of tokens with actual market demand has turned our trust into a nightmare, and even those who have endured the past two years are now paralyzed with fear regarding the upcoming unlocks.

I am in constant communication with over 1,000 dedicated members of the South Korean community. We can no longer stand by and watch our hard-earned assets evaporate due to these strategic missteps. This is why I have broken my silence to write this. This proposal is not merely a suggestion; it is a firm demand for the Pyth Foundation to take responsibility and prove it truly values its long-term supporters.

4 Likes
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Dear @Joy,

I really like your idea. I think buybacks alone only address the demand side, and we also need to look seriously at tokenomics, which is the supply side.

For Proposals 1 and 3, I’m honestly not sure what the right approach is. We’ve seen examples like Jupiter recently, where they burned around 3–4% of the total supply, and in the end it didn’t really change much in market reaction or pricing. That’s why I feel the treasury could be used in a more meaningful way. We could even think about growing the DAO treasury to something like $1M or $10M, which would give users and partners much more confidence in the protocol.

I really like Proposal 2 though. Adjusting the emission schedule feels important. Do you have any ideas on how we could approach that? One thought I had was tying token unlocks to Pyth’s revenue. The more revenue the protocol generates, the more $PYTH gets unlocked. This would better align the team’s incentives with token holders like you and me.

Overall, I support this proposal as a starting point to rethink the tokenomics and make Pyth more sustainable in the long term.

If you’re interested in discussing this further with the community, feel free to drop your Discord handle here. Also, @Derrp, could you add him to our chat?

I hope you like my reply.

From SCP with Love,
Community member of Pyth Network

1 Like
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Token burning is a poor way of trying to create scarcity and prop up prices.

No real value is being created here.

Real value comes from demand and utility. Sometimes demand is forced upon users like gas fees on blockchains. You have no choice but to pay for use.

First, address the market for Pyth tokens. Insufficient buying is taking place. The market maker can push the price down absent buying. There is a limit to this.

An exchange sells people crypto at a given price and pockets a transaction fee. If people keep buying at said price or higher the exchange continues to sell at those prices and pockets the fees.

Once buying dries up at a given price the exchange is motivated to create transactions and the most profitable way to do that is to bid the price lower. The price is bid lower, new buyers enter, transaction fees are made. As prices continue to fall some people who bought at the higher prices will capitulate and sell for a loss. The exchange typically acts as the buyer of the sale absent other buyers. Both the fee and price difference is pocketed by the exchange, they sold at a higher price and can buy it back at a lower price. This game of bidding the price lower comes to an end when demand is sufficiently consistent in a 24/7 global market place.

One way to address this demand is the mass market. People who are unaware are not a part of your market. People who use and interact with your business are much more likely to invest if they like what they see.

Second, create token utility to increase demand. Demand is created when a buyer needs the token to perform a task.

However, a revision to the token unlocks schedule might be something.

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Really good approach on your idea perspective, we should not forget about the TOKEN association like token 2049, my take away here should how to increse demand for product market fit and Proper prediction distribution on Pyth Emission, VC need unlock though and VC always laverage Valuation