A Proposal to Make $CLOUD an Innovative Token
by Obi3 (Twitter)
The Problem
Most project-related tokens do not succeed, with very rare exceptions of $JUP, $JITO. The reality is governance tokens often fail due for two reasons:
- The average user is not directly impacted by governance, therefore is not incentivized to participate and purchase the token.
- The utility of the token is vague, and only niche customer segments are truly incentivized to buy.
As a result governance tokens become very volatile, speculative, and essentially have the same dynamics as memecoins (remember $GRAPE, $STEP, $SONAR?). I would recommend reading this blog about Governance Tokens and Memecoins by Yash Agarwal.
The $GRAPE mint had such high demand at the time that it shut down the Solana network
Step Finance was and still is one of the leading tools to track your portfolio
Even ENS despite its recent run and being a core piece of the Ethereum network is still down from the initial month of trading
For $CLOUD to be different we need to try something truly new, innovative, and leverages Sanctum’s unique platform.
The Solution
Sanctum would spin up a validator that shares 100% of the proceedings, as in 100% of the validator’s priority fees, 0% MEV commission, and 0% stake commission. The validator would essentially be not generating any income for itself. However, in this example not everyone can get access to stake at that validator and its LST (let’s call it $cloudSOL). Only users with $CLOUD would be able to mint and access that LST.
The way it would work is the user burns 10 $CLOUD (exact amount to be determined) to mint 1 $cloudSOL.
In order for this to succeed the validator needs to be sustained by an application or a separate revenue stream. In this case it would be supported by $CLOUD and income from the $INF liquidity pool.
Benefits
- Does not look to replace the LSTs in its ecosystem, given only a limited number of stake can be allocated to that validator
- Actively reduces the supply of $CLOUD over time in a sustainable manner
- (Optional) Sanctum team has the ability to adjust the ratio of $CLOUD to $cloudSOL, meaning if the price of Solana drastically increases or decreases the team could modify the ratio of $CLOUD you need to burn to mint $cloudSOL.
The Cost
Total Estimated Cost of Validator:
- $4,500 in Server Fees / Yr
- $70,000 in Voting Costs / Yr
- Estimate Calculation: ~1 SOL per day x 365 Days = ~365 SOL per year.
A total estimate of $75,000 per year. That’s still much cheaper than the cost of hiring a working group like other projects and paying an entire team’s salary.
For reference, several Jupiter Aggregator working groups cost roughly the same for just the 3 month trial period, for example, Reddit Working Group, Web Working Group, Cadet Working Group all cost roughly $70K - $80K USD each for 3 months, whereas here we’re asking for a $75K budget per year.
This is not to say that Jupiter’s working groups are bad, Jupiter is a different project and has a different approach. This is more a note around validating the cost of this approach.
Jupiter Working Groups Cost:
Conclusion
This approach leverages Sanctum’s unique platform in a way where the team can sustainably provide value to $CLOUD holders without incurring too much cost. With the Sanctum platform generating revenue via the $INF liquidity pool (or choosing to sell $CLOUD to cover costs), this can be another way for the Sanctum team to innovate with their token launch strategy.
This approach will change the game when it comes to token airdrops, and will truly make $CLOUD different from anything we’ve ever seen.