Changpeng Zhao (CZ) shared a new idea for token issuance mechanism to reduce the risk of price downfall on behalf of growth & stability.
Summary
- Changpeng Zhao (CZ) shared a new crypto token issuance idea.
- CZ’s proposed mechanism has steps to unlock 5% tokens if the token price remains 2x stable for 30 days.
- Binance co-founder believes his mechanism has a better ability to stop price downfall.
Introduction: Changpeng Zhao (CZ) is a popular crypto entrepreneur known for his crypto exchange Binance & BinanceUS. In 2017, CZ raised $15 million through ICO & launched the Binance exchange. Because of low fees, vast crypto offerings, and fast transactions, Binance soon grabbed huge popularity & adoption among crypto investors. In 2021, CZ’s estimated net worth peaked at over $96 billion, making him one of the richest people globally. In 2023, CZ stepped down from Binance’s CEO position, following some legal charges imposed by the US financial regulatory bodies. Allegedly he allowed the use of Binance exchange without KYC verification in the US jurisdiction. For such unethical acts, CZ faced multiple charges, but there was no strong evidence but he admitted all the allegations and settled the case with a $4.3 billion fine & spent 4 months in jail.
On 1 March 2025, Changpeng Zhao (CZ) proposed a new mechanism for token issuance for the new crypto projects.
CZ said that all the new crypto tokens should follow his idea of token issuance to reduce the risk of price downfall because of new supply unlocking.
His proposed mechanism includes three main points, which are as follows.
- Initial Sale:
Initially, 10% of tokens should be unlocked and sold at launch. The funds obtained from this sale should only go to the project team for development, marketing, and salaries.
- Future Unlock Conditions:
Tokens should be unlocked every 6 months after the last unlock. This unblock should be allowed only if the crypto token price maintains its price above 2x from the last unlock price for at least 30+ days. The supply unblock should be a maximum of 5% per cycle.
- Project Team Control:
The project team behind the token can delay or reduce the unlock but never increase it. The supply unlocks should be controlled by a third-party smart contract to ensure transparency with the crypto investors.
Example Scenario & Benefits
CZ shared an example of it to explain his token issuance mechanism in a more simplified way. He said that if the token launches at $1 in January, no more tokens unlock unless the price sustains above $2 for 30 days.
-If this happens in July-August, 5% more tokens can be released.
-The next unlock will only happen after another 6 months and a price of $6+ for 30 days.
CZ believes that his proposed token issuance mechanism has multiple benefits. For example, it will prohibit the market oversupply situation when prices struggle and encourage long-term growth for the project, which will further inject a better level of confidence among the token investors.
Furthermore, CZ said that such mechanism adoption will help the project team to maintain the incentives between the team and investors in a better way.
It is worth noting that CZ clarified that it is just a theoretical idea proposed by him for discussion, and currently, there are no plans for implementation in any new crypto token project.
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