Feedback on REZ Buyback & Burn Proposal (with Research Context)
Thank you to the Renzo team for putting forth this proposal. It’s encouraging to see the protocol returning revenue to tokenholders. That said, I believe it’s critical for voters to weigh both the promise and the risks of combining buybacks, burns, and token redistribution in one coordinated motion. Below are my thoughts, backed by examples and research, along with requests for clarification.
1. The Need for Revenue Details & Transparency
The proposal states, “The Renzo protocol is generating significant revenue…” but to meaningfully evaluate the proposal, the community should have access to:
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Revenue numbers over the past 6, 3, and 1 month intervals.
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A 12-month trendline (i.e. month-to-month revenue growth, seasonality, downward/flat/expansion)
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Breakdown by revenue stream (staking fees, withdrawal fees, new product fees, etc.)
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Volatility or tail risk (i.e. how revenue behaves in bear vs bull cycles)
Without those, it’s hard to judge whether redirecting 75–100% of future revenue to buybacks could reasonably acquire 10% of total REZ supply within the 6 month allotted timeframe. This information should be included in the proposal alongside a spreadsheet or financial model while forecasting future revenue (base case, bear case and bull case) generated over the next 6 months.
2. Separating the Buyback + Burn + Redistribution Proposal versus One Vote
By combining all stages (buyback execution, burn, and 10% redistribution) into a single governance vote, the proposal forces voters into an all-or-nothing choice. Many of us may support buybacks but oppose burns or token redistribution structures.
A more systematic approach is rational and aligns with best practices in governance disclosures (e.g. “separate votes for capital deployment vs token usage”). The proposal would be stronger if separated into individual proposals such as:
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Proposal A: Approve use of protocol revenue for buybacks (market purchase of $REZ) over a 6 month period.
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Proposal B (after A passes): Decide the fate of purchased REZ (burn, hold in treasury, or strategic redeployment).
The separation of these proposals preserves optionality for the protocol and lets tokenholders express granular preference.
3. Critiques & Risks of Token Burns (and Redistribution)
Below are some of the criticisms and risks around burning tokens, drawn from broader crypto research and commentary:
A. Token burns remove future optionality for the protocol to use REZ tokens more strategically. Once tokens are burned, they are irrevocably destroyed. That means lost flexibility to redirect them toward future ecosystem incentives, partnerships, liquidity provisioning, or emergency funding. This is a common critique of burn models.
A blog post dated 2020, published by Placeholder VC shares a similar view and can be read here: https://www.placeholder.vc/blog/2020/9/17/stop-burning-tokens-buyback-and-make-instead. In the post, they make the case that there are better uses for bought back tokens than simply incinerating them. 2025 has been a showcase year for demonstrating the value of buybacks but it’s important to recognize that very few of these teams have chosen to burn the tokens. This is an evolution of the process and one that I think Renzo should heavily consider and bring a compelling case forward prior to moving forward with a burn mechanism.
B. Token burns are not a guaranteed value multiplier. Scarcity (via burn) only helps if demand holds or increases. If demand is weak, burning tokens won’t magically create value. Sustained buybacks do create buy pressure, which can contribute to investor confidence in buying and continuing to hold a token (there is a marginal buyer), but the important aspect of buybacks is that the protocol believes the token is currently undervalued at current prices.
While the announcement of a token burn can create newsworthy hype for the protocol and its token, it’s unproven that burning tokens creates long-term value. If poorly executed, token burns can create higher short-term price volatility and require ongoing communication with platforms that disclose circulating supply and total token supply, which is now variable and changes over time (ie, coinmarket cap, coin gecko, etc.).
C. Redistribution to stakers (ezREZ) is redundant in a buyback model. Redistributing 10% of the buyback to stakers effectively dilutes the simplicity of the mechanism. The conventional logic behind a buyback is that tokenholders benefit indirectly via reduced circulating supply and upward price pressure. The buyback is a form of in-kind distribution that benefits existing token holders. Adding a redistribution layer complicates the narrative and may lead to double claims (i.e. stakers getting extra vs price uplift).
The price impact of buying back tokens to redistribute to stakers likely creates additional selling pressure into the buybacks. If the team’s position is that the token price is viewed as undervalued, what is the rationale behind distributing the token purchased at this lower-than-warranted price? It would be best to refrain from redistributing token buybacks.
Separately, the value in REZ as a governance token should be apparent from the role governance plays in activities like voting. If REZ wants to move towards becoming a yield-generating token, it’s far more valuable if the distributions are paid in the revenue generated (ETH, SOL, etc.) rather than paying out REZ holders in REZ tokens that the treasury used funds to buy back.
In my opinion, either 10% of revenue should be distributed to ezREZ holders in the actual revenue or they should not receive any benefits from holding ezREZ.
D. Empirical evidence on sustainability is mixed. Analyses of protocols that employ buyback and burn mechanisms show mixed outcomes. Some protocols benefit while others don’t outperform peers without such mechanisms.
Buybacks in crypto diverge from traditional share repurchases; they require sustainable earnings and careful design, or they risk being short-lived or speculative. We should heavily weigh the cost and benefits of a burn mechanism.
4. Questions & Clarifications Needed
To ensure community confidence and prudent execution, I kindly request clarity on:
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Structure of the proposal(s): Separation of the current proposal into individual proposals that separates the use of protocol revenue from the subsequent actions performed with the bought-back tokens.
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“75–100% of future revenue”: Who defines the exact percentage? Are there triggers or thresholds (e.g. revenue buffer, contingency reserve) that modulate this?
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Pacing limits: What caps or maximums are placed on daily/weekly buy volumes or slippage to avoid market disruption?
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Redistribution mechanics: What formula or mechanism will allocate 10% to ezREZ holders? How will that interact with the price effect of buybacks?
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Burn address & verification: Given REZ is non-upgradable, how will the burn be verifiably enforced, and how will the community audit it (Tx hashes, trails)?
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Fallback contingencies: If revenue dramatically underperforms (e.g. bear market), will the buyback program pause or scale back rather than commit full quotas?
5. My Position
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I support a disciplined, transparent buyback mechanism, subject to revenue durability and risk controls.
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I do not support burning 90% of purchased REZ, because it eliminates strategic flexibility and relies on speculative demand uplift.
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I oppose redistributing 10% of buybacks to ezREZ holders and believe this introduces redundancy and complexity in how capital and value is created for existing tokenholders.
6. Conclusion
Because the buyback, burn, and redistribution features are bundled as a single proposal, I will likely be a vote of “No” on the current proposal as drafted. That being said, I am enthusiastically in support of a clean buyback-only proposal with a separate, optional governance vote later on token use.