Pyth Network DAO approves sending 100% of product revenue to PYTH buybacks

Introduction

The Pyth Network DAO has implemented a new policy to allocate 100% of its eligible revenue towards open-market buybacks of the PYTH token. This change replaces a previous framework that capped buybacks at one-third of the DAO's treasury balance.

Current State

The Pyth Network is an oracle that feeds outside data, such as asset prices, into blockchains. Pyth's data underpins over 94% of recent trading volume in Real World Asset perpetual contracts. Pyth Pro, the paid product line driving most of the revenue gains, gives Pyth a revenue stream tied to customers paying for data.

New Policy

The new policy, nicknamed the '100% Rule,' removes the monthly vote requirement for buybacks and allows the DAO to spend its entire share of revenue on buybacks. The buyback budget is capped at $25,000 per transaction, and maximum slippage is set at 5%.

Impact on PYTH Holders

The new policy aims to increase the token's value and stabilize its supply dynamics. If revenue grows, buybacks grow, and if revenue slows, so do the buybacks. The no-sale rule means the Reserve is a one-way accumulator, and the DAO cannot rebalance into other assets without changing the rules.

Conclusion

The Pyth Network's new policy is designed to increase the token's value and stabilize its supply dynamics. With the DAO keeping roughly 60% of revenue, the buyback budget's effect on PYTH's supply dynamics will depend on how revenue compares with the token's trading volume and any unlocks entering circulation.