[Temperature Check] Activating the ONDO Fee Switch — Automated, Programmatic Buyback-and-Burn

Governance Proposals
1

TL;DR

This is a temperature check, not a binding on-chain proposal. The goal is to gauge community sentiment on activating a “fee switch” that automatically routes a portion of Ondo protocol revenue into a programmatic, rule-based buyback-and-burn of ONDO — executed by smart contract with no ongoing discretionary management. I’d like feedback on whether we should do this, and if so, what percentage of revenue the community would support, before anything moves on-chain.

Motivation

Ondo has grown into one of the largest RWA protocols, with substantial and growing protocol revenue. Today, ONDO is purely a governance token with no link between protocol success and token value. Many holders feel that link should exist. An automated buyback-and-burn accrues value to ONDO by permanently reducing supply — without any direct payment or distribution to holders, and without ongoing managerial discretion. To keep it sustainable, this would start at a conservative 20% of revenue and scale up to 40% over time as the mechanism proves out.

Why an automated, programmatic burn

Two design choices keep this as low-risk as possible:

  1. No direct payments to holders. Unlike dividend-style distribution or lock-and-earn staking — where holders directly receive a return — burning sends nothing to holders. Value accrues only indirectly through reduced supply.
    1. No discretionary management. The buyback-and-burn runs automatically by smart contract on fixed, pre-agreed rules (think EIP-1559-style base-fee burn), not a team manually deciding when to prop up the price.
  3. Together these make the structure more sustainable and defensible than direct distribution, staking rewards, or a discretionary, team-operated buyback. (Note: lower risk is not zero risk; the Foundation’s legal review of the final structure is still important.)

Proposal (for discussion)

  1. Activate a fee switch that allocates a share of net protocol revenue to a fully automated, on-chain buyback-and-burn of ONDO.
    1. Percentage (phased): Start conservative at 20% of net protocol revenue, then scale up to 40% over time as the mechanism proves stable and sustainable. (Exact ramp-up open to debate.)
      1. Rules-based execution: schedule and sizing fixed in code (continuous or fixed-interval), neutral TWAP execution to avoid market-manipulation concerns, every buyback and burn fully verifiable on-chain, and no manual/discretionary intervention by any team.
        1. Implementation: The policy direction would be decided by this community. Actual smart-contract implementation would be developed by the Ondo Foundation / core contributors and ratified in a later binding on-chain vote.

      3. Key considerations / open questions

      • Sustainability: What percentage leaves enough revenue for protocol growth, security, and treasury runway?
        • Execution integrity: Confirming the burn is fully automated, transparent, and non-manipulative (neutral TWAP, published rules, on-chain proof).
          • Regulatory: Even with an automated burn, the Foundation’s legal review of the final structure is valuable.
            • Timing: Is now the right time, or should we wait for a specific revenue/maturity milestone?

          • Why I’m raising this

        • I’m posting on behalf of a community of ~1,000 ONDO holders interested in this topic. We want to do this the right way — building consensus here first, rather than rushing an under-supported proposal on-chain.

      • Next steps

    4. If there’s meaningful support, the next step would be to refine the parameters based on this discussion, then (with sufficient delegated voting power) move to a formal on-chain proposal via Tally.
  3. Please share: Do you support activating a fee switch? What percentage would you back? What concerns should we address first?
3 Likes
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I support ONDO Fee Switch.

I think 22% would be better.