In September 2020, Joel Monegro from Placeholder VC published the essay “Stop Burning Tokens – Buyback And Make Instead” where he suggested that projects and protocols should buy back and reissue tokens to incentivize growth rather than buying back and burning tokens to return value to token holders.

This article aims to introduce the Buyback and Fund approach (BaF), that the ResearchHub Foundation has implemented to incentivize the creation of open peer reviews on ResearchHub.

Under the BaF strategy, the ResearchHub Foundation would capitalize on its capped RSC supply, recognizing that the initial wealth distribution conditions have been set and no additional RSC can be generated. Instead of the conventional token burning method, where tokens are destroyed to return value to holders, the focus is on using the existing tokens for positive growth. Unlike traditional methods that may seem financially driven, this approach emphasizes the creation of value for the ResearchHub community.

This buyback process would be systematic and free from discretionary decision-making or the need for manual approvals. Careful measures would be in place to prevent the creation of arbitrage or front-running opportunities, ensuring the integrity of the buyback mechanism.

To fund these buybacks, the ResearchHub Foundation could leverage external funding received from various sources, such as Gitcoin grants. This external funding, denominated in various crypto assets including USDC, DAI, ETH, and USDT, would be channeled into open market buybacks. The buyback transactions would occur only after the full funding amount has been received and deposited into the ResearchHub Foundation Treasury.

Upon successful buybacks, the acquired RSC tokens would be transferred to the ResearchHub Foundation account on the platform. Subsequently, these funds would be strategically utilized to automate and incentivize peer review bounties. The BaF approach is designed to achieve a dual positive impact: firstly, by increasing the liquidity owned by the ResearchHub Foundation Treasury, and secondly, by redistributing this liquidity to valuable users over an extended period based on the completion of scientific tasks, such as peer reviews and future funding opportunities. In essence, the "Buyback and Fund" strategy becomes a concrete mechanism for ResearchHub to foster growth and engagement within its scientific community.

Link to previously executed BaF operations:

GR15:
0xa538515fa1220e253da3104c13cd95bf58170ef189cf3c04d766805a9e95eea1

GR18:
0xd5f9cb48e32b78b897b05aaade851adbfba72f25e038316fed3f0f01aa3e36bc

GR19:
0xb70696b23d0e9df4e37354dc8c2ad08f2704b26c1d30dfd4d2d4eec5edb9c9c2