1 - MCA Origination Fee Burn

This proposal asks whether a portion of the origination fee should be burned instead of paid to contributors.

Outcome: FOR. 70% of the origination fee should be burned, with the remaining 30% paid to pool contributors.

Event	Date	Notes
Snapshot Time	Nov 27, 2023 20:00 GMT	Stellar ledger sequence 49,210,507
Vote Start	Dec 24, 2023 20:00 GMT	First included Stellar ledger: 49,609,988
Vote End	Dec 31, 2023 20:00 GMT	Last included Stellar ledger: 49,713,260
Results Published	Jan 16, 2024 23:00 GMT
Implementation	Q1 2024
Completed	Apr 1, 2024

Description

This proposal asks whether a portion of the origination fee should be burned instead of paid to contributors. Burning involves a payment of SHx back to the issuing account on the ledger. This results in those tokens being destroyed and forever inaccessible, reducing SHx's total supply.

As a result, capital contributors will receive a lower proportion of the origination fee and may seek to adjust their participation including altering the offered factor rate.

Background

Merchants who are members of StrongholdNET and who have actively processed payments for at least 3 months are eligible to apply for Merchant Cash Advances. Advances may be used for working capital, storefront improvements, acquisitions, opening locations, and other projects which are expected to increase the value of the business.

An origination fee is charged to the merchant at the beginning of the advance period, in SHx, and is used to pay for administrative costs incurred during the underwriting phase. As Stronghold uses an efficient and digitized underwriting model, combined with StrongholdNET payments data, the administrative costs are lower compared to industry averages and the origination fee is instead passed through to contributors as further incentive.

The origination fee is an extra benefit for capital contributors to reward them for their continued participation in the MCA program for writing new advances. As an up-front payment, it also adds some de-risking qualities and may offset the factor rate (e.g. similar to an interest rate).

Voting Notes

The vote contains two questions. The first asks whether a proportion of the fees should be burned. The second asks what proportion should be burned, and is taken into account only if the first question passes by simple majority.

If the proposal's first question passes, then the burn proportion will be calculated as the weighted average of the second question's voted values, rounded to the nearest 5%, ties away from zero.

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Results

A total of 210,227,918 voting power participated in the proposal vote.

Question 1

Should a portion of the MCA fees should be burned?

Response	Position	Votes
FOR	A portion of the origination fee should be burned, with the remainder paid to pool contributors.	204,886,715
AGAINST	100% of the origination fee should continue to be paid to pool contributors.	3,389,619
ABSTAIN	Abstain from voting for this proposal.	2,951,584

Outcome: FOR; a portion of the origination fee should be burned, with the remainder paid to pool contributors.

Question 2

If the proposal to burn a portion of the origination fee is passed, what proportion of the fee should be burned?

The weighted average burn proportion was 69.73%. Rounded to the nearest 5% results in a 70% proportion.

Outcome: 70%; 70% of the origination fee should be burned, with the remaining 30% paid to pool contributors.