CLOUD-005: Should Sanctum offer investors early unlocks of their CLOUD? [FAILED]

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CLOUD-005: Should Sanctum offer investors early unlocks of their CLOUD?

(Thanks to the Cloudfam community member, James Hanley, for proposing this! James has furnished me with a v2 proposal and I have edited the post with his proposal. This is all James’s original language; I have added some asides in italics that give my POV from the Sanctum team. Any reference to “I” refers to James, and “us” the Cloudfam. – FP)

Changelog

  • [15 August 2025] Due to feedback and considerable discussion by community (thank you, pbear, Aro, Phil, nik4 and others) about future ASR / community dilution as a result of potential unlocks, I (James) have increased the token forfeiture amount for opt-in investors from 30% to 35% to further balance the interest of community members and stakers.

tl;dr

9% of token supply from investors is currently unlocking monthly for next 24 months.

This proposal would empower the Sanctum Team to offer investors immediate unlocks of their vesting CLOUD, forfeiting 30% of their CLOUD to the Team Reserve (which the team undertakes not to redistribute for at least the next 24 months).

The net result would be an increase of up to 27 million additional CLOUD to the Team Reserve & a decreased token overhang.

Overview

Sanctum’s core business, financial health and foothold in the Solana Ecosystem has never been stronger. This is evident from the Q2 Sanctum Quarterly published this week (here: https://x.com/sanctumso/status/1950922849751077188).

In July, early investor tokens (accounting for 13% of total supply) began to unlock. 1/3rd of these tokens unlocked immediately in July and the remaining 2/3rd will continue to vest over the next 24 months.

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Token overhangs can present a barrier to investors - particularly new ones. The ‘low-float, high-FDV’ meme emerged directly in response to this phenomenon.

In the lead up to token unlocks in July, CLOUD token price suffered.

The proposal

Instead of early investor tokens (approximately 9% of total supply, see below) unlocking gradually over the next 24 months, we give investors the opportunity to unlock early, but forfeiting some of their remaining tokens in the process.

What discount mechanism should be applied to these early investor unlocks?

As a reference point, OTC deals - where early investors sell some of their tokens off the market to other investors or trading firms - can attract discounts anywhere from 50% to 70% of the current market price for a token.

For the purpose of this proposal however, I believe this would be too aggressive and unfair to Sanctum’s earliest believers and supporters (investors).

Instead, I propose we offer these early backers a 35% discount of their remaining vesting tokens to unlock fully and immediately. That means early investors will be able to opt-in to unlock their remaining 24 months’ worth of vesting tokens (or however many months remain if this proposal passes) immediately but forfeiting 35% of their remaining tokens.

Given these early investors have already unlocked 1/3rd of their tokens (in July), this essentially means they will be keeping at least 80% of their original allocated tokens as part of their investment - meaning, they’ll only be giving up approximately 20% of their original total allocation to save up to 24 months of vesting. These are very favourable terms and a sign of respect and gratitude to Sanctum’s earliest supporters.

(Note from FP: a few investors have already told us that they will not be taking the deal as they are long-term bullish on Sanctum; I doubt we’ll get many takers with a 30% discount.)

Where will forfeited CLOUD go?

CLOUD forfeited by investors opting-in will be returned to the Team Reserve. (The Sanctum team will not redistribute this CLOUD for at least the next 24 months. - FP)

Why should forfeited CLOUD go back to the Team Reserve?

This proposal outlines three reasons forfeited CLOUD should go exclusively to the Team Reserve.

  1. The original CLOUD was split 60/40, 60 ‘team’ side and 40% ‘community’ side as you can see in the diagram below. The original ‘investor allocation’ at the core of this proposal is actually a sub-set of the Team side of this 60/40 pie, meaning it was the team-side tokens sold to investors, not the community side.

  2. At present, the ‘Community Reserve’ accounts for 30% of the total token supply while the Team Strategic Reserve accounts for only 11% in comparison. The Team Reserve is much smaller than the already large Community Reserve.

  3. The Team Reserve represents the best opportunity for potential return for all CLOUD holders as the Sanctum core team is best placed to put these tokens to work on strategic initiatives (e.g. develop a new product, make a strategic acquisition, invest in a new strategic partnership, etc.).

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How should forfeited CLOUD be used?

Some community members suggested forfeited CLOUD be committed to a specific purpose. While I was initially in favour, this proposal will not stipulate exactly how the forfeited CLOUD should be used for the following reasons:

  • It is unclear how many - if any - tokens there will be,

  • The Strategic Reserve is intended to be exactly that - a strategic reserve. Removing the optionality of how those CLOUD could be used would actually diminish their value (more optionality = more valuable, less optionality = less valuable).

  • The Team Strategic Reserve and how it is used is the remit of the team. The Community Reserve is the remit of the Community. Important to keep these distinctions clear. Clawing these tokens from the Team side to Community side would not set a good precedent.

The Team Strategic Reserve and Community Reserve are distinctly different. This proposal does not seek to blur the lines between them.

Should investors that opt in be able to stake and participate in Sanctum governance?

Yes. This proposal would not exclude investors from being active governance participants or staking their CLOUD. Note: some community members expressed concern about ASR dilution, but as noted by the time this proposal would come into effect, the current ASR process will have concluded. Future ASR would have to be determined by Community Governance proposal & vote.

(Note from FP: investors are CLOUD holders just like any other; they own their tokens fair and square, their tokens are unlocked; I see no reason why they shouldn’t be able to participate in governance like anyone else.)

Ideally, the more active participants there are in Sanctum governance - better proposals, better votes - the better both Sanctum governance, and Sanctum, should be.

But, if these tokens unlock early, won’t that mean they’ll likely be sold on the market pushing price down?

Investors will be free to sell - or not - once unlocked. That is the premise of this proposal: ripping the band-aid of supply overhang.

I believe this is a win-win-win.

  1. It gives early investors the ability to unlock early and get access to their capital without waiting for 24 months.

  2. It gives us the ability to limit the pain of gradual unlocks, confining to a short & sharp band-aid ripping of adding to circulating supply. This will result in a healthier long-term supply schedule, leading to improved investor confidence due to lessened token supply overhang.

  3. Finally, it gives Sanctum more runway by adding these forfeited tokens to the Sanctum Reserve.

Operational Details

The following outlines key dates and timelines should this proposal pass:

  • Sanctum team to notify all early investors currently vesting of the option within one week of the proposal passing (T+7 days).

  • Sanctum Investors will have two weeks to indicate interest to opt-in, if investors do not express intention to participate clearly with Sanctum team, then they are to be considered opted-out (T+7 to T+21)

  • Sanctum team is then to notify community how many investors opted-in and what total token amount this represents (T+21 to T+28)

  • Four weeks from proposal pass, Sanctum team to unlock and distribute tokens to opted-in investors and notify Community with on-chain transaction ID’s and details (T+28 to T+35)

In Summary

This proposal is an opportunity for us to rip the band-aid with some of our early investor supply overhang at the same time as offering them favourable terms as a token of our gratitude.

The outcome of this will buy Sanctum more runway for future initiatives, position CLOUD supply for a small amount of short-term pain for a healthier longer-term gain as Sanctum fundamentals and business continues to go from strength to strength.

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very interesting proposal, wondering what does the cloudfam think about this! :thinking:

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Hi James,

I wanted to flag a few thoughts as this proposal evolves.

Short-Term Sell Pressure?
Intent aside, some investors will exit. With up to 9% of total supply potentially hitting the market simultaneously, the risk of sharp volatility is non-trivial. That kind of sudden liquidity can trigger temporary panic or dent long-term confidence.

Even if large holders don’t opt-in en masse, they may still unlock and sell ahead of schedule. A slow “stealth dump” under the guise of community blessing could backfire -especially if retail feels blindsided. It’s not just the outcome that matters, but how it’s framed and felt.

Retail Needs a Clear Story.

Right now, there is no direct incentive for non-investors. New or retail participants are being asked to absorb risk with only the implied promise of a cleaner, healthier market ahead. That narrative might be true- but it has to be communicated with intent. If this is a reset button, say so plainly.

Some Clarifying Questions:

  • Will participant addresses be publicly visible on-chain?

  • Sanctum Reserve growth is positive -but the use of forfeited tokens needs to be pre-defined. Otherwise, this opens the door for speculation about “dev dumps.”

Cho´s Thought Corner
This proposal has teeth. It is bold, clean. If the north star is long-term ecosystem integrity over short-term optics, it’s a strong step.

But execution is everything. Without precision, transparency, and airtight comms, even a sound plan can spook retail. The opportunity here is to show maturity -by doing it right, not just fast.

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Thanks, choGPT. Appreciate the response.

Answer’s to your Q’s:

  1. Will participant addresses be publicly visible on-chain?

Yep, I recommend there be some on-chain signing around opting in for transparency.

Sanctum Reserve growth is positive -but the use of forfeited tokens needs to be pre-defined. Otherwise, this opens the door for speculation about “dev dumps.”

Perhaps we could make the forfeited tokens subject to the existing vesting i.e. if they were 20 months left of unlocking then they will continue vesting that same but into the reserve where they sit idle. What do you think of that?

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Rally the troops :saluting_face: :cloud:

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ChoGPT :rofl: thanks for the answers.

The idea of on-chain signing to opt into transparency is really good. Aaaa

I agree that having undefined mechanics for those tokens is a risk- especially around perception. Dev dumps might not even happen, but the fear of them can create unnecessary volatility or distrust. I like your proposal to make forfeited tokens continue vesting on the same schedule, just into the reserve instead.

I would suggest going one step further: maybe those tokens could be allocated within the reserve for specific use cases (ecosystem grants, future participant rewards, or treasury backstop)?

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Love this suggestion. Particularly the treasury backstop. To be honest, the ecosystem grants etc. is probably the realm of the Community Reserve - which, for the record, is more than twice the size of the team reserve & can only be unlocked via governance proposal / votes

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I guess I just wish there was a bit more flexibility in how we support growth, especially when timing is really important.

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Thanks for the awesome proposal, James!

I think this is a good start. I can shop it around investors and see how many of them would be likely to take this deal.

If this will reassure the community, I don’t have any issues doing it. Team reserve tokens are meant for the long-term.

I want to temperature check this crazy idea: what if we just accelerated investor token vesting and unlocked all of them right now, with no discount? Then we would definitely have some short-term pain, but afterwards there would be no further unlocks or sell pressure (apart from team).

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I would say short-term it’s dangerous cuz its create a sell pressure of course, but better for mid/long-term vision so being careful on how to say and specially put emphasis on the WHY so ppl don’t panic. Interesting overall, let’s see what ppl think :face_in_clouds:

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Seems like free optionality for the early investors at no-cost. IMO there has to be some sort of discount / trade-off otherwise it’s a free option and I can’t see existing stakers feeling good about that.

What would be the benefit? In this proposal, the benefit is the Reserve run-way (win-win)

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Cho-gpt is hilarious

I think the idea of early unlocks without any forfeit at all could also work like FP said but I think an early forfeit option is probably the better option all things considered. You shouldn’t just be able to get an early exit while the market is heating up.

Also can early investors stake yet, maybe give them an option to be able to lock the remaining period with the same rewards retail will be getting if they participate in voting?

Something to add that I think the team can do is make investor unlocks completely transparent show us all the upcoming unlocks. Names don’t have to be included but you can create a real time dashboard so everyone is aware of unlocks when they occur. This will keep up the reality of Sanctum being the most transparent team in Crypto.

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Great points re: staking & vesting schedules. A live circulating supply schedule on the website would be awesome - more transparency like you said.

I think you might be onto something with the staking component - like how do we get them involved in on-chain governance. I guess one of the drawbacks to that is the ASR. If the early investors (13% of supply) get to 100% unlock early into sCLOUD then they’ll essentially be double-dipping their Investor allocation with the Community (30%) allocation. But maybe that’s the best play. I.e. ***how do we convert early investors into ongoing community contributors?

Thanks for the feedback Mr. oliiver.

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Token locks weren’t done that long ago. And not that much has changed in terms of the markets or Sanctum’s product roadmap.

So why would the reasons the tokens were locked as they were now be invalid?

That’s the biggest question that needs to be answered here.

I would think, given the nature of an investment decision that entails lock ups, not many (if any) investors would be keen to cut short their lock up.

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Hey @JamesHanley, really cool to have you here. I fully respect your intellect in the space. You have far more knowledge and experience in these matters, so I completely pay attention and consider every thought and idea you put on the table.

Maybe I’m looking at this wrong, but I just don’t think in the public eye this would convey confidence by the team in the amazing products that they are offering. It’s almost like saying, “I know we failed, so here’s an easy exit if you’d like.”

To the contrary, I believe we should be giving them even more reason to feel confident in their investment by boosting the utility, and potentially the value of CLOUD. Consider CLOUD one of sanctum’s products and give it equal bandwidth to nurture it’s growth.

Forgive me if I am misunderstanding your proposal. :folded_hands:t4:

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Not sure I understand your question, mate! Can you elaborate a bit more?

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Hey James!

I think this could be a good idea. It reminds me of how the token vesting worked during CLOUD’s launch airdrop, where users could either wait (2 weeks for the Capital Airdrop or 6 months for the Earnestness Airdrop) to claim the full amount, or claim earlier starting from 50%, which gradually increased over time. That approach helped spread out the claiming and reduced sell pressure, since people claimed at different moments, making price action less predictable and less vulnerable to speculation or manipulation.

In this case, since investors are already vesting (while claiming small portions over time), the only missing piece would be offering them the option to claim early, at a cost, similar to the launch airdrop. That could bring some of the advantages mentioned in the proposal, such as increasing the Sanctum Reserve and helping balance future unlocks and sell pressure, while allowing each investor to weigh the trade-offs themselves.

Regarding the idea of unlocking without any discount, as mentioned by @fplee, I do think applying a discount leads to a more balanced approach. It offers investors flexibility while helping avoid too much short-term pressure that might unsettle holders. To me, it feels like the best of both worlds. That said, it’s been interesting to consider this more radical approach! Having no further unlocks ahead does feel pretty tempting!

As @andrewsaul pointed out, maybe not enough has changed to justify altering the original plan, but everyone has their own reasons, and situations do evolve over time. So giving people more flexibility, especially in a way that might benefit both sides, is definitely worth considering. I’d really like to see this proposal move forward to a vote so we can see how the community feels about it!

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Hey James, good stream. You answered most of what I was wondering, anyway. I like the adherence to the balanced 50/50, I think the community allocation is generous enough already. All the fud during the initial airdrop which was only 10% doesn’t inspire much confidence that the community allocation needs to be any higher, or would be handled in a mature way.

I think 30% is a good and fair number. This means max returning to the long term strategic reserve would be 2.7% supply and 6.3% supply max unlocked if everyone takes the deal. There’s no concern in my mind about that. If you think they will sell, you think that for 2 years which is more annoying to me. Sanctum is stronger than 6.3% of supply going into circulation.

If we recall the initial planned first vote to be ASR incentivised being CLOUD-2 putting 10m Cloud up for sale at cheap af prices to accomodate interested whales scared off by their own splash/price impact, well this proposal marries up well. If those investors unlock and sell, then we already know there’s interested parties trying to accumulate low, this may be their last chance if it does impact price which personally I don’t care about… if i’m not selling tomorrow why does tomorrow’s price mean anything to me? Or maybe that’s just 7 years experience in crypto talking.

You already identified the futarchy paradox that concerned me during Cloud-2 so maybe swing the vote around… “do you want to veto the investors ability to sacrafice 30% for instant unlock” yes or no, you’d vote yes then thinking price will go up if they remain locked for 2 years I guess???
So then a NO vote would enable them to have the option.

There’s not really much more for me to say I think its uncomplicated, well thought out and don’t see any down side. Its a perception issue that never bothered me anyway, but I can see how this would give people confidence seeing the holders are here long term because they believed in Sanctum before it was massively integral to Solana’s success. Solana is what… 4th largest blockchain, and Sanctum is one of the most decentralizing forces for validator support and a strong positive influence and integral part of how the chain runs… people need to stop projecting their short term thinking onto investors who clearly see Sanctum is positioned better than ever.

Don’t see any need to dissect it that much, its optional afterall, fair and well balanced.

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Wonderful proposal James!

Giving this option to opt-out early is a good and fair gesture for early investors and 30% is a good bargain. The only clause to the proposal I would tweak is to have a specific and short target date (possibly within 2 weeks of successfully passing of vote or lose the option) so those wanting to execute the opt-out clause can do it and not game the proposal.

I doubt many early investors opt-out at these price levels but maybe some want to cash out and look for other opportunities which is understandable.

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Points of concern and things that need to be specified

  1. How much time do the investors have to accept?

I think that if investors can sit on this option will result in losing this rip the band-aid effect you are looking for.

I think 1-2 week period some time after the proposal should be enough assuming all investors are notified individually.

Why so little?

I think making it longer will cause panic which is something you don’t want, yes price will recover but it’s not a good look. Like you said you want a rip the band-aid not a pull the band-aid slowly and painfully effect and not a rip the band-aid on a way that skin comes off as well.

  1. % of cut

Because a 24month period is too long. I think the cut should be 50%. Taking into consideration that 1/3 has been already claimed and taking into account that crypto is a high risk sector (2 years time is an eternity) getting 1/3 + 1/3 (the remaining 50%) which in total equals to 2/3 of the allocation instantly offers a lot of mobility and safety. (Being in lockup adds a lot of risk to an investor).

Don’t forget that in 2 years maybe there is a bear marker and everything is 70-80% or even more down from where we are atm. (Sanctum’s revenue is tied to SOLs value, never forget that). I am not sure at what price they bought initially but even if it’s not a lot lower than the market price atm, I think the freedom you get is crazy.

I think 50% is not disrespectful, the initial deal was unlocks on a 24 month time frame. Having instant access comes at a cost.

50% was also the number used on a similar situation for earnest members.

Earnest people didn’t pay someone could argue… but airdrop receivers allocated capital on LSTs and their time for the protocol.

Please remember what happened when meteora vault unlocked ( which is a very similar situation to your rip the band-aid scenario)

3. I think the tokens forfeited could go 50-50 to team, for growth, and to community for voting uses like voting for Kamino incentives or whatever comes up.

Recap

1.Notify investors and give them a 1-2 week window to accept or reject.

  1. A 30% cut is too low, approaching 50% is the way to go imo.

  2. Balanced 50-50 between team and community.

P.S.

FP proposing 0% cut is nuts. Very bad idea i

mo. That’s giving it away basically.

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