Trading him is the right thing to do in my opinion. You get some assets back to help your rebuild, you get the cap space and flexibility, hopefully they use it on short terms deals they can flip at the deadline for more assets or maybe take on a bad contract or two for picks, you help your draft position over the next few years, and if and when the time comes, you can spend the money on someone who likely has less risk of regression and is hopefully entering their prime as your team is entering its contention window.
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