dHEDGE acquisition update

Below is an update on the acquisition of mStable by dHEDGE, including:

  • Handover of assets
  • Product sunset plan
  • Launch on Optimism
  • MTA Redemption

Handover of assets

The teams have come together to begin the transition plan of assets, beginning with offchain infrastructure. mStable multisigs will now be transferred across to 3/5 dHEDGE contributor signers.

Product sunset plan

dHEDGE has instructed and is working with the mStable team to cut MTA emissions and sunset products that have limited traction.
mUSD / imUSD will remain operational and the teams will explore options for revitalization of mUSD with the community.

The sunset execution has begun, including the following:

  • mBTC (due to limited traction)
  • Cut emissions to Feeder Pools
  • 3Pool Convex Meta vault (Meta vaults to be relaunched with more competitive yield)
  • Staking / governance (to be relaunched with a new MTA staking mechanism as per proposal)
  • Automated tasks that are no longer necessary
    The above will mostly follow MIP 31 sunset approach.

Launch on Optimism

mStable will shift focus to Optimism:

  • Boost MTA liquidity (current trading liquidity is low)
  • Launch competitive yield products (target to aggregate to a Meta vault)
  • Enable MTA redemptions

MTA Redemption

MTA will remain and will become a part of a redesigned governance system to be more aligned with the underlying mStable protocol.

As per MIP 33, MTA holders will be able to swap their MTA for stablecoins at a fixed floor price.

This will be available as follows:

  • MTA will be swappable for stablecoins on the Optimism network. This will be live by the end of April 2023. As per the dHEDGE forum proposal, redemptions will remain open until no longer deemed relevant by a future MTA governance vote.
  • MTA holders will be able to redeem liquid stables for their MTA at the floor price
  • The floor price for MTA will be determined by: Value of mStable liquid treasury (in USDC) / MTA eligible supply using data from the Overview of MTA eligible supply and Treasury Value and liquidation sections
  • The treasury will be placed in a mStable Treasury vault on Optimism, a private dHEDGE vault. There it will earn safe yield on stables (likely on Velodrome).
  • MTA holders will be able to redeem the mStable Treasury vault tokens with their MTA at the floor price. This will be available on the mStable dapp. The treasury vault tokens can then be withdrawn into stables of the user’s choice (eg USDC) via the dHEDGE dapp.
  • The redemption contract will enable a simple swap of MTA to the mStable Treasury vault at the fixed floor price in USD. The mStable Treasury assets will be transparent and visible via the dHEDGE dapp.

mStable team’s latest update on the MTA circulating supply and treasury to determine the floor price (circa $0.03) is as follows:

Overview of MTA eligible supply

  1. mStable DAO Treasury Assets are held across the following 4 addresses:
  1. MTA Max Total Supply (100,000,000) would be eligible for redemption: excluding:

    1. Directly held MTA held across the addresses mentioned in 1.
    2. MTA deposited in third-party protocol across the addresses mentioned in the 1.
    3. MTA held in the Emission Controller contract
    4. Unvested core-contributor streams
  2. The formula used to determine the Eligible Supply for Redemption is the following:

    Max Total Supply - (MTA held in Emission Controller Contracts + Plain MTA held by Treasury + Invested MTA held by Treasury + MTA costs (after 15th March) + MTA to be returned to addresses controlled by TreasuryDAO + MTA to be returned to addresses controlled by BuilderSubDAO)

    Using this formula, the Eligible Supply for Redemption number is 64,614,909 MTA. Details on the calculation can be found on the third tab of this spreadsheet

  3. Notes on dHEDGE holdings of MTA

    By acquiring mStable and leaving MTA freely tradable, dHEDGE is acquiring 9,247,891 plain MTA and 2,475,654 invested MTA. Following the calculation of 3., these MTA are not part of the eligible supply and will not be redeemed by dHEDGE against Treasury Assets.

Treasury Value and liquidation

  1. Estimation of value redemption

    At time of writing (March 30, 2023), the latest value of mStable Treasury Assets (excluding MTA) is $2,089,540. It is assumed that there will be a funding surplus returned from subDAOs and ongoing costs to the TreasuryDAO between now and the end of April.

    Hence, the Total Estimated Redemption Value is estimated to be close to $1,939,540.00. This total value will be divided by the total eligible supply of MTA to give a per $ value redeemable per MTA hold we’ll call floor price

  2. Nature of redemption

    • All mStable Treasury DAO Assets would be liquidated for USDC by the dHEDGE team in the coming days after the publication of this post after the multisig handover from the mStable team
    • After the conversion of the Treasury DAO Assets to USDC, they will be transferred to a redemption contract designed by the dHEDGE team on Optimism
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A quick note on this - the link here could be misleading as it shows all MTA in Sablier contracts. Not all of these token fall into this ineligible category (some early advisor and investor are fully vested and delivery will continue, and some tokens here will represent delivered but unclaimed MTA). The 1,107,000 shown in the table reflects the estimated total to be returned from unvested streams.

Also a quick question on point 3: “Notes on dHEDGE holdings of MTA”, the ~21m MTA from the Emission Controller and the ~1.7m to be returned from the Builder subDAO and Sablier streams would be treated in the same way, correct? So in total dHEDGE will hold ~35.4m MTA which will not be redeemed against Treasury Assets?

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Thanks @cam, correct they will not be circulating to ensure all existing token holders can redeem.

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