✔️ MCCP 25: Increase Governance Fee Flow to Treasury

Summary

It is proposed that 100% of protocol revenue be directed to the treasury to provide an easier path to profitability and ensure that building long-term value is prioritized over short-term payouts to MTA stakers.

Abstract

Before the launch of the Emissions Controller last year, the protocol used to deposit the governance fee revenue towards the Buyback & Make pool on Balancer.

Since then, the DAO decided to reroute these governance fees to purchase MTA directly off the market and distribute to stakers. This left the treasury and protocol with no organic way of capturing revenue and accruing value back to the treasury, and thus called into action an initial overhaul of the fee flow in MCCP 20 in order to redirect 50% of these fees back towards the TreasuryDAO.

It is now suggested to increase this fee flow to 100% in order to ensure a sufficient perpetual runway for the protocol. Once this has been achieved, additional revenue can be considered to be redirected back to stakers.

As previously mentioned, it is suggested to increase the fee flow from all sources, which will also include the upcoming Convex Meta Vault and any future vaults until another proposal is made to alter this fee flow model.

Since stakers are already receiving a substantial amount of inflationary MTA rewards through the Emissions Controller, enough incentivization to stake will be left for Meta Governors to ensure continued participation in the ecosystem.

Motivation

As mStable’s treasury is still heavily allocated in native governance tokens, the DAO has to ensure means and ways on how the protocol will continue tho thrive in creating a sustainable business model towards profitability.

The DAO initially granted stakers 50% of the protocol fee revenue (in form of additional MTA streamed into the staking contract) on top of the inflationary MTA rewards from the Emissions Controller dials.

It is now proposed that rewarding stakers with inflationary MTA rewards singularly through the Emissions Controller is a valid and sufficient way to incentivize Meta Governors to stake their tokens, as well as make allocations on the Emissions Controller that would not deviate away significantly from the current allocations they’re currently making.

Additionally, increasing governance fee flow to the treasury will allow for further asset management opportunities, which will ultimately increase the value of MTA by growing mStable’s treasury.

Specification

The functionality to split the revenue is part of the contract RevenueSplitBuyBack deployed on Ethereum Mainnet:

The ProtocolDAO multisig will queue the following transaction to set the Treasury fee to 100% (effectively removing distribution of revenue to stakers):

  • setTreasuryFee(_treasuryFee)
    • _treasuryFee = 1000000000000000000 (1e18)
    • 1e18 = 100%

Next Steps

Pending no significant changes to its content, this proposal will be taken to a Snapshot vote on Monday, the 5th of September 2022.

Voting will be open for a 5 days window to give adequate time for a concurrent discussion. Governors can change their vote at any time should the discussion sway their decision. We look forward to hearing what MTA token holders have to say and seeing how they cast their votes.

fully support this as mentioned previously! Achieving sustainability is more bullish than squeezing rewards out.

2 Likes

Thanks for this proposal @mZeroNine
I’m joining the conversation a bit late, but really interested in this proposal.
I’m strongly aligned with the profit-centric vs revenue-centric approach which make obvious sense
I wonder if by pursuing this 100% redirection toward the Treasury:

  • We’re affecting in some capacity token price by removing a weekly purchase of 3.5k MTA (amount which increases when fees increase). Curious about @nesk opinion on this
  • Could we find a way for the Treasury to still create a weekly MTA buying pressure from its revenue allocation in mUSD?

This reduced buy pressure should be somewhat offset by reduced sell pressure due to reduced emissions through the Emissions Controller, right?

1 Like

I’d concur with this. We’re effectively protecting MTA from being sold by protecting it from being “bought” in the same measure and instead ending up in the treasury where it’s “safe”, so it should end up being a 0 sum game in the long-run.

Curious what @nesk has to say as well, though.

I like this idea. We could put a certain value in the Treasury Charter that we codify to mandate buying x% of all revenues generated to purchasing $MTA off the market. I think @rugolini also had a cool idea in replicating something that Yearn Finance has been doing in offering buybacks of MTA at a discount via UI.

If I recall correctly, this was what he was referring to. I’d personally be keen to see this explored in greater detail by the TreasuryDAO, and in the wider sense, by the Builder subDAO to assist the TreasuryDAO in securing a stable MTA price in the future.

Hey! Sorry that I’m just jumping in, I wrote a draft and forgot to submit it.
I fully support this MCCP, I think we should be focusing on building a sustainable product. That being said:
I disagree with @TClochard proposal of allocate part of the Treasury to buy MTA on a weekly basis. We are focusing on building a long term, sustainable protocol that will ultimate accrue value to token holders by charging fees and somehow distribute that value to them. Whenever we achieve that goal, we will discuss the best way to do it. At the moment, I don’t think it’s optimal to provide exit liquidity for MTA, as short term token price is irrelevant for the functioning of the protocol.

2 Likes

Agree with Juilan here that for the time being revenue should be directed towards helping the protocol reach profitability and build long-term value rather than attempting to support the token price short term.

Happy Friday everyone!

This vote has resolved unanimously in favor, and we’ll begin implementation of this updated fee flow in the coming days! :star_struck: