MCCP-4: MTA reward emission overhaul

Posted by a representative of the mStableDAO

Simple Summary

Note: This MCCP assumes a positive resolution to MIP-9.

Note: This MCCP does not propose changes to the MTA assigned to Staking rewards or MTA/ETH pool

It has long been proposed that major optimisations can be made to the MTA emission. This MCCP proposes a major revamp; bringing all the incentives “in-house” to create better circular effects, reduce MTA sell pressure and maximise TVL. This proposal also outlines a prospective emission schedule over the next few years, and a set of rules to follow in order to calculate weekly distributions.

Abstract

The MCCP proposes that mStable:

a) stop incentivising mAsset liquidity on third party protocols and focus entirely on Feeder Pools (e.g. tBTC/mBTC feeder pool, which has an effect of leveraging & giving more fees to mAsset SAVE)

b) change the rewards contracts so that X% of MTA is unlocked immediately and Y% is vested over Z months (like the current imUSD vault), with a boost for being an MTA staker, thus incentivising LPs over a longer time period

c) stick to the outlined emission schedule (over the next 16 weeks) and ruleset defined here in order to calculate weekly pool distributions

Motivation

The current incentives structure is inefficient and does not promote long term project alignment. LPs are rewarded for providing mAsset liquidity on to third party platforms, which, while providing some utility for mAssets, does not induce circular effects in mStable, and benefits the third parties moreso. In addition, LPs are only incentivised over a very short time period as the rewards unlock immediately, thus incentivising ‘flash’ liquidity provision and short term outlook on MTA. Thirdly, the calculation of quantities and determination of which sources should receive MTA emission is inefficient and could be optimised with a ruleset.

This MCCP interacts positively with MIP-8 and has the power to set the tokenomics on a different course: increasing mStable TVL, increasing fees to mAsset SAVE, increasing revenue to buy & make, reducing sell pressure for MTA and causing people to be MTA bulls due to the lockup and the rewards gained from being a staker.

Goals of MCCP-4:

  • Utilise MTA to generate circular effects for mStable

  • Increase net fees going in to mAsset Save

  • Leverage utilisation rate for mAsset Save

  • Increase revenue allocated to Buy&Make

  • Maximise mAsset TVL

  • Maximise demand for MTA

  • Reduce sell pressure for MTA

Read the specifics

https://mips.mstable.org/MCCP/mccp-4

3 Likes

Bring it on! Very welcome tokenomics change.

1 Like

Nice one. I agree with the changes.

1 Like

Fully support. Focus on feeder pools will generate more usage and higher swap fees → more revenue to MTA holders via buyback and make + more APY for savers → reflexivity that will drive more swaps and higher MTA price, and so on.

1 Like

I think conceptually this is sound and positive for mStable:

  1. This redirects mindshare/fees over from the DEX pools back to mStable.
  2. Increase TVL on mStable

Main concern is:

  1. Price discovery and liquidity/slippage/ keeper activities on DEX, especially for mBTC and mUSD given that it does not have a centralised exchange peg.

  2. Aggregator routing protocol ( 1inch, paraswap), may not have integrated these routing algos through mStable.

That said, I believe the feeder pools could provide a form of price proxy.
And, mStable being an OG project should be able to get aggregator support easily.

The team has been superstars in terms of execution and I trust them on MCCP-4.

5 Likes

This is great, it completely alters mStable tokenomics:

  • moves incentives to directly pay users who place assets onto mStable, not onto third parties
  • is the first time there is an objective and governance minimised way to gauge rewards for pools
  • connects MTA staking to earning potential on mStable

To respond to @Eugin, I think he has a point. I would like to see these tokenomics, combined with feeders, to be a wedge to rapidly increase TVL, after which time, mStable can focus on pushing that liquidity elsewhere. I believe that mStable didn’t have enough resources to meaningfully incentivise deep mAsset liquidity from the get go.

1inch are close with the team and I’m confident they’ll integrate very soon after launch

1 Like