MDP22 - BadgerDAO Loan for Bootstrapping MTA Vault Boost

Summary

After successful internal motion, it is proposed to lend the BadgerDAO a sum of 500,000 MTA for 90 days in order to help bootstrap the MTA boost received for users of their platform in the imBTC and mBTC/HBTC Vaults, once these get deployed on the Badger dApp.

The loan is given in a trustless fashion via a loan function on the deployed MStableVoterProxy contract that is managed by both the mStable Protocol DAO and the BadgerDAO.

Through shared ownership, the VoterProxy has the ability to deposit this loaned MTA into the mStable Staking contract, and consequently manage this stake (for example, migrating to a new staking contract when it goes live).

After the term ends, the loaned out MTA will flow back into the mStableDAO Funding subDAO treasury, and a configurable percentage of accrued rewards from this loan will remain in the VoterProxy contract to help bootstrap an initial boost for the BadgerDAO and its users.

Depending on initial success of these vaults, the loan duration can potentially be extended to retain a competitive boost on the Vaults, which will mandate an additional formal vote by Meta Governors at least 14 days before the extension would take place.

Abstract

The Funding subDAO will loan out the agreed upon amount of MTA for the duration by depositing the MTA into this VoterProxy contract.

From there, the MTA will be deposited into our existing staking contract to be eligible to receive a boost on the imBTC Vault, as well as the mBTC/HBTC Feeder Pool, and the staking duration has to be less than the loan duration in order to be able to pay back the loan in due time.

A percentage of rewards received from staking and for providing liquidity will remain in the VoterProxy contract at the end of the term to assist with maintaining a boost for these positions in the long-term.

Motivation

The mStable core contributor team has worked diligently to get part of our mBTC ecosystem integrated with other protocols, and this collaboration with Badger marks the fruit of a long period of a joint development effort.

In order to assist the BadgerDAO attract a high return for these new products in the launch phase, we’re now asking Meta Governors to decide if this assistance should be granted to them and their users.

This short-term loan will benefit the mStable protocol, as every active user on their platform will have a direct net positive effect for mStable’s own TVL. It will also highlight the collaboration and interconnectedness between the two protocols and help set a solid foundation for further mutually beneficial endeavors.

Pros:

  • Mutually beneficial loan
  • Relatively small investment vs a big reward
  • Great rapport building exercise

Cons:

  • Interest-free
  • Detracts staking rewards from other stakers

Next Steps

Given the great track record and historic success of the Badger platform for Bitcoin derivatives on Ethereum, it comes to no surprise that the mStableDAO & Protocol DAO is very excited to move this integration forward.

We’re looking forward to hearing feedback and thoughts around this proposal from Meta Governors & users of both protocols, and pending no significant objections, this proposal will be taken to a public Snapshot vote on the 24th of August 2021 and will remain open for 5 days to give adequate time for a concurrent discussion here on the forum.

3 Likes

I like the idea especially since it really conveys the need for a pooled boost, but that being said, this implementation doesn’t accrue much value for the treasury or for MTA holders. While I love mStable’s design and capital efficiency, one area mStable has consistently fallen short is treasury diversification/tokenomics/token value accrual. I’d hate to see us continue down that path here. At the minimum, we should ask for some sort of interest payment or deposit to our treasury from Badger. Ideally, we should just wait for a pooled boost implementation to return value directly to MTA stakers (and thus create demand for MTA, helping the treasury. Not to mention the idea of bootstrapping pooled boost with treasury MTA as I’ve mentioned previously) .

This current proposed implementation will generate TVL, but at the expense of sell pressure on MTA with very minimal value accrual back to MTA. Again, we must protect our treasury. TVL for the sake of TVL is not what we’re after - rather TVL that accrues value to mStable.

Would really like further discussion here before Snapshot vote. We pushed the Polygon incentives through without addressing value accrual and would like to see that stay a one-off event and not become the norm.

2 Likes

This seems to have been in the making for quite a long time and I am very happy to see that it finally comes to fruition. I think this is a great step to establishing a new use-case for mBTC. We need to get mBTC out of the ecosystem and establish its usefulness outside of mStable. This is a good start and I would love to see more protocol to protocol collaborations.

1 Like

May I know why is this loan interest free?

There will be a strategist fee which will be received by the mStable/Badger dual multisig, and Badger will also be incentivising this pool with Badger/DIGG. So, I think that a loan is still a reasonably capital efficient method of incentivisation from the mStable treasury. They are essentially paying for the loan with their token incentives and not necessarily contributing to much more sell pressure for MTA (our emission will remain similar as before).

1 Like

Thanks for your feedback and input everyone. The Snapshot vote is now live and will remain open until Sunday.

@Cold_Summer I have included an option in the vote to revise the conditions, in case you and anyone else wanted to express this viewpoint there.

@metahead The answer from @alsco77 should shed some light here, but please let me know if this still isn’t clear from here on out.

Wishing everyone a productive day ahead, and make sure to cast your vote, as rumors have it there might be something in it for Meta Governors this time around :wink:

1 Like

Thanks for the reply, Alex. Any detail on that strategist fee/how much will accrue to mStable? Assume you’re referring to some sort of rev share on the fee Badger will charge its users

It will be 10% of all revenue generated by the strategy :slight_smile:

2 Likes

Hi everyone,

The vote has resolved positively, and the MTA will be moved from the treasury into the Funding subDAO in the coming days, before making their way to the MStableVoterProxy contract.

Thanks to all who participated, and I hope you enjoy your new POAP in the collection :innocent:

1 Like