PDP 31: MTA emission and distribution pre Emission Controller launch

Posted on behalf of the mStable ProtocolDAO

Simple Summary

It is proposed to adjust the MTA topline emission and distribution scheme after MCCP 9 is approaching expiration. This adjustment is pre-gauges launch and will be replaced by the gauges launch or before that by another proposal. This proposal outlines the reduction of the topline MTA emission by 20% compared to MCCP 9 and adjustments to the distribution to different products.

Abstract

This proposal follows directly MCCP 9 and suggests a further reduction of the topline MTA emission to 166,153 MTA weekly, a 20% reduction compared to MCCP 9. This emission reduction in comparison to earlier proposals is shown in the following figure.

Following the proposed topline emission is also a breakdown of the emission towards the individual products. This new breakdown is necessary because MCCP 7 suggested carving out 20% towards polygon. Since then, the protocol has grown and Polygon has seen an increase in interest and TVL. Additionally, this is a step to increase transparency and allows MTA Governors to influence and approve distribution schemes more granular. The breakdown of the item “Vaults & Feeder Pools” to individual pools will continue to be calculated based on MCCP 4, which takes TVL and volume metrics into consideration.

Network Pool MTA
Ethereum Staking V2 MTA 32,500
Ethereum Staking V2 mBPT 20,000
Ethereum Visor Finance Uniswap V3 5,000
Ethereum Vaults & Feeder Pools (MCCP 4) 68,654
Ethereum Subtotal 126,154
Polygon imUSD Vault 15,000
Polygon FRAX Feeder Pool 10,000
Polygon BAL pool 15,000
Polygon Subtotal 42,360
All Total 166,154

Motivation

The reward emission is a key part of the mStable ecosystem. Not only does it bind liquidity, but also rewards participation and usage of the mStable protocol - It allows protocol users to become its owners. Therefore an extension of the mentioned rewards is important to keep this momentum going and to continue to incentivise liquidity providing, staking and participation.

The reduction in emission is proposed to decrease the weekly inflation rate of MTA and to allow MTA to appreciate over the longer term. MTA holders and stakers benefit the most from a reduction of emission since sell pressure from liquidity mining can be reduced that way.

Initially, MTA generous emission schedule was designed to reward protocol users and to allow users to have a path to become its owners, contributing to the protocol and participate in its growth. This initial stage resulted in a vibrant community around mStable and gave users a path to an active governor role within the protocol. This stage is now coming to a quiet end; the effect of fostering a community by the distribution of the MTA token has diminishing returns. This is an opportune time to curb emissions further, to make MTA a more scarce asset and allow the strengthening of the community around mStable.

Permission

This Proposal grants the ProtocolDAO permission to repurpose the MTA distribution to third-party pools, in case of co-incentives from third-party protocol cease or a better opportunity presents itself.

Next Steps

Pending no significant changes to its content, this proposal will be taken to snapshot vote on Monday, 11th October 2021. 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.

1 Like

I am keen for this as in my view too much MTA is being emitted with too little return. I am more interested, however, to discuss how we might be able to improve outcomes with MTA emission. For example, there is a discussion on discord about bribing veCRV holders in the mUSD CRV pool here that could result in a large amount mUSD minting and protocol growth: Discord

I will be voting FOR this. The reduction in MTA emission is long overdue and we need to be more careful with distributing too much MTA for little return.

Also keen to discuss more how we can adjust it even better to achieve a higher return.
So after this proposal, we should continue to discuss and adjust.

Thanks for posting this up @Dimsome - much appreciated as always!

I am in full support of this reduction to emissions prior to the gauge system. We should have probably reduced the emissions quite a while ago, but I also believe that early supports should get the largest share of the pie, so it all worked out in the end.

Therefore, I think it has now finally come to the time that we’re entering the main stage development phase of the protocol, and no longer need to incentivize the use-case for mStable as heavily as before, as we’ve shown what we’re worth, and need the token price to reflect this adequately.

1 Like

Vote is up on Snapshot!

I support this proposal. mStable has a great product and now I am appreciative of steps taken to increase the token value such as this one.

I do have a few questions relating to the next step implementation (the gauges).

  1. Can the vote be split across multiple gauges?

  2. Will the vote be on snapshot or other “gas-less” mechanism?

  3. Under the implementation, how often is voting expected to take place(or does the vote carry over as the same until changed)? Related, how often do the weights update?

  4. I assume MTA staking rewards would also be part of the gauges that governors can vote on, is that accurate?

Thanks otb for your feedback!

Regarding the Emission Controller (previously named gauges):
I am not across the details for the design for this mechanism yet. We will have today a discussion amongst core contributors and will communicate the details of the implementation thereafter or as we are closer to finalizing the ideation.

1 Like