This RFC would like to gather feedback surrounding the further increase of the governance fee flow from the protocol to the treasury from all sources due to the recent downturn in overall interest on Aave & Compound, as well as in preparation for a prolonged bearish market sentiment in the wider crypto ecosystem.
Since then, we rerouted 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 forms the basis of this RFC to remedy this.
We subsequently overhauled this fee flow in MCCP 20 in order to redirect 50% of these fees back into the TreasuryDAO.
It is now suggested to increase this fee flow to 75% or even 100% towards the treasury, as in the current bear market condition, the Treasury needs to ensure a sufficient runway for the protocol.
Currently, the mStable Protocol liquidates 50% of protocol fee rewards into MTA which is then streamed to stakers, and it is suggested to use these rewards for the increase in treasury fee flow.
As previously mentioned, it is suggested to increase the fee flow from all sources, which will also include the upcoming Convex Metavault and any further Metavaults until another proposal be made to alter this suggested fee flow model.
This change in fee distribution will also significantly reduce the selling off of inflationary MTA rewards and not needlessly punish stakers, as they are already receiving a substantial amount of rewards through the Emissions Controller.
With the recent tumbling of the Terra ecosystem, we’ve seen a drastic reduction in total market capitalization allocated towards cryptocurrencies, and as our treasury is still heavily allocated in native governance tokens, we have to ensure means and ways on how the protocol will continue tho thrive and endure in a potentially prolonged bear market.
We initially granted stakers additional inflationary MTA rewards to steward the Emissions Controller towards the best returns for the protocol, but this has not been the case if we look at the historical performance of the Emissions Controller.
Thus, I believe that rewarding stakers singularly through the Emissions Controller is a valid and sufficient way to incentivize them 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 making.
Additionally, if we were to increase the governance fee flow to the treasury, we would immediately make available more runway for community-funded ventures, of which the Ecosystem subDAO can only partake when the funds are available beyond funding the Builder subDAO core operations.
- The MTA token and the mStable protocol will start accruing more value due to less sell-offs
- The protocol will be able to generate more revenue than before to fund operations
- Save significant amounts of gas on the cumbersome process of exchanging native mAssets for MTA to distribute to stakers
- Stop stakers from receiving inflationary rewards on top of inflationary rewards
- MTA stakers will receive only Emissions Controller MTA, so most likely will cap that dial moving forward or decide to unstake
It is suggested that the community comment on this RFC in the coming days, and bearing no significant opposition or change in ideation, we would move ahead with this RFC in the coming weeks and create a formal draft proposal on Github to be used for review.
Meta Governors are encouraged to provide as much feedback as possible until then, so we can create the best possible outcome for mStable and its users.