This is going to be a brain dump so apologize in advance for lack of organization.
First some disclaimers - I don’t really own any MTA anymore, yet I do have friends that still do and also have spent a significant amount of time on mStable, like many of those involved, and want to see the project succeed.
Hopefully that provides me with a rather objective perspective but see into that how you will. I believe I have ideas that could be productive for mStable to adopt but you of course may see that differently.
Let’s take a look at where DeFi sits today. Many recent success stories are grounded in “ve-” tokenomics and Convex. FXS pumped 200% in less than 2 weeks after cvxFXS was announced. YFI is up over 100% over the last couple weeks since its veYFI tokenomics redesign. And these appreciations are for good reason. Since the launch of Convex in May 2021, CRV has outperformed ETH by over 60%.
I intro with that for a number of reasons.
(1) I continue to see mStable focus on the nominal quantity of MTA emissions and caught in the ideology that “less MTA emissions = MTA go up,” rather than focusing on the incentive design around those emissions. CRV, the token that outperformed ETH ultrasoundmoney by 60% since mid May is hyperinflationary. Again, incentive design, not nominal emission.
(2) Since last spring, I hammered away at the need for a Convex-style pooled boost on top of mStable to create the incentive design that would drive utility and value to MTA. While the mStable team has recently pushed out staking v2 with a gauges component (congratulations on this achievement), resources over the spring and summer were utilized on a Polygon deployment that did not have a mechanism to drive value back to MTA, rather than building staking v2 sooner & a pooled boost mechanism on top. (understand that there may have been other resource limitations here, but regardless, the resource allo was -EV). Thus, the MTA token (and thus the mStable treasury) did not and still has not benefitted from this Convex/pooled boost tailwind.
(3) I luckily had been active in the Convex discord in the summer and heard about Votium/bribing/CVX controlling the veCRV on Convex. I proposed some ways in the mStable discord that mStable could accumulate CVX to use to bootstrap its product suite with the veCRV votes. This ideation occurred on July 21st when the CVX price was $2. Current price is $48 and mStable now spends MTA emissions bi-weeky to Votium bribes (a bi-weekly expense) - rather than owning CVX (an asset with utility) to vote with its own veCRV. Again, an opportunity to be early to a trend that was unfortunately not captured.
(4) The supply of mUSD, before recent Votium bribes began, fluctuated between ~30-40 million mUSD for greater than 1 year. While the rest of DeFi (even on eth network only) did multiples of TVL growth, the mUSD supply was flat. As a result, I think mStable needs to ask itself a very hard hitting question. Is mUSD worth incentivizing? While the mUSD supply has recently grown significantly as a result of the bribe expenses (which still generate about $5 worth of CRV incentives for every $1 spent on bribing - i.e. the bribe cost is only positioned to continue to rise, costing more MTA every 2 weeks), it’s quite clear, when contrasting against the previous ~14 months of no growth, that this mUSD growth is simply a result of mStable paying MTA for CRV incentives to go to mUSD users.
This growth is not because users find utility in mUSD, rather because mStable found a way to leverage its MTA emissions by ~5x through bribes, which are an unsustainable recurring expense. Without these incentives to pull mUSD away from Save, the performance of imUSD approaches that of stables deposited in Aave/Compound with greater risk surface of holding 4 stables, rather than less (which is why you need to pay people incentives to hold mUSD). Similar to the Polygon deployment, the Votium bribes for mUSD seem like mStable is spending MTA on generating activity for the sake of generating activity without consideration for the cost-benefit equation of doing so.
Emissions have a purpose of bootstrapping a product. Helping you reach a critical mass of users that then appreciate your product for the utility it inherently provides sans incentives. Emissions are not simply a “more = bad” & “less = good” dichotomy. Development stage is everything. Product utility is everything. Incentive design is everything.
I encourage mStable to consider whether (a) the current product suite has inherent utility sans emissions (b) whether mStable should priorititze alternative mAssets that may offer greater inherent utility and combine that product launch with a more aggressive emission schedule that has a better incentive design (pooled boost) on top.
(5) I have suggested over and over since last summer that what I see as the best use case for a meta asset is meta staked ETH, mstkETH, which later could be expanded laterally to other PoS chains (i.e. meta staked DOT, mstkDOT) as defi continues to go multi-chain and liquid staking solutions grow. mstkETH, by smoothing out variability in validator yield due to MEV, creating a composite staked eth yield, provides an mAsset with inherent utility. People wanting staked eth with more predictable yield will want to own what will be the risk free rate/cornerstone collateral piece of DeFi. Read my previous ramblings here.
With the merge coming in 2022 (hopefully, kek), eth 2.0 and MEV will take center stage. mStable can be early to this narrative and capitalize on a massive growth opportunity for an mAsset that has inherent utility that eventually won’t need incentives for people to want to hold it. While mStable missed the Convex opportunity, this is the next big one on the docket. I’d direct every resource mStable has at capturing it. This is make or break for mStable. Ignore at its own peril.
P.S. Deprecate the feeder pools and buy CVX with some of the MTA emissions that would’ve gone to those pools and make Curve mStable’s defacto feeder pools and make them pay the CRV emissions every 2 weeks, rather than mStable. Continue to allow swaps between the mAsset basket assets to utilize that idle liquidity.