Hello you beautiful culinary liquid staking enthusiasts!
MNDE Liquidity mining serves 2 functions in Marinade:
- it incentivizes staking SOL and using it in DeFi integrations, being a means of acquisition and retention
- it spreads the ownership of Marinade protocol around in the ecosystem to its users, decentralizing Marinade
Liquidity mining plan for every 2 weeks is currently planned by the Chefs team. While flexible in the beginning, as the Marinade and the space around it matures, this control can (will!) include biases, omissions, and errors.
With Marinade governance online, there is an opportunity to decentralize this part of the DAO by transferring the power to allocate MNDE incentives to the MNDE owners.
Hand over liquidity mining planning to the Marinators via on-chain governance
- Switchover the liquidity mining incentives coordination to Marinade governors
- Connect Tribeca pro-rata gauges to Quarry, allowing Marinators to vote on MNDE incentives towards their preferred protocols
- New governable parameter: Cap the MNDE amount to be distributed; initially set to 1.000.000 MNDE (0.1% total supply) weekly
If implemented, this proposal both opens and automates liquidity mining planning.
Opening the decisions on where to direct MNDE incentives to all MNDE holders should make biases irrelevant and remove the chance for Chefs’ errors while providing a parametric regulation.
The expected behavior is for all users to vote the most selfishly for the protocols where they provide the liquidity or want to see growth. Users voting randomly will be slowly diluted by the selfish voters, making their liquidity mining vote less and less relevant. This ensures the users are always incentivized to seek and capture the biggest value for themselves, and thus for Marinade.
Automation - MNDE can be dispensed automatically from the treasury from a pre-allocated budget. This reduces overhead of multisig coordination on the Chefs’ side, which will also enable cycles shorter than 2 weeks. Shorter cycles, in turn, make it easier to follow and adjust to market conditions.
Voting via pro-rata gauges allows for vote-and-forget behavior for the selfish voter. They will simply set up their preference once in the gauges UI and won’t be forced to ever readjust them (unless they acquire more NFTs, lock in more MNDE, or change their mind).
Founding Chefs originally planned to allocate roughly 1.7M MNDE weekly for liquidity mining with a predictable base rate and some flexibility to increase or decrease it to allow for promotion or remove needless spending. Average after 26 weeks (excluding Milestone bonuses) is almost exactly that: Docs, with the last weeks’ rate bring roughly 1.25M MNDE per week.
The proposed reduction to 1.000.000 MNDE be allocated to gauges is in place to stimulate consolidation of the incentivized channels - a gradual change in a liquidity mining strategy from stimulating ecosystem adoption to selecting the most interesting mSOL uses.
The Chefs’ view is that Solana ecosystem has undergone a dramatic development of core DeFi and NFT protocols, which now largely offer a similar product with a different token on top. To stimulate further improvements and innovation and to make space for exciting new mSOL uses, Marinade stakers - and not only Chefs - should rise up to the responsibility of choosing the best places to use their mSOL. Should the responsibility lies solely on Chefs, then it could potentially lead to biases and a narrower view of the space.
To not go completely wild, and to establish a healthy metagame on MNDE distribution in a safe(er?) environment, one thing to consider at the start would be to cap the % of votes each gauge can receive to 20% for the first year, or even more gradually start at 20% and rise by 1% every week.
Giving true power to the token-holders is scary yet necessary - otherwise tokenized governance would be just a meme. Marinade is on a mission to decentralize Solana and itself (See 2022 roadmap), and where to better start than deciding on where to further give itself away.
In the frame of the mDAO, this proposal seeks to drag in and engage a solid group of tokenomics gourmets, driving the liquidity mining discussion forward, perhaps by providing a recommendation and reasoning to the rest of the Marinators on why vote a certain way.
In the frame of selfish behavior, other protocols and DAOs are expected to use/buy/borrow their MNDE and vote-steer the MNDE incentives for themselves and their allies. While this may be a low way of getting their attention, this attention could be further and more easily steered towards harder-to-digest Marinade values like decentralization by leading by an example in openness, empowering token holders, and reducing bias.
New Gauges: we will need to add a process for voting. This can likely be lightweight or informal since the actual voting towards incentives is what matters, but there is some merit in projects seeking MNDE incentives approaching the community via a public forum post.
Quarry support: not all protocols support Quarry. Marinade will need to create quarry-relayers, to be funded by treasury and automatically deposit to the protocols’ distribution wallet. devChefs will need to explore the technical design and feasibility.
// Edit: For protocols that cannot support Quarry easily, private quarries will be created and tokens issued so they can claim on behalf of their users.
Coordination: We will likely need to create a new Discord liquidity mining channel under mDAO for discussion, reasoning, influence, and coordination. Suggested rights: Read everyone, write only Marinators.
Bribes (=voting incentivization): bribes come hand in hand with voting and allocations. It’s a reality elsewhere in DeFi (and the world), and architecture should be designed in a way to make the system open to 3rd party interactions like bribes.
Arguably, exposing the DAO’s bribe attack surface should make the DAO stronger, not weaker. Note: Governing is a responsibility first, and a right second.
Lack of flexibility for the Partnership and Growth workgroup to support new integrations: perhaps allocate optional extra, up to 10% of the total weekly MNDE to partnership WG to allow directing attention towards new protocols, integrations, and developing partnerships.
// Edit: dropped from a proposal. For an approachable and transparent, this will need to be achieved via social consensus.