Agree that we want a healthy setup for MNDE!
It’s a mistake to think that Lifinity gets MNDE for free. Lifinity is providing liquidity, which entails both price risk and impermanent loss risk. On other DEXs, these risks are assumed by LPs, which are external to the protocol; the protocol takes on no risk. In the case of Lifinity, the protocol itself provides the liquidity and thus takes on the risks. Just as LPs on other DEXs are compensated for the risk with MNDE rewards, Lifinity is also compensated for the risk with MNDE rewards.
Originally, Marinade manually determined how much MNDE emissions went to each protocol. The switch to gauges was made for a variety of reasons, but ultimately it was seen as a superior model. Most people are aware that it is an emulation of Curve, which has proven to be extremely successful. The model is designed for protocols to acquire tokens and vote for their own gauges (as opposed to individuals being incentivized to lock and vote, for example, as explained in my previous post). And that is precisely what Lifinity is doing.
This will lead to MNDE losing significant utility and prevent new participants to come in.
On the contrary, CRV gained significant utility through its gauges, even as each protocol showed differing levels of willingness to purchase CRV to participate in voting. Some early projects saw the benefit of buying and locking CRV, and as time passed more projects joined in. This only accelerated with the introduction of bribes, and if I’m not mistaken Marinade is currently building out this functionality for MNDE.
Through the discussions here and elsewhere, I am getting the sense that some protocols prefer the former method of the Marinade team manually determining emissions. This way, there is no need for protocols to make an investment in MNDE and they can receive assets to incentivize usage of their protocol for free! Or they are fine with the gauges…as long as no protocol accumulates MNDE so that the share of rewards for protocols that don’t accumulate decreases over time. But if there’s some sort of implicit agreement that protocols can’t accumulate MNDE, then we are just anchoring to some arbitrary distribution based on the initial amount of MNDE that protocols happen to have. I see no good reason to do this. On the contrary, it seems obvious to me that Marinade should want protocols to accumulate their token.
Finally, I want to mention that any protocol can do what Lifinity is doing or similar if they are willing to put in the effort. For example, protocols can create a system where users’ MNDE rewards are locked until a future date, and in the meantime the MNDE is locked and used to vote for their own gauges. Get creative!