OK, here’s an idea, depending on how much risk we are willing to take on.
A first step would be to get MNDE adoption as collateral into protocols like Solend. Even if it doesn’t generate yield, it would remove MNDE from circulation and allow users to borrow against it.
More importantly, it would open MNDE use for arbitrage opportunities, which Marinade itself could take advantage of to drive more SOL to the project.
For instance, Solend’s borrow rate for SOL is currently 3.84%, but mSOL generates 6.67% APY. Currently the Solend also pays 9.66% in SLND for borrowing SOL, which would be extra yield for the protocol’s treasury.
Of course these things don’t necessarily scale, and after a certain amount of SOL the project would move the needle on the rates, but thought I’d put it out there for brainstorming.
Hello
I would like to thank all of you who posted here. I love how the conversation is taking more structured and long form with points and arguments taking over replies and comments.
Not all forum topics will need that, but abstract topics like tokenomics imo gain from a clear and well structured conversation. This is also the last time I will mention this ever Let’s get serious.
Voting power boosting
I changed my mind on the voting power boost being separate from a token holding in Marinade. Previously I thought it’s an unnecessary complexity as Marinade governance will not be playing iterative games.
I now think we should implement voting multipliers per time locking, because I can see several (maybe) interesting and meaningful games being possible on the validator level. While these might not happen anytime soon or ever, having a vote boosting mechanic available might be a necessary enabler.
NFTs
I think we don’t need 5 NFTs as @MEPIGME states. Instead, the staking process can burn the old & immediately mint a new NFT with similar or different underlying stake as it happens, while preserving or, more interestingly, changing some visual attributes (think growing, or in tech term: unfrozen metadata).
Profit sharing
Would anyone have more insight into the US law regarding securities? Let’s assume profit sharing is only distributed to staked and/or locked MNDE. In which of these options would MNDE be likely considered a security?
Form:
profit distributed in a form of mSOL as a direct fees from staking
profit distributed in a form of MNDE as a buyback from the market
profit distributed in a form of MNDE from the treasury (staking) and buybacks going to different treasury with a vesting
Time:
profit distributed per epoch once, claimable
profit distributed per quarter once, claimable
profit distributed in a continuous payment stream (MeanFI) “per block”
With regards to the insight on Profit sharing, if anyone has inroads or links to the Galactic Gecko Space Garage team I know they got fully into the weeds with lawyers and securities experts when their spat with listing on Alpha.art and the PiggySol royalties debate a few months ago. Ultimately they decided on 0, nada, no on royalties and even kept their NFTs off markets that engage in it. (i.e. Alpha) so they could be privy to either serious complications of one or simply erred on the side of maximum caution.
IANAL, and definitely not a securities lawyer, so take this with a grain of salt. It’s even fuzzier because of how political things on the topic have been in the US.
Other teams who have looked into it mostly aim to avoid running afoul of the Howey test: if profits associated with the token come from the efforts of others, then it’s more likely to be considered a security (particularly if these “others” are clearly defined - eg. a team).
Going by that definition, then it wouldn’t really matter if it’s staked or locked, but why it is gaining value. Unvested options in a company are still a security, even though they are effectively “locked”.
I’d expect that any activity where the Marinade treasury grows because of some active effort, and then there’s an expectation that these funds are used to grow MNDE’s value or disbursed to holders, would put it at risk of being labeled a security.
The team I had the longer conversation with on this topic said that cases where the value comes from the system itself would seem to be OK. A token for a lending project that gets fees, for example, gains value mostly because random individuals decide to borrow or lend, not because of the daily work of a core team (yeah, I know).
This is the sort of thing for which the team should go to a lawyer, though.
Meatspace central governments are completely, 100%, incompatible with decentralized blockchain. I think it does makes us a lot of harm to try to adjust to meatspace requirements when the incompatibility is 100%, there’s no way to find a middle-ground.
Vast amounts of time and money spent in lawyers and experts, opportunities to innovate lost by fear… it does not make sense. Either we move with cypherspace conditions and our own ethical principles… or if we try to appease the regulators we will end-up deciding the same: to do “zilch, zero, nada”
I agree
Fabric and lifinity are two protocols I know of where NFTs have utility. Fabric have doubled down and committed to continuing this path as they operate in a defi environment. If legislation comes then of course they will look at it but until then will not let their decisions be guided by fear of what might come.
From my POV, we need a little bit more structure in this discussion.
First, I agree with PlayerOfBits, we need to separate the end goal (governance, revenues sharing, ownership, etc) from the means to it (NFT, staking, locking). We need to first draw the vision of WHAT we want (who controls what, what are the cash flows, etc) to achieve here before we think about HOW we want to achieve it. Do we want MNDE holders to get a part of Marinade revenues ? or Marinade future revenues ? Both ? Interest on the treasury ? What control will they have ?
Second, we need more information. We are discussing what direction we should take, but most of us are in the fog right now. Marinade should give us more disclosure on protocol statistics so we can collectively build a valid plan that may survive the crual reality of numbers. I know that Marinade made a nice effort to provide statistics and visibility, but some crucial informations are still lacking on this dashboard:
How much does Marinade earn per month? (right now)
How much does Marinade spend per month?
How is the user base growing/evolving?
How is marinade visibility growing/evolving?
From there we would discuss what end goals should be a valid perspective for investors and how we can build something that bring us there
In crypto, prices are just determined by who is the marginal buyer/seller.
This is why token incentives for veCRV work so nicely → creates demand to not only hold but actually buy those tokens since they can be used to earn revenue (albeit CRV inflation, but still).
There’s a couple of ways to tackle this:
Improve liquidity on MNDE/mSOL pairs. Right now, $100k buy is a couple of % slippage. Any institutional player looking at MNDE will come to a positive conclusion on the fundamentals/DCF analysis but are unable to buy.
Reward for locking tokens. Basically, the way to do this here with a gauge vote for the rewards & protocols would be incentivized to accumulate MNDE to drive value to their protocols. This has a bit of a downside that the CRV inflation is much more than MNDE, but something to consider.
Beyond that, long-term I think it’ll be some revenue sharing. If you don’t want to pay profits you can double-dip & buyback MNDE and distribute to veMNDE stakers similar to veFXS.
Indeed. Perhaps a heretical approach would be useful here.
MNDE is a governance token. Is there anything re Marinade that actually needs governing in the long run?
The mission is straight-forward enough, and all the components are there already: avoid the top validators, no whitelisting, validators get selected algorithmically.
If the project remains focused on this core, are there any values you see now that the governance could productively tweak in the future?
Put another way… what is the key thing that you think would add value if you got to vote on?
It the long run, it’s about treasury and earnings. You know, doing something good/interesting/daring with the money there. There’s a lot of people to educate, onboard, support …
Great questions - I can look at the first question this weekend but the second question would require more time to get familiar with Marinade’s existing data. (On my to-do list, but will take longer)
How is the user base growing/evolving? (On-Chain Data)
I recommend looking at this through the following time-series views: Distinct Holders, Distinct Transfers, and Distinct Contract interaction, mSOL balance (P25, P50, P75, AVG) for each of these events
How is marinade growing/evolving? (Off-Chain Data)
I recommend looking at this the following time-series views: Social Sentiment (Twitter impressions / mentions), website visits, and cumulative number of partnerships.
I’ll follow up before the end of the wknd related to 1
The lack of liquidity in MNDE/mSOL pools is real, however, I think the implementation of the NFT program somewhat sidesteps this as bigger buyers can simple purchase secondary market NFTs and then burn & combine the underlying MNDE without dealing with slippage. This would be an educational thing that would need to be explained to potential buyers I believe.
If this action takes off then it will likely creating a slight premium on the NFTs which smaller users could arbitrage, if valuable enough. Essentially this would create an artificial futures market for MNDE which would have a mostly positive impact on the price as its not a long/short futures market but only a long market as people are paying a premium to accumulate more MNDE for governance purposes.
I’m personally in the camp that CRV/CXV dynamics are short winded and do not benefit the underlying protocols mission, especially something like Marinande. I get how it makes sense for a stableswaps platform or an exchange in general but not a liquid staking platform with pure goals in mind of decentralization.
Let’s get serious.