This proposal suggests redirecting ADA batcher fees revenue to boost $MIN staking rewards and make $MIN staking more attractive. It has been discussed as a temp Check discussion here.
Problem Statement:
Currently, batcher fees accumulated are mostly unused in the DAO Treasury. Around 1.5mn ADA was accumulated since the start, and 300k was spent on CEX Listings and bootstrapping an USDM/ADA Pool. Moreover, the Minswap DAO Treasury currently owns more than 21mn ADA worth of assets. Instead of continuing to accumulate ADA, it’s better to use it to grow the protocol and adoption.
One of the best ways to achieve that is to increase MIN staking attractiveness. We propose allocating the new income from this source (historically an average of 100,000 ADA per month) to staking rewards. This would provide approximately 3,333 ADA in additional daily rewards, increasing staking ADA returns by around 57%, effectively increasing staking rewards a further 7.2%. With current data this would bring the APR to 20.5%. Note that is the average for the last 14 months, if we took only the last 3 months it would be 46,000 ADA, so a little less than half that increase.
Data derived with current rewards on 1-11-24
Proposed Solution:
Redirect New Batcher Fees: Direct incoming batcher fees to increase ADA rewards for $MIN stakers. This additional ADA monthly boost will increase overall rewards significantly.
Periodic Assessment: Regularly review staking engagement metrics to determine if the boost is achieving the intended impact and decide whether to extend, modify, or conclude the measure.
Limited Duration: This measure will be implemented for a trial period of 6 months, allowing the DAO to assess its impact on staking engagement and adjust. After that and extension may be granted.
Benefits:
Enhanced Staking Appeal: The temporary increase in rewards makes staking more attractive, encouraging more users to participate and stake their $MIN.
Productive Use of Accumulated Fees: Directing batcher fees towards staking rewards offers an immediate and valuable benefit to the community rather than allowing these funds to remain idle. It’s a core business principle that unused funds should be actively utilized. If the DAO faces challenges in deploying these funds effectively, it would be better to return them to the stakers, allowing them to decide on their most efficient use.
Increased Community Engagement: Higher staking rewards may encourage long-term holders to continue participating in the Minswap ecosystem.
Proposed Compensation:
To fairly recognize the time and effort spent in researching, analyzing, and drafting this proposal, we propose a compensation of 120$ in MIN Tokens for the 3 hours dedicated to its development to the author (calles), following the average hourly rate corresponding to the position of a financial analyst, taken from the data aggregators of Glassdoor and Salary.com. The average hourly rate for an intermediate analyst is 40$.
Voting Options
I would like to emphasize that if the proposal goes on chain we are letting the DAO decide, so this should not be seen as voting for or against the proposal but rather if you think this is something the DAO should vote on.
Should this Proposal be put forth for an on-chain vote?
I voted yes because right now I do not want to vote no without a solution proposed that is detailed. Imo a buy back is better (burn can be debated) because it keeps the rewards within the ecosystem. Staking rewards stakers, but doesn’t guarantee that the ada stays within the MIN ecosystem. I feel that this would be better for the token, but since I have not been able to find time to show this I will vote with a cautiously optimistic Yes and maybe put out a proposal later
I am unsure all batching fees shoupd be redirected to MIN stakers. I still am unsure what utilty MIN stakers provide to the ecosystem. I would personally like to see the ADA used for actions we want to incentivize, like goverance voting, providing liquidity, trading etc.
Regardless, i am not 100% opposed to this. I think we should add 2 constraints.
A % of ADA redirected to MIN stakers. Maybe 50% of batcher fees recieved per month.
A test period. Say for the next 6 months and then the emissions working group or another working group will reassess. Or we need a dao vote ro extend.
there IS another solution, check out this proposal:
Vote no. Keeping a stream of the protocol’s revenue into the DAO treasury ensures survivability and allows for a forward-looking approach to budgeting DAO expenses.
I understand it, but don’t share it, especially when there is no alternative use for the funds as of today other than sitting idle. I also think the mitigation impact it would have would not help with trying to measure the impact
This was my intention with the point 2 of the proposed solution. It should have been clarified in the Proposal. My thinking was a 6 month period. With a DAO vote to extend. We can determine whether this initiative was successful based on KPIs like staking rate, TVL growth, MIN price or MIN Staking metrics at that point, I think it doesn’t makes sense to define it all now, since we have no clue what will be the general market situation will be in 6 months, and ALL of the KPIs we can define today will need to be bench-marked to whatever is the best benchmark.
I added an extra point to clarify this.
Thanks for updating the duration piece. I still believe GTs proposal is better. Purposefully targeting pools with deeper liquidity st competitors nd using DAO assets (maybe partnerships) to deepen liquidity on those pools for Minswap.
The only thing staking does is provide a means to distribuing revenue to MIN holders with no other benefir to the peotocol itself. I think thats fine, but the yield is already strong. 11% APR right now its higher than most companies dividend yields
The proposal is excellent, but I have a slightly different perspective. Firstly, I feel that there have been too many changes to MIN staking recently, which might confuse users. Secondly, I’m not sure if increasing the current MIN staking rewards is really that attractive. Lately, it feels like we may be overly focused on utilizing the funds that should remain in the DAO treasury.
As this is a proof of concept I voted yes (tentatively) but I would like the onchain vote to be for a percentage of the batcher fees.
We should probably try to smooth out the APR. So during lower trading volume months a higher % of batcher fees are used. During high trading volume months a lower % of the batcher fee is used
Love this ig! I think perhaps the amount of fees that should be directed towards stakers can be fine-tuned; but overall, great initiative. Anything that gives real-ADA yield back to stakers = a step in the right direction imo.
I like the idea of profit sharing, as the dominant dex - we should be able to bully out competition. ( extra dex and crypto ethos - is a myth, take what you can while you can is human nature - capitalism ). if you want to help the people, just make sure you’re a good king vs a tyrant
Con
this does not stop the constant emissions/erosion bleed
APY spikes >> people buy MIN >> previous holders sell the pump >> wait for it to fall and repeat before next “proposal/hype/event”
Buffet : when you find yourself in a hole, stop digging. ( higher yield is temporary pump decreasing as people chase the yield, bonds 101 ) - wasted dev cycles for no real effect imo
Update on my take on this. I will vote no. Did a paper recently where I breakdown how Minswap needs to stop giving away all of its revenue and needs to retain some within its ecosystem. I would rather support buy backs and holds of min with a portion of the revenues instead of distributing 100% of all revenue sources to stakers. This benefits holders and stakers even more as stakers get to keep enjoying apy from revenue distribution plus long term price appreciation as the protocol buys back its own shares.
Pro to the con #2: People arbitraging are trading on minswap which helps trading volumes, fees, and derisks positioning for passive min stakers.
Granted its a small derisk but time in the market is the goal for the dex to achieve. Anything that keeps min and liquidity on the dex the better imho
As for Con #1: This proposal isn’t trying to address the emissions issue. In fact there is a committee handling this separately. Currently daily emissions are down to ~200k. A massive decrease from just several months ago.
Con #3: I agree with this. We don’t want to be positioned in a bad spot with no funds for development, maintenance, etc…
Having a variable rate where a majority of batcher fees go to stakers or the treasury depending on trading volumes makes more sense to me.
The smart contract batcher scheme may make this battle a much smaller issue in the next several months anyways.
