AQube - Fee Switch Buyback Mechanism: MIN Staking Rewards Reform (Temp Check)

Temp Check Discussion
1

1. Title

Fee Switch Buyback Mechanism: MIN Staking Rewards Reform (Temp Check)

2. Type of MIP

Constitutional

3. Self-introduction of the Member

AQube is a specialized firm in blockchain economic research, DeFi strategy, and tokenomics optimization. The firm applies a structured, research-based methodology to token restructuring, liquidity planning, and incentive system design. Experience includes:

  • $400M+ TVL supported across DeFi protocols
  • $6M+ fundraising supported for blockchain projects
  • Strategic liquidity and tokenomics models across multiple DeFi platforms
  • Minswap General Report: produced a General Report on Minswap tokenomics, covering tokenomic dynamics, liquidity and treasury management, and a solutions framework that underpins the first DAO proposals on tokenomics restructuring
  • MIN token burn proposal: designed and proposed the One-Time General MIN Token Burn for Minswap DAO, which passed on 2025-10-03 with 99.67% support and resulted in burning 500,000,000 MIN from the Yield Farming Reserve

4. Scope of Change

Authorize Minswap Labs to convert the weekly ADA fee switch allocation to stakers into purchased MIN and to distribute that MIN to MIN stakers in the same period, with weekly execution cadence.

Option A: Full replacement
100% of the ADA Fee Switch buys MIN and is distributed to stakers as MIN each week.

Option B: 50% Conversion
50% of the ADA Fee Switch buys MIN and is distributed as MIN. The other 50% is distributed as ADA.

Option C: Dynamic Split
Each week the Emissions Committee splits the ADA Fee Switch across three buckets that sum to 100 percent: ADA paid as ADA, ADA converted to MIN and distributed, ADA converted to MIN and burned. Labs executes the split with weekly cadence. A weekly report discloses the chosen split and the rationale.

5. Motivation

Minswap operates in a mature, fee-anchored regime. The DAO has already retired reserve supply, establishing supply discipline. This proposal extends that path to staking by routing fee switch value into recurring market demand for MIN and by making rewards MIN-centric without adding emissions.

What this proposal aims to achieve
• Alignment: make MIN the unit of account for staking, so staker incentives match protocol health.
• Demand creation: convert the ADA fee switch allocation into recurring MIN buy pressure sized by governance.
• APR continuity: preserve dollar APR in expectation by converting ADA and returning purchased MIN in the same period, subject to prices and fees.
• Operational clarity: weekly cadence, disclosed multisig, standard public ledgers, no new issuance, no fee rate change.

How the two options map to the goal
Option A, Full replacement
Immediate alignment. All weekly fee switch ADA buys MIN and all rewards are paid in purchased MIN. Maximizes fee-funded demand and keeps execution simple.

Option B, 50% Conversion
Balanced alignment. Builds steady MIN demand while preserving ADA payout continuity for user needs.

Option C, Dynamic Split
Flexible alignment. Protects participation by keeping an ADA leg when needed, builds demand by converting a share to MIN for distribution, and enables targeted buyback-and-burn.

6. Rationale

This chapter shows how fee-switch buybacks would have worked from 2024-09 to 2025-09 under Option A, 100 percent conversion, and Option B, 50 percent conversion. For each month we report ADA fee-switch inflow, then potential buy pressure in MIN and in USD using a monthly ADAUSD VWAP.

Month ADA fee-switch inflow (ADA) Option A buyback (MIN) Option A buyback (USD) Option B buyback (MIN) Option B buyback (USD)
2024-09 108,330 2,596,698.12 38,046.02 1,298,349.06 19,023.01
2024-10 170,300 4,124,646.33 59,555.95 2,062,323.17 29,777.97
2024-11 175,572 3,686,862.49 64,976.23 1,843,431.25 32,488.11
2024-12 156,942 3,082,708.72 73,594.21 1,541,354.36 36,797.10
2025-01 149,629 2,221,919.09 79,937.69 1,110,959.54 39,968.85
2025-02 173,899 3,012,642.75 104,517.68 1,506,321.38 52,258.84
2025-03 241,939 6,118,063.09 212,448.85 3,059,031.55 106,224.43
2025-04 220,069 5,301,232.27 206,579.47 2,650,616.13 103,289.74
2025-05 177,512 4,889,938.65 164,097.25 2,444,969.32 82,048.62
2025-06 243,908 6,040,824.23 195,415.52 3,020,412.12 97,707.76
2025-07 129,563 4,556,230.39 137,681.77 2,278,115.19 68,840.89
2025-08 106,765 3,787,716.71 75,508.45 1,893,858.35 37,754.22
2025-09 89,811 3,249,013.39 87,936.41 1,624,506.70 43,968.21

Cumulative potential buybacks from 2024-09 to 2025-09:

  • Option A: 55,360,498.11 MIN and 1,600,294.50 USD.
  • Option B: 27,680,249.05 MIN and 800,147.25 USD.

Pricing:

  • Monthly MIN price: volume weighted average of daily MINUSD across the calendar month, with each day weighted by that day’s MIN USD trading volume.
  • Monthly ADA price: volume weighted average of daily ADAUSD across the calendar month, with each day weighted by that day’s ADA USD trading volume.
  • Monthly MIN to ADA ratio: volume weighted average of the daily MINUSD to ADAUSD ratio across the calendar month, with weights based on MIN USD trading volume.

7. Key Terms

  • Fee switch: the share of swap fees routed to stakers.

  • Purchased MIN: MIN acquired on the market using the converted ADA and distributed to stakers.

  • ADA floor: the minimum percentage of rewards kept in ADA under Option C.

  • Emissions Committee: existing body responsible for emissions planning. Under this proposal it is additionally authorized, if Option C is selected, to set the weekly ADA floor.

  • Period: the reward and execution window for this mechanism.

  • Execution VWAP: size weighted average price of all fills in the reporting period.

  • Execution window: the time block within the period when conversions are performed.

  • Slippage limit: the maximum allowed price impact per order during conversion.

  • Shortfall: any ADA not converted due to liquidity or limits, carried forward to the next period.

  • Staging wallet: the address that temporarily holds purchased MIN before distribution.

  • Conversion wallet: the address that executes ADA to MIN purchases.

  • Reporting ledger: the public weekly post with ADA converted, MIN purchased and distributed, MIN purchased and burned, prices, fees, shortfalls, wallets, and txids.

  • Burn: permanent removal of MIN from circulation by sending it to an irrecoverable address.

  • Burn allocation: the percentage of funds designated for burn in a given period.

  • Txid: transaction identifier published for on chain verification.

8. Specifications

Platforms and components

  • Chain and asset: Cardano L1. MIN is a native asset.
  • Funding source: ADA fee switch allocation to stakers.
  • Period: 1 week.
  • Distribution asset: purchased MIN and ADA per the selected option.
  • Custody: Labs multisig controls the ADA conversion wallet and a staging wallet for purchased MIN. Weekly reports publish addresses and txids.
  • Governance and oversight: the Emissions Committee manages ADA floor adjustments under Option C and publishes rationale in the weekly report.

Mechanism details
Common operating runbook

  • Compile inputs: ADA allocation for the week, payout split if Option C (percent ADA payout, percent to MIN distribution, percent to MIN burn), pricing window, slippage limit.
  • Move funds: route ADA to the conversion wallet.
  • Execute burn leg: convert the burn allocation to MIN and send to the burn address. Record execution price and fees.
  • Execute distribution leg: convert the MIN distribution allocation to MIN within the pricing window, respecting the slippage limit. Record execution price and fees. Move purchased MIN to the staging wallet.
  • Distribute: send ADA payout to stakers and send purchased MIN from the staging wallet to stakers according to the week’s composition.
  • Report: post the weekly ledger with ADA paid, ADA converted, MIN delivered, MIN burned, execution VWAPs, fees, any ADA shortfall, the payout split if Option C, wallet addresses, and txids.

Option A: Full replacement

  • How it works: convert 100% of the weekly ADA fee switch allocation to MIN bought on the market and distribute in the same week.
  • Reward composition and timing: All rewards paid in purchased MIN.

Option B: 50% Conversion

  • How it works: convert 50% of the weekly ADA allocation to MIN and distribute in the same week. Pay the remaining 50% in ADA.
  • Reward composition and timing: 50% purchased MIN, 50% ADA Fee Switch.

Option C: Dynamic ADA Floor

  • How it works: the Emissions Committee sets the weekly three-way split across ADA payout, buyback MIN to distribute, and buyback MIN to burn. Execute the burn leg first, then the distribution leg. All actions complete within the same week.
  • Reward composition and timing: Mix of ADA and purchased MIN set by the split.

Execution window

  • Weekly order: snapshot, pricing window, conversion, burn, distribution, public post.
  • Execution timing within each week is at Minswap Labs’ discretion, within the defined pricing window

Data and auditability

  • Weekly post includes: ADA paid, ADA converted, MIN delivered, MIN burned, execution VWAPs and fees, any ADA shortfall, the payout split if Option C, wallet addresses and txids.

9. Steps to Implement

Governance

  • Temp Check: present the three options, the fee switch buyback mechanism for staker rewards, execution authority (Minswap Labs), reporting cadence, and, for Option C, the Emissions Committee mandate to set and adjust the weekly split.
  • On-chain vote: select one option and set the start week.
  • Mandate: authorize Labs to execute on the approved cadence and publish the weekly report.

Execution

  • Pre-checks and staging as specified. Disclose conversion and staging wallet addresses.
  • Launch: in the first full week after passage, begin weekly operations.
  • Publish: issue the weekly report as defined in the Report subsection.

10. Timeline

  • Forum Discussion: 7 days.
  • Temp Check: 7 days.
  • On-chain vote: starts within 7 days after Temp Check passes, lasts 7 days.
  • Pre-execution setup: up to 3 business days after vote passage.
  • Go-live window: first full week after the vote.
  • First reporting: within 3 business days after the first run closes.

11. Overall Cost

  • External spend: $4,000 success-based consulting fee to AQube, payable only if this proposal passes and is implemented.
  • Emissions Committee compensation (Option C only): +$50 per member per month stipend and +$50 per member per committee bonus vote for the added analytics and monitoring.
  • Network fees: minimal, reported with actuals in weekly posts.
  • Manpower: executed by Minswap Labs using multisig and standard operations. No third-party grants.
  • Recurring costs: none, other than the conditional Option C committee compensation.
Voting Options (to be extracted for the on-chain vote)
  • Approve Option A, Full conversion
  • Approve Option B, 50% conversion
  • Approve Option C, Dynamic Split
  • No, do not pass this proposal
0 voters
6 Likes
2

What about burning? I would burn a piece of it, too.

2 Likes
3

I like the mechanism but I like having the autonomy to choose where my ada goes more. For me right now this is a No vote.

If it was a smaller fixed amount of ADA (so the purchases can’t be gamed) I would support this. Or if buyback percentages were tied directly to trading volumes/revenues and capped at ~50%.

My concerns:

  1. Unlocks from large stakes will increase volatility.
  2. Many in the ecosystem have already acquired the position they want to hold in $MIN. If they start receiving an extra portion of $MIN it will be sold to rebalance.
  3. A number of stakers will likely choose to leave because they see $MIN staking as a passive income play to get a superior ada yield. If we change those dynamics substantially we run the risk of losing those players.

Just a few things to consider. I am sure there are more points for and against.

1 Like
4

I’m more in the camp of full conversion, we are in the phase of revitalizating the $MIN token now and the volume on Cardano has been going quite low since this March that we need 100% buyback to make a significant impact.

Of course, there will be stakers that sell their MIN rewards, but as long as the sell amount is less than the buy amount, there’s still more buy pressure for $MIN. Also, any buy or sell would create volume and trading fees ro LPs.

The 50% option is my 2nd choice, it’s less aggressive but also less impactful.

6 Likes
5

MIN should not be distributed directly to stakers, as they may sell it immediately, nullifying the buy pressure created by DAO buybacks. If the DAO conducts significant MIN buybacks, the purchased MIN should be reserved for the future rather than distributed, especially since the protocol is still in its early stages. A hybrid approach—part ADA distributed as staking rewards and part ADA used to buy and reserve MIN—better supports price stability and leaves room for future policy adjustments.

Although my view does not fully align with the proposal, if I had to choose between A, B, C, or rejecting it, I would support Option C, as it is the most flexible and allows dynamic adjustment between ADA and MIN rewards.

3 Likes
6

Listening to community feedback, we have updated Option C to make it more flexible.

The revised version introduces a Dynamic Payout Split, allowing the Emissions Committee to decide each week how the fee-switch ADA is divided between:

  1. ADA paid out to stakers
  2. ADA converted to MIN and distributed
  3. ADA converted to MIN and burned

This change gives governance direct control over the full allocation each week, balancing participation, demand creation, and long-term supply reduction.

The discussion may now continue on this forum under the revised version until the end of the Temp Check period. Community feedback on this new structure is welcome before moving to on-chain vote.

6 Likes
8

I think the third option is too scattered. There’s no need to make a new decision every week. It’s sufficient to burn a fixed percentage, such as twenty percent. If the community wants to change this percentage, they can propose a change later. I think this is the best way.

2 Likes
10

an aggressive maneuver is needed buy back and burn is prefered

1 Like
11

Given the extra responsibility I would like to request we add another $50 per month to the stipend of the committee members and $50 to the bonus pay vote as this requires additional data monitoring and building of probably another few metrics and dashboards.

4 Likes
12

actually, the rewards will be locked for 9 months so sell pressure (if any) would be delay

3 Likes
13

I support using ada to buy back min and allocate it all to stake. 9-10% APR is great!

14

I completely agree with you

2 Likes
15

In my opinion, one of the reasons for Min’s value drop is:

People borrow Min from the Liqwid platform, profit from it, and then return it, generating excess selling pressure without being exposed to the token’s price. This issue could be resolved by transferring all Minswap exchange revenue to the Min token and burning it all. This would directly increase the token’s value and block the unfair and destructive way that Liqwid platform borrowers profit.

This isn’t just about selling pressure. When a major investor realizes this, they would rather not enter the token market at all. It’s a kind of profitability bug.

3 Likes
16

However, there are always MIN positions completing the 9-month staking period, so some MIN will still flow out in the short term.

17

Thanks for the suggestion. We have incorporated this.

Under Option C we add: +$50 per member per month stipend and +$50 per member per bonus-pay vote. These are conditional on Option C passing. Reflected in Section 11 (Overall Cost).

2 Likes
18

I have a concern regarding the last-minute addition of extra compensation for the Emissions Committee.

If there’s a genuine case for increased workload and new deliverables (which I think is reasonable to think it may well be the case), I’d fully support a separate, clearly scoped proposal explaining:

  • What additional responsibilities or metrics are being taken on,

  • How the DAO and its members can benefit from or access the outputs of this additional work. Since funds would come from DAO, it would make sense for all holders, and not just committe members to also gain visibility into the data, dashboards, or analysis produced. From what I understand, this work already exists and could add real value if shared more openly with MIN holders.

I want to be clear — I don’t oppose fair compensation or even an inflation correction. I oppose the method: adding financial changes ad-hoc inside another proposal, not to mention the optics are terrible in my opinion. This, I feel, should be in another proposal, and would be an amazing chance to revamp the committee.

I’d really encourage keeping the two topics separate:

  1. This proposal — the Fee Switch Buyback.

  2. A future proposal — adjusting Emissions Committee compensation with community input

3 Likes
19

I completely respect your perspective. Historically we have seen several projects attempt this on Cardano and none have been able to get sustained buy pressure on their token.

Minswap is different but even larger protocols like Indy appear to be switching from buybacks back ada distributions for their stakers.

If this passes I hope it works

2 Likes