$MIN Staking - Improving the Model & APRs - Temp. Check

[CWSchub]

MIP Type: Constitutional
Author: @CWSchub
Full Report : Hybrid $MIN Staking V2
V1/V2 Calculator : Data Visualisation Spreadsheet
Geogebra Calculators: V1 Calculator | V2 Calculator
About the Author : CWSchub is a Minswap Kitty Farmer, an actively engaged community member since March 2022, author of the current Hybrid $MIN Staking design and an aspiring physicist working in the IT sector.

1. Introduction

Since the implementation of the Hybrid $MIN Staking mechanism, the total $MIN staked has organically grown from ≈ 450 M to ≈ 590 M tokens, valued at $10M. While this headline demand is encouraging, in‑depth analysis shows the current V1 design leaks yield and misallocates capital – making it highly inefficient – and risks Minswap’s competitiveness as Cardano DeFi matures.

2. Proposed Solution

As per the report’s conclusions, the current state of hybrid $MIN Staking is much worse than a simpler “Liquid $MIN Staking”. This proposal aims to implement the core upgrade and monitor its success during the period of 9 months:

A) If KPI targets are met, fully implement V2 – including peripheral changes.
B) If KPI targets are not met, discard the hybrid $MIN Staking model altogether – default to a fully Liquid $MIN Staking model.

3. Problem Statement

0. Illusion of choice – one pool always dominates, so the second pool adds complexity without benefit.
1. Same APR, 9‑month wait – V1 ultimately pays no more than a fully‑liquid system, yet forces stakers to lock for 9 months and pay penalties for early exit.
2. Capital lockups rarely pay off – early‑exit penalties plus collapsing APRs punish long‑term stakers in quiet markets.

Problem 0. Only one option is truly used.

Despite the existence of two $MIN Staking options, there is a overwhelmingly favourite choice. $MIN staked in the Tiered option currently represents 94% of the total stake.

Consequently, this leads to Problem 1.

Problem 1. Tiered stakers are earning little more than the absolute minimum.

The folllowing chart displays the current APR curves for Liquid Staking and the Tiered (9-month) Staking options, based on live $MIN Staking data (click here for the interactive chart).

Moving up and down the X-axis shows the corresponding APRs relative to the amount of daily $ADA rewards at the current $MIN Price and total stake.

• Blue line — Liquid APR: This option provides a flat yield, remaining pretty much constant when the APR beats the $ADA staking APR.
• Red line — Tiered APR: This option yields a considerably higher APR (provided there are enough daily rewards).
• Yellow line — Baseline APR: What everyone would earn if the model wasn’t “dual option”.

Problem 2. Tiered APR isn’t always greater than Liquid APR.

As can be seen in the graph above, when the APR decreases past a certain point (low yield regime), both options end up earning exactly the same rate – they “collapse” into the same APR.

• Liquid stakers can leave at any time with no fee, so the match-up is fine for them.
• Tiered stakers, however, are locked and must still pay an early-exit penalty, yet now earn no extra return.

It is very important to prevent this event, because Tiered stakers represent 94% of total staked $MIN

4. Scope of Change

This proposal differentiates improvements based on whether they affect the reward redistribution logic “core changes” and other supporting improvements “peripheral changes”.

Core Changes

The core improvement is a unique change to the rewards distribution logic with the following consequences:

1. Dynamically adapts APR to demand: V1 has a rigid APR implementation (which leads to Problem 1). V2 balances out APRs based on demand, creating a wider range of opportunities.

2. Tiered APR > Liquid APR always: V1 does not guarantee Tiered stakers earn higher yield than Liquid stakers, while still incurring early withdrawal penalties. V2 guarantees this.

3. General uplift in APRs: The new implementation results in higher APRs for both options, provided the baseline APR is higher than $ADA staking.

Peripheral Changes

1. Since most tax systems operate on a yearly basis, it is reasonable to extend the Tiered Option from a 9-month to a 12-month period, thus simplifying tax implications.

2. Exempt LBE tokens from Early Redemtion fees – apply them to $ADA and $MIN rewards only. This avoids “dust” accumulation of LBE rewards after the official distribution period is over.

3. Adjust the curve for Early Redemption fees. Implement a “cliff” curve instead of linearly decreasing fees. This translates into a more punishing early regime and transitions into a forgiving later regime.
   

   

4. The $ADA delegation APR is required to compute the relative performance between $MIN staking and $ADA staking. However, this APR has been hardcoded as a constant value of 2.86 %, which is both inaccurate and unfair. It should be dynamically sourced from the mohly average yield of the Stake Pool Operators (SPOs) to which Minswap delegates its $ADA (see ADA Delegation Proposal).

IP disclaimer

Due to IP concerns, the full formulaic approach will not be publicly disclosed unless the proposal passes with Option A being the winner and the author will relinquish any copyright claims to the released documentation. This protects the author in case of a failed proposal.

Nonetheless, several datasets have been made available. The first is a public Google Data Visualisation Spreadsheet, and a second Github repository will be made available in order to track the implementation milestones.

5. Impact of the Core Changes

Predictions on $MIN Staking APRs follow the Capital Flow Model developed in the $MIN Staking report show the outperformance between V1 and V2 compared to the amount of daily $ADA rewards distributed at current total $MIN Staked and $MIN price.

Research on dynamic stake allocation shows a significant overall improvement in both Liquid and Tiered APRs for V2.

• Liquid APR: V2 outperforms V1 by 100% using current market data.
• Tiered APR: V2 outperforms V1 by 20%-80% using current market data
  
  
  
  
  

Why V2 Improves APRs for Everyone

1. Starts from a single baseline 𝐴𝑃𝑅 (what every staker would earn if no options existed).
2. Apply a redistribution logic which simultaneously balances both APRs relative to demand and available rewards.
3. The two APRs are now co-determined. Incentivising the Liquid option also boosts the Tiered option.

6. Conclusions

As per the report’s conclusions, the existing redundancies and design-flaws in the current $MIN Staking mechanism do not justify the existence of two staking options.
Therefore, Keeping the current $MIN Staking model will only postpone these changes, due to its fundamental flaws.

The consistent increase in total $MIN Staked supports the idea that “liquifying” the mechanism is beneficial for Minswap. The improvements in V2 aim to support a more liquid and dynamic flow of staked $MIN.

Therefore the future of $MIN Staking* lies in either:

• V2 hybrid $MIN Staking: Improved APRs for both the Liquid and Tiered options. With an increase of APRs (Liquid: increase by ~100%, Tiered: increase by ~20%–80%).

• Fully Liquid $MIN Staking: Everybody earns the same yield, without lockups or fees. APR would drop from ~9.5% to ~9%.

*These numbers take into account data on 07/07/2025.

7. Scope of Work

1. Research & analysis – collapse/saturation study; capital-flow, RP, triviality.
2. Mathematical development – PR function, proofs, calibration.
3. Simulation tooling – Raw $MIN Staking data processing; Sheets/GeoGebra calculators; matplotlib suite.
4. Financial impact study – V1 vs V2 cost/benefit in yield regimes.
5. Technical documentation – V2 $MIN Staking report, redacted formula, full appendix on approval.
6. Implementation support – liaise with Minswap Labs for contract upgrade.
7. Comms – article, forum posts, DAO Q-&-A.

8. Proposed Compensation

1. Hours worked

Research & analysis: 60h
Mathematical development: 75h
Simulation tooling: 45h
Financial impact study: 35h
Technical documentation: 30h
Implementation support: 10h
Comms: 20h

Total: 275 billable hours.

2. Rate

Freelance rate: US $70 per hour.

3. Total Base Compensation

275 h × $70 = US $19250 rounded to $20000 or the equivalent in $ADA

9. Milestones - V2 hybrid $MIN Staking

Following the established Base compensation of $20000, the author proposes a set of milestone and success-based checkpoints if the proposal is successful. This aims to distribute the base compensation fairly accross the milestones.

Milestone 0

1. Published V2 $MIN Staking report and datasets.
2. Completion of sections 1,2,3,4,5 (report) and 6 in Scope of Work.
3. Governance proposal completion.

Duration: Immediately after governance process (if successful).
Cost – 25% Base compensation = $5000

Milestone 1

1. Open sourcing of V2 IP: Premium Redistribution function “C_V2”.
2. KPI publication.
3. Validation of 1+2 by Minswap Labs.

Duration: no more than 2 months after governance process.
Cost – 25% Base compensation = $5000

Milestone 2

1. Implementation of core optimisations.
2. Tracking of V2 $MIN Staking subject to defined KPIs.

Duration:
2.1 - TBD by Labs
2.2 - 9 months since implementation of core optimisations.
Cost – $0

Milestone 3

1. KPI target evaluation:

   • If KPIs are not met after 9 months, automatically default to Option B in case of underperformance.
   • Otherwise, proceed to implement peripheral optimisations.

2. Result publication.

Duration: Up to 2 weeks after Milestone 2 completion.
Cost – Up to 50% Base compensation <$10000

Milestone 4 (M3 is successful)

1. Implementation of peripheral optimisations:

   a) Extend Tiered Staking period to 12 months.
   b) Implement new redemption fee curve.
   c) Exempt LBE tokens from early redemption fees.
   d) Implement dynamic sourcing for $ADA delegation APR.

Duration: TBD by Minswap Labs
Cost (success incentive) – 25% Base compensation =$5000

10. Total Costs (to engage CWSchub as per this MIP)

Fixed fee – 50% of Base Compensation = $10000 according to Scope of Work and Hourly Compensation.

Success Based – 50% + 25% (M4) = Up to $10000 subject to KPIs + $5000 for M4 implementation

Compensation range for this proposal: $10000 - $25000

Voting Options

• A) Pass this proposal.
• B) Don’t pass this proposal.

[Contra]

This is a very important MIP. Shub is to be commended for his diligence in improving his staking design so that it is resilient for the future while rewarding holders with real yield. I have no notes.

[CWSchub]

I recently updated the following sections:

Compensation Plan

Inctroducing several Milestones and Success-based Metrics for each voting option. This aims to ensure commitment, fairness and transparency towards both shareholders and the proposal author.

Implementation Plan

This section lays out the different stages of implementation for each voting option. Breaking down the changes into manageable parts and grace periods for shareholders to adapt to the new implementations.

[CWSchub]

Thank you so much Crocco, I’m extremely thankful for the support and insights you’ve provided along the way!

[polkada]

does time lock have an impact on the price of min ?
If time lock have no impact. how to reward long-term commitment ? NFT or nothing ?

[CWSchub]

Hi @polkada, thanks for your questions.

The proposal has not researched how $MIN Staking affects the price of the token. The only thing I can say is that V2 will improve APRs, making the product more attractive. This could shift the balance between offer-demand.

Long-term staking (Tiered option) has a higher APR than Liquid staking. V2 will improve this a lot.

[polkada]

The relevance of the choice also depends on an alignment of interests. If the investor earns a better return, what does the protocol gain?
Last thing. Obtaining a high APR based on a token that no longer has any value is not interesting.
I wonder about the chronology of events. AQube’s proposal should be considered first.
AQube - Strategic MIN Tokenomics Revitalization - Temp Check

[CWSchub]

I’m not sure I understand the question. What does the protocol gain from improved APRs?

$MIN’s market cap is sitting at $23 million, 6th place as per TapTools. I don’t understand how the decline in the token’s price justifies not improving the underlying Staking Mechanism.

AQube’s proposal is already on-chain and seems to be succesfully favoured. It is already being considered first.

[polkada]

I expressed myself poorly. I am not against the lack of improvement of the underlying staking mechanism. I am concerned about the misinterpretation of an increase in the APR in conjunction with a decrease in the min price. The proposed solution is truly excellent from a mathematical point of view. Unfortunately, finance is not only math but also a feeling. Schub, thank you for all the work accomplished.

[CWSchub]

Thank you for your feedback and the time you’ve taken to engage with this proposal.

Please bear in mind that the scope of the proposal is to improve an existing product. The token’s price may be influenced by this, but it’s hard to assess, therefore it’s been left out.

Nonetheless, I can’t help you with the subject of token price, because that’s not what this proposal is about.

[Smurfy]

Have been digesting this proposal for a while.
In general, I do understand it however, one aspect that is of concern is that the significant improvements and reward increases are targeting edge case market scenarios more than the normal market conditions.
Whilst yes, improvement of the yield distribution curves and ratios is valuable even daily, the tangible results from those increases are not something I see many people materialising let alone appreciating with the passing of this proposal (barring the edge cases that would exacerbate them).
My 2c: If an explanation of why this proposal is more widely applicable to status quo market conditions rather than just edge cases, might help others appreciate/understand it better too.

[CWSchub]

Hi there @Smurfy,
Thank you so much for your feedback, I’ll take this into account. It appears that the impact of the improvements seem a bit underwhelming when, in fact, it’s the complete opposite!

[CWSchub]

Pre-onchain Update:

This proposal has been rewritten multiple times in order to truly reflect its impact in a simplified and digestible manner, making it (finally) on-chain ready.

For a better understanding of the step-by-step approach performed in this proposal, kindly refer to the published report and the available datasets.

Lastly, the Milestones have been approached such that:
If the results don’t meet the set targets established by the KPIs, further development of V2 will be halted and the Hybrid $MIN Staking model will be discarded in favour of a fully Liquid $MIN Staking.

Because of this, I highly encourage $MIN holders to vote for passing the proposal.

[ilia1380]

Thank you for the time and effort you put into this proposal. However, I must respectfully decline.

We currently have a satisfactory APR and see no need to take on additional risk for a potentially higher APR. As you mentioned, you’re not entirely confident that these actions will yield higher returns, and you suggested reverting to another option after nine months if it doesn’t work out.

Additionally, I disagree with the penalty curve you proposed for early withdrawals, as it essentially renders the lock-up period meaningless after a certain time. A linear penalty reduction would be more appropriate.

I do agree with your point about making ADA staking rewards dynamic and distributed.

More importantly, our primary concern right now is the tokenomics of the Min token, which continues to lose value. The proposal from AQube is far more critical to our ecosystem and requests a reward of $12,000. In contrast, your proposal, despite being less impactful, requests $25,000. This suggests that your proposal is not implemented as efficiently as it could be.

Thank you for your efforts.

[CWSchub]

Hello! Thank you for your time and feedback. I understand your concerns, however your perception is incorrect.

The risk lies in keeping $MIN staking as is. Currently, long term stakers are essentially earning the same APR as if the system were fully Liquid, but with the added early withdrawal penalty. This means that Long term stakers will not fully benefit from the current APR until the 9 months are over.

If $MIN Staking were to transition to “fully-Liquid”, the decline in APR would be from the current 10.2% to a 9.8% APR. We could have a 9.8% $MIN Staking APR that is fully liquid, instead of 10.2% locked over 9-months. You can check this in the following chart which confirms my statement.

Additionally, the improvements I am proposing are predicted to impact the APRs such that they will increase between 20%-80% for long-term stakers and ~100% for liquid stakers. Making $MIN Staking overall healthier and more attractive.
If the targets aren’t met, the hybrid model will be discarded completely, confirming a fully liquid $MIN Staking to be superior.

Finally, I don’t understand why there is this general perception that multiple proposals can be worked on and ongoing simultaneously. There is no reason why the improvements on $MIN Staking have to wait for AQube’s other proposals on $MIN tokenomics to come into effect.

[ilia1380]

Thanks for the clarification.
I now understand your point, and it seems very logical and exciting.
I think this could be very beneficial for the platform.

[ilia1380]

But I still think a linear reduction in the early withdrawal penalty is the better option. Because your curve practically makes holding at the end of the lock-up period meaningless and drastically reduces the penalty.

[CWSchub]

This is correct. Here’s the reasoning behind this implementation:

The reason for this has to do with User Experience and it replicates other protocols and financial products.

The “cliff” curve is meant to punish users harder at the beginning, forcing a rational risk/reward evaluation. This deters the “cheap escape” that the linear curve offers – “I’ll stake for 3 months and earn more than with the Liquid option”. This keeps stakers “honest”.

On the other hand, when the position is close to reaching maturity, stakers should be rewarded for their long-term commitment and not feel like waiting a week or two will impact their accumulated rewards. Tiered Stakers enjoying higher APRs without withdrawal penalties towards the end of the staking period aligns with the sacrificed flexibility.

In any case, these implementations will only see the light of day if KPI targets are met.