MIN Staking to help reduce inflationary pressure

Currently, the price of MIN continues to go down. This is mainly due to folks selling their MIN or zapping their MIN back into the MIN/ADA liquidity pool. I think there should be another incentivization mechanism to stake your MIN so that the MIN will be locked up/held, and help reduce the amount of MIN in circulation.

Staking the MIN should give the users rewards in ADA. The user can redeem the ADA when their ADA exceeds 2 ADA, and the transaction fee for redemption will be taken out of the reward.

Here are a couple of ideas of how the rewards could be funded, but you all may have others:

  • Take a small portion of the 2 ADA transaction fee (say .02 ADA) and distribute it equally based on the MIN that is being staked.

  • The ADA in the Minswap liquidity pools should be earning staking rewards. Take some portion of those staking rewards earned and put them in a reserve. A percentage of that reserve would be distributed each epoch, and the remainder could compound, so that it can grow over time.

I welcome any thoughts or alternate ideas.

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Zapping MIN into the liquidity pool should be deflationary, not inflationary. Another phenomenon which may be occurring is individuals buying MINt with their MIN, knowing that they can almost double their holdings long term. This would tend to diminish the value of MIN and increase the value of MINt, in which case the cost of the two may converge to the point that MINt has no value.

Zapping MIN into the liquidity pool is in essence selling half your MIN for ADA. Yes, half of it gets locked in the liquidity pool, but the other half is being sold for ADA causing the price of MIN to go down.

2 Likes

Got it! That makes more sense. Thank you.

Excellent ideas, Gorath.

A group of Minswap fans along with Minswap staff have been working on advanced tokenomics ideas for a couple weeks now. I think we’re close to getting some specifications to either rollout, or to post to the forum for public discussion. Stay tuned!

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It has been 3 weeks. I feel like it would be good for them to share their ideas on this governance forum so that they can be vetted by the community.

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