Ethereum is a burning of fees, not the same thing, plus its also an L1. Same with BNB - an L1. @JWolfish (forgive me for speaking on your behalf) contention is that apps that utilize buy backs is in effect a capitulation to a ponzi scheme - an artificial constraint on supply that disguises a lack of demand. We want to incentivize demand of Min
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We are also talking about burning of fees⌠Whether the business is L1 or Dex should not make a difference if the token is used to pay for the service
I think we need a mix of the solutions to help give more utility for $MIN:
Voting Escrow Token - $veMIN
Users lock their $MIN for $veMIN, and the longer they lock their $MIN for, the more voting power they have and the bigger boost on LP Fees and $MIN Farming rewards they can reach.
Batcher Fee
Allow the use of $MIN to pay for the batcher fees, or give a discount on fees if you own a certain amount of $MIN.
Farming rewards from POL
Currently Minswap owns around 34.78% of the $MIN/$ADA Pool (6.7M $ADA and 94M $MIN), which could be farmed, and the rewards given to LP providers.
But this should be kept in a low risk farm, so that the liquidity of this pool is never at much risk.
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But making min a means of exchange is not viable because it isnt holding value intrinsically, whoever ends up receiving the min (batchers) will end up trading it away. So, as I said earlier to someone else, making min a means of exchange is pointless if it is not also a store of value (representative of the protocolâs revenue).
agree with rewarding long term holders
There are a few examples where you can see where value is created on other exchanges. Binances BNB is a good example.
Give a percentage discount on fees if you pay with Min,
Have a monthly burn mechanism that removes Min from circulation completely based on the amount of Min used for fees each month. (have a target to reduce supply by a certain percentage over several years)
Give higher rates to anyone that uses Min as a pair on Farms.
Share profits with any wallets that have Min locked in to staking for a fixed amount of time to reward long term holders.
There are numerous ways to create value. Voting rights are importnat on how the project moves forward but i dont believe most people have that as a priority and certainly wouldnt buy Min if this was the only feature/function
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Thanks for your input Ross!
What your suggesting is Babel fees, and it is a good one. My only concern is what incentive is there for the final custodian to hold or invest a depreciating asset - as it is now. More likely they will cash out for ada or djed to lock in the value in anticipation of future fall in price, thus perpetuating the sell pressure in the final equation. This is especially the case for a service like batchers, who have an overhead cost their need to take care of.
We are not a fan of burning, we cannot identify any small to medium cap project that has succeeded under a buy back and burn scheme. However, I grant the premise that there is too much Min sloshing around at the moment with no where to go but to be sold back into the Min-Ada pool. While the emission rate is decreasing by 5 million a month, a decrease of about .5% of total supply a month, this supply curve is still much too steep and outstripping the demand of new farmers to add liquidity to the min-ada pool, since IL and price depreciation outpaces any potential yield return in the short to medium term. Nevertheless, taking min out of circulation and returned to the treasury for future emission is likely. Most buy back and burns function on a protocol with unlimited supply, whereas Min is a fixed supply. So sequestering this excess supply while introducing a demand curve seems the best way of maintaining tantalizing APRs. Otherwise, if we just reduce supply but there is no demand, then APRs and price will continue to fall. Im not saying that the fair price and APRs will be maintained, but at least we have some way of determining a fair price with the introduction of a demand curve. We are aiming to do with through revenue sharing through locked min-ada LP.
Min-ada pool already receives the highest yield allocation. Not quite sure what youre suggesting here.
Revenue sharing for locked min-LP is exactly where we are heading and is being worked on by @marco_112358 in all his math wizardry. He developed the TVL-Volume algorithm for allocating min rewards.
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This is a great question, and not sure exactly how to answer. Honestly, how one values a current LP token could be argued. So say you have a valuation model for both pairs (MIN and ADA for example). You would layer onto that an added value of the fee sharing (currently 0.3% but will most likely move to 0.25%) and then add on the value of the liquidity mining/farming. They you need to offset some of that with the cost of IL. IL implicitly is the pairwise volatility, so some measure of pairwise correlation plus independent volatility of each token.
Now you have some model for the LP lol. Now to lock that LP into a veLP you need additional inputs. You need the benefit of the expected revenue sharing (0.05% of the total revenue of the protocol fees plus some POL fees plus any batcher fees plus some portion of the ADA staking rewards plus does POL farm? (and on top of that if we go full vevoting is there Minwars with bribing, etc.). So lots of potential upside here. Valuing some of those return streams are easier than others. Finallly we need to discount that locked veLP to show the opportunity cost of locking (the illiquidity premium).
So all in all, not sure exactly the right way to âvalueâ it (or really anything in this space for that matter lol). But hopefully that block of text gives you an idea of what I think.
Thanks for the interesting question!
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Again, using Min for fee payments, giving discounts to Min holders and burning of Min fees are all options that must be used.
Inflation is simply insane and no utility exists. Burning should be used to counter this inflation. At least temporarily until inflation is countered and utility established
Right I may be using fair value improperly. I am basically thinking of it in terms of a breakeven point + the most basic expectation of rewards (incentives), such that the supply curve and the demand curve meet at a stable price. If we can begin by quanitifying the potential amount of revenue per LP token, all things being equal, then we can begin to adjust the supply rate so that any sell pressure generated by excess min farm rewards will be matched by demand pressure to participate in reward sharing. It may be the case that Min price as it stands is still way to high due to inflated supply schedule to stabilize against the potential revenue that the min could accrue if it zapped and locked into ve-minLP in the short term. But hereâs some back of the napkin maths, based on my own farms and daily volume traded and current min price.
0.05% of the daily volume x my share of the min-ada farm is 0.02% of the ada value of my min-ada farm position per day.
Percent of daily volume to be redirected in ve-minLP revenue sharing scheme
0.0005 x 1 500 000 = 750 worth of Ada to be directed to ve-minLP per day
my share of min-ada lp farm is 0.00022 (0.022%) (x750) = 0.165 Ada of personal dex revenue per day
my min-ada farm total value is ~7500 Ada, thus revenue is 0.165/7500 = 0.000022 (0.0022%) of personal farm value in revenue per day.
Ada staking rewards across entire dex concentrated into ve-minLP revenue sharing.
100 million TVL on Dex = 50 Million in Ada staked
[(50 000 000 x 4%)/73]/5 = ~5500 ada staking rewards per day
0.00022 (0.022%) (x5500) = 1.1 Ada - my share of dex wide ada stakings rewards per day.
Grand total of 1.75 Ada in revenue from the dex per day.
Meanwhile I earn 10x that in Min rewards per day from my Min-Ada farm alone, not including the rewards from various other farms.
So the questions then becomes am i willing to forego 10x the ada i can get from selling Min today for 10 days of lock up to receive the same reward, meanwhile risking further downside in the value of my farm?
Another, more broad perspective is to just think of it like a P/E ratio.
Basic earnings per day is 6250 Ada per day
Tokens in circulation = 22 440 000 (MC) / 0.0599802
= 374 123 460.74
Earnings per token = (6250*365) / 374 123 460
=0.0061 ada per token
P/E ratio = 0.0599802 / 0.0061
= 9.83
Earnings Yield is just the inverse = 0.1 (10%) slightly better than staking your Ada. Maybe weâre already at a break even point. Someone smart please take over
EDIT: this doesnt seem so bad now lol thanks @Sardonicus
anyway im sure youâre already aware of these problems but i thought iâd just spell it out how massive of an issue this is for all the hardcore forum watchers.
In terms IL, this is my personal bias, I think of it only in terms of Ada value and not fiat, since i am trying to accumulate Ada value passively in this bear cycle, so maybe that might simplify things in the short term.
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agree that we need to take min out of circulation, but not burning, just returning it to the faucet for future emissions. protocols that implement burning have an infinite faucet, minswap has a fixed supply
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Correct me if I am wrong here: did you calculate the P/E per day? I thought P/E was calculated with yearly earnings?
omg yeah i did smh fml
P/E looks low if you annualize your calculation in that case. 9,8 or something if I did the math right. (Donât quote me on this)
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Wow thanks for all that math. I have done some calcs myself but hoping someone on the team will confirm before I share. Conceptually i think you are right tho. We need to think about the opportunity cost of locking LPs. We just need to make some assumptions on how much of the LPs are locked, what percentage of ada staking and fee sharing and maybe batching (and POL and maybe POL farming) go twoards locked tokens. Is that amount worth locking? Maybe if u lock u also get voting power on MIN emissions?
I like the idea of the MIN emissions being partially determined by voting and partislly by the formula. And if that goes well, we can move more and more towards full voting. That will give the locked veLP more utility. And the longer u lock the more voting power u get per 1 LP
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My overall point with the âshow me a protocol that burns tokens and has had it workâ is that it typically doesnât work. At least, not in the way retail wants it to work. BURN TOEKENS SO THE PRICE GOES UPPPPP! is what you want us to do. So, letâs look at ETH. It burns fees, now (which I find personally offensiveâŚthose fees are massive and then they just get burned!!! gahhh). ETH price has decreased massively since this EIP was activated. BNBâŚlowest price in the last couple of years despite burning. The example I used several posts up of a protocol that actively advertised that it would aggressively buy back and burn its tokenâŚit is basically worthless now.
Burning some tokens might not be a bad thing to incorporate into Minswap somewhere. Iâll admit that. But to expect it to increase price alone is ridiculous. It wonât. And spending significant parts of protocol revenue to buy the token just to burn it is something I will oppose. That revenue should be used to grow Minswap as a protocol and business, be shared to LOCKED MIN token holders, or preferably, both.
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oh you peer review your math? charles would be proud. pear reverred pappers
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You are making my point. There is infinite supmly at the moment and this supply will keep on feeling unlimited until serious volumes happens and tokens have a true utility. Both must happen for that supply to not feel unlimited.
Therefore a fee burn is crucial in order to alleviate that inflation during that time.
I have the very strong conviction that the protocol team funding and Minswap business will die off far before that unlimited supply dries off as it will take time to have true volume and hence utilityâŚ
Fees burning must happen in the meantimeâŚ
this! I came here to say the same thing! All sources of revenue should be tapped, but also recognize that those revenue streams are all feeding different organs of the minswap ecosystem.
Making MIN tokens required for new Batchers/Scoopers/Validators/Hydraheads/etc to be accepted into the network will both create a real concrete utility for the token and can offer users another reliable source of % that is directly based off the actual use and health of the network.
One thing I want to say is that whatever solution(s) are chosen it should be elegant and clear where the value is coming from. Anything that resembles gambling (lottery), a shell game, or musical chairs/greater fool theory, needs to be rejected outright.
Iâm not terribly worried about the MIN price falling right now. I donât think pumping the price needs to be a priority. I want to see the devs and community come up with sensible ways that allow MIN holders and long term LPâs to enjoy their entitlement to the revenue generated by the protocol and to spread power, decision making, and influence out across the network in the process.
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i had to vote no on this because while I think that the ada staking rewards from all the LP pools is obviously a revenue stream that needs to be tapped into, I donât know if the best use of it, especially at this point, would be soley to pay out MIN holders. Maybe adding them to the normal LP rewardsâŚ
I feel like directing that money towards stuff like developers, R&D, hell even NFT/Advertising campaigns, might be a better strategy for long term growth and sustainability. We should use it to hire lawyers, or lobby.
Returning value to stake holders is the long term goal, but I think we need to resist the urge to pilfer the treasury.