Proposal to reward long term xMPL holders with MPL distribution to offset inflationary impacts of additional token minting
For those existing MPL token holders who have staked their tokens to the xMPL contract and left them staked for say at least the last 9 months and have therefore shown long term support and commitment to Maple, could it be considered that each wallet staked to xMPL be streamed additional % tokens?
The benefits of this are that it will reward those who have staked to the xMPL contract and aligns interests of the community to the xMPL contract- therefore incentivising further staking into the xMPL contract in future as it sends a clear message that the protocl will reward long term ecosystem participants and xMPL holders.
Could this please be given serious consideration by the Maple team and the community?
I will hold off purchasing more MPL token until after the vote then I will access my next decision. I am not in support of token dilution or new token issuance. One of the reason I considered MPL was due to its limited reasonable maximum token supply.
As an investor with Maker (MKR), I can tell you that MKR maximum supply is about 1,005,577 MKR. MKR is a RWA project like MPL and that’s why I invested in MPL too.
If Maker can grow extensively while maintaining a maximum token supply of 1,005,577 MKR, why can’t MPL grow better than MKR . with its 10 Million maximum token supply?
What the team should have proposed is to burn 20% of token supply to make MPL deflationary. But your proposal of new mint and increase in supply - amounts to inflation and dilution of the MPL.
Expect a massive MPL market dump of at least 40% downwards if the proposal is implemented. This is not a threat but a fact that will happen. Please find other means to increase the treasury pocket/allowance. I and other community members/holders are happy to fund the treasury in exchange for discounted token or other counter proposal means - that will be put to community vote.
I like @Icarium proposal too.
In the past a default has always had a negative affect on lenders as well as MPL holders. This proposal eases that pain for mpl holders and defaults would now be viewed differently. The only issue i see is borrowers might be hesitant to purchase mpl upfront.
Understand the need for dilution in order to fund growth (until revenue can).
From the growth initiatives mentioned, believe that the composability of LP tokens is probably the feature that can bring 10x utility to power lenders (like hedge funds) if it allows the use of LP tokens as collateral. This could be achieved through solutions like Blue (ERC-20 wrapper tokens with built-in KYC / KYB checks) or the Flux / Ondo route (a Compound V2 fork with whitelisting restriction for lenders posting collateral or liquidators seizing it).
Looking at the recently announced $5M funding round, understand the DAO is being asked to approve a 10% initial token issuance to be sold to round investors at ~$5 per token? (or to replenish the tokens already sold), plus a 5% issuance per year to fund growth initiatives over the next 3 years?
The $7.8M stables in the protocol treasury include the $5M proceeds from the round?
Do lock ups apply to the new round investors?
Will any of the growth initiatives be subject to further DAO votes before implementation?
While we find the proposal promising, a comprehensive assessment of its potential implications requires more specific information and scenario planning.
We believe the Maple team has come up with a variety of growth initiatives that can be highly beneficial for the future development and growth of the protocol. We understand and support the need for the DAO to have the resources in place to continue building out the product and expanding into new markets.
However, below we have highlighted questions that we believe will help to get a better understanding of potential outcomes and effects. We think clarity on these questions would be the next step to allow us to throw our full support for the proposal.
Sizing the Supply Increase
How large does the supply increase need to be to execute on the essential growth initiatives and ensure sufficient runway?
It is clear that executing the proposed growth initiatives, along with ensuring a sufficient runway, requires significant financial backing. Assessing the necessary funding is difficult, particularly given the reliance on a volatile asset like MPL.
We would like to keep the dilution at the absolute minimum necessary. Thus, it would be good to understand the rationale behind the chosen inflation terms.
Allocating the New Supply
How much of the new supply will be roughly allocated to which areas?
Beyond the absolute size of the recapitalization, it would be helpful to have the spend & investment areas outlined and quantified.
Changes for Stakeholders
How do the proposed tokenomics upgrades affect the business case for different stakeholders?
It would be interesting to understand how different stakeholders perceive the proposed tokenomics upgrades before moving forward with the implementation. As Maple primarily targets institutional and corporate clients, those need to be open to holding MPL tokens. More detailed insights into proposed terms would provide a better understanding of the potential benefits and challenges for all stakeholders.
Understanding how the insurance fund/guarantee system would work is essential to assess the financial attractiveness for lenders to buy and/or hold MPL tokens.
The rebates for borrowers must be significant enough to outweigh other opportunity costs. Understanding whether the rebate will be based on fixed MPL token tiers or the relation between MPL holdings and borrowing volume as well as understanding the size of potential rebates would be important.
The proposal significantly impacts the pool delegates’ business case. The requirement for pool delegates to allocate a portion of their fees to MPL tokens, combined with rebates for borrowers, raises questions about the short to mid-term viability of their business case.
Learnings from the market
Have other projects implemented similar mechanisms to the ones proposed here and what can we learn from them?
It would be great to analyse what went right and what went wrong in comparable cases. Especially projects with institutional / corporate clients.
Really like the questions and outline you have provided here requesting more specific data! Looking forward to Sids reply!
Question, for you as well. Have you had a chance to read my additional borrower specific tokenomics/utility mechanism I submitted above? These include a variable burn mechanism that is triggered during our extremely rare loan default scenarios (<1%) as well as a targeted incentives initiative/hard mpl staking requirement for crypto native borrowers/first time borrowers to be paired with the potential for rebate that official maple team has provided in the MIP.
I think this additional mechanism is crucial to optimally replacing the removed mpl as pool cover mechanism that acted as a sort of double edged sword for us during black swan lending/credit events. We need something with more teeth, and my provisions do not impact borrowers overall cost to borrow metric by very much.
The proposal was shared on 22nd August and was open for consultation from 23rd - 30th August by the Maple Community. Comments received were broadly requests for more information on token utility ideas, token issuance rate and allocations, Maple’s financial position and the migration process. Rational and supportive feedback and new ideas for token utility were also posted on the forum, which is testament to the community’s collaborative spirit and encouraging as Maple aims to be a DAO where ideas thrive. Thank you all for spending the time to build with us.
This post responds to each comment and idea in one post, and seeks to provide clarity and additional information requested by the community.
Firstly, it’s important to clarify that MIP009 will be a vote for, or against the issuance of a new token and not a vote which implements the token utility ideas shared as examples in the MIP.
We agree that each idea needs developing, and in the instance that MIP009 is approved by the community, Maple Core Contributors will develop the four token utility ideas into MIPs. By splitting MIP009 and token utility ideas into separate MIPs, appropriate details, mechanisms and models can be developed and shared.
Another benefit of this approach is that the Maple Community will have more opportunity to collaborate and fortify these ideas to collectively shape the future of the Maple protocol.
As well as feedback on ideas, new ideas for token utility were proposed during the consultation phase.
Alongside ideas and comments on token utility, there were requests for more details on the motivation behind MIP009, potential uses of new tokens and information on Maple’s financial position which we aim to cover below.
Maple’s treasury currently holds $7.8M in stables with the majority acquired from the sale of MPL tokens to firms in the strategic round and which are locked up for at least 18 months. Based on current levels of activity and staffing, Maple has a burn rate of approximately $400,000 per month. At this rate, the Maple protocol has a runway of about 19-20 months or until mid-2025, without accounting for revenues that could grow the Maple Treasury.
Maple is a protocol with the token as network ownership, it needs to pay for grants and development through the token. There is not a separate entity with equity that raises money or accrued value. MIP009 proposes that new tokens are minted to the Maple Treasury and will be utilised in accordance with the Governance Framework to achieve growth and long term success. If the additional tokens are not required to achieve the growth Maple envisages then the tokens could be burned in the future.
Maple has the opportunity to be a leader in DeFi lending and beyond. What Maple does in the next 12-18 months will position Maple for success in achieving this opportunity.
What’s the alternative? If Maple doesn’t expand the supply, its dependency on revenue to cover operational expenses will increase. Without additional tokens Maple has no flexibility for raising growth capital or pursuing other initiatives for long-term success.
A 10% one time mint and a 5 % annual issuance is proposed after extensive modelling by Maple Core Contributors. These amounts were chosen over alternatives for reasons including:
A multi-year funding plan avoids the need to seek additional financing in the near-term
A large token balance would help to attract and retain talent and commercial partners
A 10% mint provides an adequate buffer for new opportunities and unexpected challenges of operating a start-up in a nascent industry
A 10% mint can be allocated to growth initiatives where future revenues and current treasury balance does not suffice
A 10% mint provides tokens for value-creating future token utility implementations i.e. ecosystem fund and rebates
A 5% annual inflation rate provides a multi-year funding plan, allowing enough time for initiatives to start and scale
A 5% annual issuance is not dissimilar to mid-cap tech companies
In the instance the MIP009 passes, the Maple Treasury will hold stables and tokens. Stables in the Maple Treasury will be used to continue day-to-day operations. Tokens in the Maple Treasury will be allocated by the DAO towards value-creating initiatives over the next few years whilst Maple has the opportunity to become a leader in DeFi lending and beyond.
Because the tokens will be held in the Maple Treasury and use of the tokens will be decided by DAO, it is not currently possible to provide an accurate forecast on the initiatives or amounts of tokens allocated to them. Such initiatives could be attracting and retaining talent, securing partnerships, new token utility initiatives such as the ecosystem fund, or even sold to extend runway should protocol revenues not be sufficient.
As covered above, MIPs for token utility ideas will be developed separately so the necessary motivations, budget requests and commercial value can be included ahead of evaluation by the Maple Community.
An important question was asked regarding the migration to MPLv2, which we aim to answer and build upon here.
The transition would take place with the aim to have the lightest lift for token holders. In short, xMPL holders would not need to do anything and MPL holders would simply have to come to the Maple webapp at app.maple.finance and follow the prompts to convert legacy MPL for MPLv2.
Maple will develop a migration homepage which will feature on the Maple WebApp, and questions asked during the consultation phase will be collated to form FAQs and added to the Maple Gitbook alongside a step by step guide on how to migrate MPL. For complete transparency, Maple has been in liaison with centralized and decentralized exchanges to ensure smooth transition to MPLv2 and will advise on the specific processes for different venues closer to the time.
We hope this post provides the necessary clarifications and information needed ahead of a formal vote this week. If not, please reply and we’ll come back again!
Speaking for myself, Sid and Joe, the thoughtful feedback, creative ideas and messages of support are extremely encouraging and we are energized to collaborate with the Maple Community on this cornerstone MIP. Thank you for spending the time to build with us.
The technical migration will complete by 25th September.
From the 25th September MPL holders will be able to convert to the new MPL token via a conversion page on the Maple WebApp.
For those holding MPL on an exchange, Maple is making arrangements so that MPL tokens will automatically be converted into MPLv2, with no action required from holders. We will share details relevant to each exchange ahead of the 25th September.