Ongoing Discussion: MPL tokenomics

2021 was a big year for the Maple community. We saw the launch of the protocol and crossed $500mm in TVL. If interested, you can read our CEO Sid’s full 2021 recap here:

With strong progress made, we’re confident that 2022 is going to be a big year for Maple. We want to enlist the community’s help in achieving our ambitious goals of $2bn in liquidity by June 2022 and $5bn by the end of the year as well as generating $10m revenue for the Maple Treasury. Co-Founder Joe shared our commercial goals and the product developments that will get us there in more detail here:

As a team, we at Maple are focused on building a lasting financial infrastructure that contributes to a more equitable and transparent financial ecosystem for all.

As we build this infrastructure we want to ensure that value is maximized for the Maple community. We know that tokenomics is key and are committed to continuously reevaluating our offer to deliver the most value for the Maple community.

Today the native Maple token (MPL) serves three roles: governance, staking, and a share in network fees. Let’s dig in…

Governance: MPL holders can submit and vote on proposed changes to the protocol, including adjusting fees, minting or burning MPL tokens, and other protocol level changes. If MPL holders don’t want to participate in governance themselves, they’ll have the option to delegate their voting rights. MPL holders can also vote on distributing fees that have accrued to the Treasury. The community has pushed through seven MIPs, most recently voting through a MPL buyback using earned protocol fees.

Staking: MPL holders can provide default cover to a Liquidity Pool - thus earning a share of 10% of the interest received in the pool, the Ongoing Fees - by staking their MPL tokens. MPL holders stake a combination of MPL and stablecoins into a Balancer Pool, and then stake that Balancer Pool Token (BPT) on a specific Liquidity Pool. In order to align incentives, Pool Delegates are required to stake on any pools they manage.

Network Fees: The Maple Treasury earns a portion of the Establishment Fees, which represent an origination fee on the notional amount of each loan originated on the platform. This fee is paid by Borrowers when their loans are funded and is shared between Pool Delegates (50%) and the Maple Treasury (50%). Through governance, token-holders will have ability to vote on the amount of the Establishment Fee (currently 50 bps) as well as how the portion of the Establishment Fees that accrue to the Maple Treasury are allocated.

While the initial tokenomics above of MPL made sense and have served the protocol well to date we have had tons of suggestions for improvement from community members.

**Example (1): Incorporating a lock/staking mechanism into MPL similar to Abracadabra/Spell. MPL holders can stake MPL in return for xMPL. xMPL will accrue protocol fees over time. As the protocol generates more fees overtime xMPL will be worth more and more MPL. **

Example (2): a discount or rebate to borrowing rates for borrowers who hold X% of their loan amount in MPL.

As such, we wanted to share this post in order to effectively collect community ideas in one place. The goal here is to crowdsource ideas that are in the communities/protocols best long-term interest. Once we’ve collated a number of ideas we will create working groups to expand on them further, scope feasibility and propose tokenomics changes following MPL governance procedures.

We look forward to reviewing everyone’s thoughts and ideas! See you in the chat!

I do not think the MPL token should adopt the xSUSHI model.

The xSUSHI model can be understood as buying MPL tokens with protocol revenue and distributing them to MPL stakers. This is effectively a dividend paid in MPL which I’m strongly against.

If we believe that Maple (the company/DAO) is an efficient allocator of capital and is using its resources to create new products that will drive more value to the DAO, then we should not be paying out dividends. All of the revenue should be going to fund development and growth.

There is a reason Amazon doesn’t pay dividends. They know they can drive the most value to the company and by proxy, their investors, through reinvesting revenues in the business. Maple, and most other DAOs, are high growth organizations. It would be a huge misallocation of resources to adopt the xSUSHI model and suck resources out of a fledgling business while it is in a rapid growth phase.