MCCP 7: MTA rewards distribution on Polygon

Simple Summary

It is proposed to amend MCCP-4 to carve out 20% of base emissions (i.e. 50K MTA per week) for liquidity mining on Polygon, with incentives going to the Save Vault and Feeder Pools. Incentives could be used for joint-liquidity mining programs with partners.

Abstract

MCCP-4 proposed a prospective emission schedule over the next few years and a set of rules to follow in order to calculate weekly distributions.

The current emissions schedule on MTA is approximately ~250K MTA per week on Ethereum Mainnet, distributed across 4 Feeder Pools, 2 Savings Vault, MTA/WETH Uniswap LP and MTA Staking.

MCCP-4 also proposed mStable incentivises liquidity in-house instead of third party protocols in order to promote boost in-house liquidity and channel fees within the protocol. Since MCCP-4 was passed, mStable has deployed on Polygon and accumulated deposits to Save even without incentives.

In this amendment, we propose that mStable carves out 25% of base emissions as incentives to attract liquidity on Polygon for 3 months, with a renewed vote after.

The Polygon team has agreed to launch a joint-liquidity mining program on Polygon with MATIC rewards from their #DeFiForAll fund, with more potential partners in the pipeline. It is proposed that the carved out emissions will go to both the Save Vault and Feeder Pools on Polygon.

Motivation

Polygon offers users an affordable way to interact with DeFi protocols, and mStable is at the forefront of this space with a best-in-class savings product with integrated liquidity pooling and same-asset swaps. We were also among the first protocols to deploy on Polygon, demonstrating our commitment to make DeFi more accessible to all.

Specification

This proposal suggests split up the total_emission into two new variables:

1. total_emission_ethereum = total_emission * 0.75
2. total_emission_polygon = total_emission * 0.25

MCCP-4 will remain intact with all the specified calculations and only the total_emission in that proposal will be replaced by total_emission_ethereum.

The total rewards received by imAsset vaults and feeder pools on Polygon is denoted as total_emission_polygon. A fixed percentage of total_emission_polygon denoted as feeder_emission_pct goes to the feeder pools.

feeder_emission = total_emission_polygon * feeder_emission_pct
vault_emission = total_emission_polygon * (1 - feeder_emission_pct)

The emission internally between pools are distributed according to their performance in the previous week. However, before we look into performance, a fixed percentage base_emission_pct of emission to feeder pools is distributed equally to the mAsset’s feeder pools. In other words, each feeder pools receive a base reward of

feeder_base_emission = feeder_emission * base_feeder_emission_pct / n # MTA
vault_base_emission = vault_emission * base_vault_emission_pct / m # MTA

where n is the number of feeder pools and m is number of mAsset vaults.

On top of base rewards, each pool receives bonus rewards based on their performance from the previous week. We derive a simple performance metric from the volume and liquidity of the pool, according to

# For each feeder pool i
bonus_feeder_factor[i] = volume[i] / liquidity[i]**(1/4)
# For each mAsset vault i
bonus_vault_factor[i] = volume[i] / liquidity[i]**(1/4)

where volume is the value of the sum of all trades that were executed by the pool in the past week, and liquidity is the value of the time weighted average of total liquidity in the feeder pool in the past week.

Pools receive rest of the rewards proportional to their bonus factors:

bonus_feeder_emission[i] = feeder_emission * (1 - base_feeder_emission_pct) \
        * bonus_feeder_factor[i] / sum(bonus_feeder_factor)
bonus_vault_emission[i] = vault_emission * (1 - base_vault_emission_pct) \
        * bonus_vault_factor[i] / sum(bonus_vault_factor)

Finally, the total emissions a feeder pool and a vault receive are computed as the sum of the base emission and bonus emission

total_feeder_emission[i] = feeder_base_emission + bonus_feeder_emission[i]
total_vault_emission[i] = vault_base_emission + bonus_vault_emission[i]

It is proposed that:

• feeder_emission_pct = 0
• base_feeder_emission_pct = 0.2
• base_vault_emission_pct = 0.5

Copyright

Copyright and related rights waived via CC0