This proposal outlines a strategy to utilize the stablecoin yields generated by our protocol to buyback and burn MAHA tokens, thereby potentially increasing the value and scarcity of MAHA.
Our protocol generates revenue through Real-World Asset investments. This revenue presents an opportunity to reinvest in our ecosystem and potentially increase the value of MAHA tokens.
Proposal Details
We propose allocating a significant portion (e.g., 50%) of the RWA revenue for the buyback and burn process on a daily basis. The allocated funds will be used to purchase MAHA tokens from the open market at regular intervals (e.g., monthly or quarterly).
All MAHA tokens purchased through this mechanism will be sent to a burn address, permanently removing them from circulation.
We propose executing all of this on the Base network, which will soon be the new home and liquidity hub for the MAHA token.
If approved, we propose implementing this strategy within 1-2 weeks of the vote passing.
Transparency and Reporting
To showcase the burn transaction, we will have a transparency page that reports all the buyback and burns that we’d execute on a daily basis.
Conclusion
This buyback and burn strategy aims to create a positive feedback loop between protocol revenue and MAHA token value, potentially benefiting all stakeholders in the ecosystem.
Community members are encouraged to vote on this proposal and we look forward for any feedback
With regard to the buyback interval, I would choose no longer than a maximum of 14 days. If it is automated, perhaps weekly. Maybe not at a fixed time, so that traders don’t take advantage of the (possible) pump.
And with shorter intervals, the buyback will not be too large and will contribute to a constant continuous price increase rather than just a short-term pump and dump.
You could also set a $ value for the interval. Whenever X$ has been accumulated, a buyback is triggered. If several times this amount of revenue is received at once, the buybacks can also be split into several buybacks. Buybacks could then be made continuously until the wallet has fallen below the defined $ limit for the trigger.
In terms of allocation, I would not take more than 40-50% for buybacks and burns.
Is there a rough calculation of how much revenue is generated with how much TVL, or how high the buybacks would be per 1m$ TVL (with e.g. 50% burn)?
I do like this, however what if we split this 50% between buyback n burn, but also use some to compound into more collateral backing for ZAI? The relative amount added to collateral for ZAI could then be distributed to Maha Stakers as newly minted ZAI. In addition, since this is a scalable value, it may also be a good idea to use some of the minted ZAI as LP emission rewards.
So for example, with regards to the 50% of RWA revenue;
Burn Portion
30% for Buyback and Burn
Mint Portion
20% added as ZAI collateral
(10% added as Maha Staking Rewards valued in ZAI)
(10% added as LP Farming rewards - utilizing gauge vote distribution)
This would allow Stakers to Earn ZAI passively, alongside Maha Rewards, to then give option to add into LP’s for further rewards via Emissions, or Stake into sUSDz for farm the passive yield from MIP:34 proposal. Furthermore, the TVL for ZAI would then have compounded growth which can accelerate revenue via USDe (ethena) or greater RWA investment.
Bit of a loose idea off the top of my head, let me know if this would be viable or not – otherwise am all for the 50% total for buyback.
The buyback and burn proposal for MAHA is a solid step toward driving value and reducing supply.
Instead of specifying only “regular intervals (e.g., monthly or quarterly),” you could introduce “dynamic buybacks” tied to revenue milestones or token price thresholds.
E.g if revenue exceeds a certain level in a given month, a larger portion can be allocated to the buyback. Buybacks will occur monthly but if revenue exceeds a specified threshold, the buyback amount will increase proportionally to further support the price.
I fully endorse the idea taking into to considerations the following
Scarcity of token to drive value
As mentioned to attract as value proposition of Maha in eyes of Coinbase ( but this could be subjective)
While I think 50% is a little excessive, but a fast track to achieve the aforementioned points.
That being said we have to consider the operational side of things. I’m good as long as someone is not able to predict the buybacks and create unnecessary volatility. This can be done by making the buybacks much dynamic as possible.
I feel like a daily schedule is a very good idea. And if it happens on base, then the gas fees are also going to be minimal. Making the buybacks random is a very good idea because we have historically seen people frontrun trades.
I’m fully supportive of this. Ideally we would want to give MAHA stakers a portion of the revenue rather than MAHA emissions. At considerable amounts of TVL this should be substantial rewards for the stakers.
I think if we channel 20-30% to Maha stakers, this has more effect on the price than if we buy and burn Maha with it.
For most people, buybacks and burns are less visible and understandable. They simply hold the coin because they assume it will rise in value anyway (because of the bull run, developments, demand etc).
However, if the Maha price rises and they also get something in return (staking rewards) for continuing to hold their Maha (instead of swapping it into other assets when they are in good profit), then they will hold it for longer and are more likely to buy and stake more to increase their share of the passive income (which they can then invest into other assets instead).
And new people who come across Maha will also find this more attractive than just burns.
Perhaps such a formula would therefore be more effective:
20% Maha stakers
30% Buyback and burn
50% sUSDz stakers
or
30% Maha stakers
30% Buyback and burn
40% sUSDz stakers
A possible solution to this could also be to add the revenue for buyback as a limit order or onesided liquidity. This way it can’t really be front run, but insteads acts as a backstop.I think that may help promote more of a trending structure as opposed to PnD price action.
You could use the buy back captial as a trailing buy order.
Either of these i think is fine, but the specific thing i would do with the Maha Stakers portion, is firstly add the revenue back into minting ZAI – and then reward that same ZAI to stakers instead.
Reason being is that it with combined rewards of Maha emissions & ZAI for stakers, this can be used to create a liquidity pool for moving into farming, or alternatively, the ZAI rewards can be added into the sUSDz staking pool.
Also it helps grow the TVL, rather than giving stakers USDC (but if stakers wish to, they can simply redeem the USDC from the ZAI reward anyway). It just makes doing so an active action/intent, as opposed to those who will let rewards grow passively (which otherwise grows TVL passively at the same time until such decision is made to redeem).
This also effectively means the 20-30% sent to stakers in ZAI - is also acting as a possible revenue portion as it is first used as collateral (which is reinvesting into USDe).
Its a round-a-bout way to basically reward stakers and compound the RWA revenue with the same capital being used. Rather than say… rewarding USDC to stakers and they may let that built up or utilize it on things outside the ecosystem.
I would like to suggest we slightly increase the % given to ZAI stakers.
The reason being is that the more % we give to ZAI stakers, the more the yield gets amplified. And the more TVL we can attract.
Something around 70% is the ideal number. It is large enough to amplify the yield from sUSDe and spacious enough to accomadate a buyback and burn and yield to stakers.
I’d recommend also putting 5% to debt pool as well. The ratio of revenue to MAHA stakers vs buyback and burns, should be leaning more towards the buyback and burns because large on-chain buyback and burns activates a lot new buyers on the chain.
So if we are good to go with
70% to sZAI stakers
5% to debt pool
15% to Buyback and Burn
10% to MAHA stakers
This should balance everything easily.
I would like to also add that we stop MAHA emissions completely and keep MAHA emissions to our upcoming points program. Points are a more scalable form of incentives and stopping MAHA emissions will work towards making MAHA more scarce.
If @Michael and @LongWay agree to this, we can start to put this for a vote and execute. I
Do you also mean no Maha emission for Maha staker?
And no for DP?
Both are basically at 5k per month, although I’m not sure whether this will really be implemented in the DP.
I think it’s good and important for the stakers in particular that they also receive Maha as rewards. This is a reliable thing and therefore independent of the income generated by the protocol. Especially at the beginning, when not much income is expected for distribution.
If the protocol really generates so much later on that an attractive, long-term (above-average) APY is achieved for the stakers, then it would be ok to skip the Maha rewards.
As far as the DP is affected, we should clarify what proportion of what flows into it. This 5% would only be from these stablecoin yieald, right? The rate would be higher for all other revenue (including parts from ZeroLend)?
The “end” of the 5k Maha for the DP would also have to be discussed, as this was determined by a governance vote. And that was a very controversial compromise at the time. (Which in the end was not what it should have been. Namely a reliable payout bridge until there is revenue.)
I think that this issue and discussion should also be held in the DP group. If the people there are presented with a fait accompli because they don’t notice this discussion here, it will not go well. I think clear conditions need to be created for the DP. Perhaps adapted to the new situation. But that needs to be explained to the people.
I think for better clarity and less confusion, it would be best to make the proposal as an overview of the total 100% of revenue from RWA investment. I’m not certain if this breakdown is now referring to the 100% total or a secondary breakdown of the “50% portion” from the initial post.
To simplify, if we’re discussing a secondary breakdown of the 50% portion, then it would be easier to understand if we just convert this to what each expenditure is represented as within the total. E.g. 70% of 50% of RWA revenue is actually 35% of 100% of RWA revenue.
I would strongly recommend a visual flow chart to accompany this as well, basically to help with the overview of all the moving parts as this is an adaptive and sensitive system that the DAO needs to understand and grasp clearly.
I’m assuming we’re talking about an increase of yield to sZAI stakers from the other 50% portion, now up to 70%? And the purpose of this is to essentially attract more collateral to mint ZAI whilst that collateral compounds greater investment into RWA through sUSDe? I think this approach is good for an initial contract, but would be better to evolve later into something that considers the fluctuating ratio between RWA revenue and ZAI TVL – this to give a more stable yield as opposed to one that could swing more dramatically depending on compounded growth of RWA investment and revenue with regards to staked ZAI and collateral. This can be done by using top and bottom thresholds to keep sZAI yield stable overtime, by increasing RWA investment or allocating an excess to a DAO treasury.
With regards to these portions;
5% to debt pool
15% to Buyback and Burn
10% to MAHA stakers
I think it would be better to create a DAO Treasury with the 5% debt pool portion instead, and label it like such. This would need its own proposal and objectives outlined. It would be a good precursor into governance around fund management of an investment portfolio that the DAO could manage, also a precursor into things like a Maha Foundation. Since we’re talking about a % of RWA revenue, it is better to affix this to a greater purpose like a DAO treasury, that can then be designated for a multitude of avenues.
As for a greater amount to buyback as opposed to stakers – I think the logic for that is subjective and preferential. Equally true is that to give greater potential benefit to those that have bought Maha but keep it liquid, is not better in my opinion than to reward those who lock the token which is also a form of reducing the circulating supply whilst demonstrating a greater faith in the project overtime. For these reasons, I think it is fair to balance buyback and maha staking rewards equally. Economically, either deflating Maha more through buybacks and purchase demand from revenue, would be akin to the price discovery of incentivizing more tokens to be locked up whilst encouraging organic buying demand for the greater reward benefit.
With all the above considered, my suggestion here would be;
*12.5% to buyback and burn
*12.5% to Maha Stakers
*5% to “DAO Treasury”
*70% to sZAI stakers (later refined with low/high thresholds to keep yield stable).
Regarding formation of a DAO Treasury, this can initiate with primary objective to pay off debt pool, but once done (or simultaneously), can then service alternative pursuits as the dp has a definite and finite end point. Possible service alternatives – portfolio management, grant funding, foundation, non-essential development, RnD).
Alot to read there, but also want to recap on the need for mapping out the ecosystem and revenue/cost flow into a visual form (map). Much is lost on many in purely text form, but seeing an overview illustration would help compliment these proposals with how they fit into everything else.
5% to “DP” instead of “DAO Treasury” gives DP holders more confidence that this part will not be misappropriated or diminished (over time).
It’s a small thing to put that 5% into a “DAO Treasury” when the DP is paid off. This could even be defined in the proposal now or simply when the time comes.
I think the idea of a visual illustration of the cash flows is great. Where in the protocols is revenue generated, where is it collected and from there how is it distributed. At the moment, we are only talking about a specific revenue area.
I also tend to lean in this direction, as I simply think that the effect is greater when there are more attractive staking rewards than buybacks and burns achieve.
*12.5% to buyback and burn
*12.5% to Maha Stakers
*5% to DP, later “DAO Treasury”
*70% to sZAI stakers
Yeah I understand. essentially my suggestion is the same net result – to then initially use the DAO treasury to pay of the DP first. I guess we can do this afterward, but my rationale is that it is better optics to have a proposal for setting up a dao treasury with all the potential uses of that, rather than give more spotlight to the dp. In a way i’d prefer not to bring further attention to it via embedding it in proposals strait after our V2 launch.
My preference is that the dp is handled without the need to blemish future proposals. If we setup a ‘DAO Treasury’ and task it to clear the dp first, then we still meet the need without giving it unnecessary/undesirable attention.
Michael and Signal made few good points , here where i stand
I got to agree with with Signal and Rehan regarding making buyback and burn weekly AND dynamic interval. this prevent both frontrun and also big p&d ( in quaterly )
agree on fixed 5% on DP and later on rename it to DAO ( give dp holders confidence that the % wont be messed with )
5k monthly maha emission okish but only 12.5% ( 6.75% total revenue ) goes to stakers ? I doubt this encourage users to stake.
Generally some amount to buyback and burn and some amount to stakers is enough to give enough speculation.
There’s also a multiplication effect for those who staker for longer.
I’d suggest so. We should look to make MAHA scarcer and the DP should ideally be paid in cash. Whatever MAHA has been collected will be OTC’d with some KOLs or newer investors and the proceeds from that will go towards paying off the DP.
Also MAHA stakers should start to receive fees and ZERO emissions which should start to scale as the protocol generates more and more revenue and grows.
Okay, so to finalize this, reading up from all the comments above. We shall go forth with the proposal to
12.5% to buyback and burn
12.5% to Maha Stakers
5% to “DAO Treasury”
70% to sZAI stakers
The vote has been scheduled for tomorrow to agree upon on Snapshot.
On a separate point, with the buyback and front running potential – I think this can be sorted by automating hourly buybacks like setting up a dca order. The more frequent the interval the more can disperse the amount purchased each time. This would make it pointless to try front run anything.
