This applies to any and all kinds of revenue from the protocol.
We can definitely do it hourly. The only thing here is transaction fees on ETH mainnet.
If it applies to all sources of revenue, Iâm against it. Then I am in favor of keeping the old formula as it is currently defined in the docs.
Maha stakers min. 20%
DP 5-10%
ZAI staker 50-60%
Safety Pool / Treasury / Operations / Security fund ?%
Whatâs the main issue here? Would be good to know.
The revenue from the RWA part is actually going to be the biggest driver for the protocol. I donât think other sources which might the lending/borrowing revenue will be as significant as the RWA revenue coming in.
With the current TVL of 180k$ we are already now generating a 50k$ annual revenue.
The old docs did not work out as we saw in the last few months so the change in numbers is definitely needed. The main reason for this was that lending revenue could not contribute as much as we expected.
Moreover in this case MAHA stakers benefit from two portions. Having a % of revenue go to stakers and a % of revenue to go to buybacks and burns which helps increase the MAHA price as well from speculators. Which means in the current proposal over 12.5% + 12.5% = 25% goes to the benefit of MAHA stakers.
Also to note that MAHA stakers will be exclusive in receiving all future airdrops including that of ZERO (ZeroLend).
Iâm in support of the new changes, if you balance all things here, this is a net positive for both maha and zai stakers.
Even though the direct portion to maha stakers is reduced from 20% to 12.5%, you have an additional 12.5% that is acting as both buying demand and token deflation. So the logic here is that the 12.5% rewards will actually have a much greater likelihood of greater valuation than 20% with no buyback and burn.
We can further compound this more as increasing the incentive for ZAI stakers means this is a greater incentive to provide collateral and mint ZAI, effectively building further on the capital used for RWA investment and fee revenue â all of which, benefit Maha and ZAI stakers.
I know on paper it may not look like a net increase of return, but taking the entire system as a whole this is a good way to benefit all areas of the ecosystem. It does no good to hinder ZAI TVL and depend solely on new buyers to get us off the ground. With such a low mcap and liquidity, these adjustments can impact greatly at kick starting the money making machine.
Aside from the above points, It is better to give this a go as see what the results are â we already know what has already been attempted, and of course, we can always re-adjust things back if it is not working out as intended. I voted yes already to this on the snapshot, I think for the very least it is good to see what introducing this new buyback and burn mechanism will achieve, and also yield for ZAI. These are strong additions for marketing aswel and I think we ought to give it a try. We wonât know otherwise, but to be fair⌠I think we can vest considerable faith in the fact that this kind of work is front and center of Stevens elements â namely economics and mathematics.
In my opinion, 70% of all revenue for ZAI staker is too high. I donât think the ratio is right.
12.5% as rewards for the stakers is proportionally too low. Of course, it depends on the amount of revenue. With a large pie, 12.5% can also be a good slice (APY).
Buybacks and burns interest the stakers only for the price if they want to sell the Maha Rewards (from the 5k Maha per month for all stakers). They cannot sell what they have staked during the staking time. Therefore, it is only an indirect effect.
DP down to 5% and no Maha either, then weâll soon be at 0% as nobody will care anymore. Especially all the new people who will join us and later vote in new gov. proposals.
No part at all for operations, treasury/reserves and security? Does everyone work for free? Are there no costs? Is no safety net being set up?
We should think about how we divide everything up and what we need all the money for. Simply using the maximum amount for a top ZAI APY to drive up the TVL is too short-sighted in my view.
Iâd say the buyback and burn (BBB) is more of an accumulative impact â its not guaranteed that it will induce positive price appreciation in short/mid-term; it depends on how much supply pressure there is from larger investors, so at best it is a speculative thing. Of course, overtime and with larger RWA revenue, it may expect it to have a much greater effect as an accumulative and growing pressure.
The short-term impact to observe would mostly be due to the lower liquidity and mcap of maha at current, but that can change rather fast and suddenly the âBBBâ effect tappers off significantly. This is why having a stronger incentive to build RWA investment, means the âBBBâ effect can continue to put buy pressure on Maha as it grows in liquidity and mcap. Stakers of Maha is not something that will grow the revenue, but greater yield to ZAI stakers is something that can.
Consider the fact that ZAI is not a volatile asset, and the attraction to it will depend almost entirely on the yield. Unlike Maha, where the ROI is not only from the rewards as stakers, but also the price appreciation of those rewards and stake value. Its hard to put a number on this, but even if it takes a year for Maha to reach $2, its still a better ROI then if you farmed the yield on ZAI at 70%.
Once again, staking Maha is not going to generate revenue â but growing TVL for ZAI will. We need to be competitive and attract that TVL in, and 70% of revenue towards it will pale in comparison to the net positive effect of 12.5% going into a lowcap micro. ZAI will stay at $1, but Maha? It has a massive potential for price appreciation, but only if we can build revenue â which doesnât happen by staking it or buying it.
To make an analogy â fruit doesnât come from a fruit tree, it comes from the farmland the tree grows on. We need to grow TVL and revenue, and trying to sell apples without any land isnât sustainable.
We can always come back and adjust these things, but we already know what keeping things the same looks like â and that ainât worth voting for. Lets try the changes, and make a judgement call thereafter. Right now weâre haggling over a few % and no one knows how much revenue weâre even talking about.
What is 20% of one unknown value, compared to 12.5% of a different unknown value? Thats essentially the discussion here. But what we can deduce is that revenue growth from doing it this way is going to most certainly be a larger unknown value. So lets start with something, and refine it later to something better.
As with inclusion/exclusion of stated operation costs â my guess is that what is being considered as total revenue here is already factoring in those deductions. Also, you got to remember the team itself is invested in Maha and ZAI too. Everyone wins here.
Itâs not necessarily about the 12.5% for Maha stakers.
Itâs more about the other points.
If you look at the revenue distribution in the docs, you realize that someone has given more thought to the big picture. The operation is taken into account as well as the risks and safety etc.
Contrary to what is described on the voting page, this new distribution formula is now to replace the one in the docs âfor all revenuesâ.
By lending the collateral behind the stablecoin externally, we are taking much more risk. At the same time, however, we are reducing the entire safety net (and the part for operating costs etc.) to 0 (Zero). All of this doesnât add up for me and signals to me that a quick shot/proposal is being made here just to inflate the TVL and launch v2. Without considering the big picture.
It was Steven who wrote the doc that youâre also referencing though.
So taking risk is not an issue, its how its managed and what is the trade off/reward for it. The old doc refers to the 10% to the safety pool, but here in this proposal there is quiet a large incentive for people to stake ZAI (sZAI) and bolster that safety backstop for any bad debt. Instead of centralizing the 10% of revenue towards it, the update here is to encourage users to do so with greater rev share. This is would be an improvement overall to managing risk of bad debt.
Regarding external use of funds for RWA â what is the alternative to that? The is no internal approach to this, a third party is required as weâre not offering our own brokerage for this kind of service. Yes it is a risk, but to me it is an acceptable risk for the revenue gained and the track record of Ethena. Diversity of investment in RWA is more the key here, but not complete avoidance of it. Besides, it is my understanding that the team will still hold custody of it on eth mainnet anyway, but may need clarification on that.
The most significant change here is redirection of revenue from LP to sZAI, and this was kind of what we suggested above with wanting to compound the RWA revenue. My suggestion was to feed it back into collateral which would be centrally managed, but Stevens suggestion here to feed into greater sZAI rewards is just a more efficient, safer and decentralized way of doing that.
Anyway, its good to have contrarian views - i think it gives opportunity and reason to make these proposals more clear and presented more thoroughly. After all I think that is where the improvement need be â less so in what is being proposed, but more focus on clarity of specifics and rationale. There may be a few things I have misunderstood as well, which is why I think all of this needs to be put into an overview flowchart map.
In anycase, I do get the sense that some things here are trying to roll out sooner than later. I donât think its at a critical point to be too concerned about that, and we have opportunity to revisit and refine things before scaling up to larger numbers. I just think now is a good time to take steps forward and test the waters on this. There is only so far discussion will take us before needing to put theories to work.
All in all, I think this is a proposal that improves risk management, increases TVL, and a good balance to rewarding stakers whilst making the reward itself more valuable. Thanks for your feedback though, been a good discussion.
To make my position clear. I am not against
- the use of collateral to generate revenue externally (even if there are risks involved)
- buybacks and burns
- the share for the Maha stakers
Nowhere has it been written that part of the planned 70% for ZAI stakers will be used to stimulate the safety pool. That seems to me to be speculation. The safety pool is also just a safety measure to reduce risks in the protocol, but there is much more that goes under the heading of safety, especially if you are handling millions of $ in the protocol (including building up reserves, insurance, investments in technical safety, etc.).
It is also unclear how staff and infrastructure will be paid in the future. This is simply being cut out for the time being with the current proposal.
Here I had to laugh. The current proposal does not improve risk management, but completely abolishes it. The risks increase due to the lending of collateral, but all funds for security are completely eliminated. That is the opposite of improvement.
I would suggest that a proposal is written where it is either
a) really only about âStarting to use the stablecoin/collateral for yieldâ and/or âBuyback and Burn MAHA using (RWA or all) protocol revenueâ
or
b) about the general distribution of all income (i.e. a new distribution formula that replaces the current one in the doc)
or
c) one that clarifies all this transparently in one
B and C must take the previous distribution points into account and the sources of income (e.g. from protocol fees or LP/Swap etc.).
In any case, there needs to be more information and more transparency on the individual points, as well as on the overall picture/distribution.
Its literally in the proposal - 70% to sZAI. That is the safety pool. I think you just misunderstood what is being proposed here.
Again, its 70% revenue being directed towards those staking ZAI in the safety pool (sZAI). That is backstopping any bad debt that may occur due to value of collateral changes â which is being proportionately used for RWA investment.
For people to farm this 70% revenue, they will need to provide collateral to mint ZAI and then stake it in the safetypool (sZAI). Iâm not sure what your issue is with this, it is a direct incentive to build TVL with providing collateral, whilst also bolstering the safety pool (sZAI) as a risk mitigation measure.
You were previously supportive of this proposal when it was 50% buyback and burn, which in that instance the protocol was still intended to use collateral for RWA investment with no incentive to build the safety pool. This change with 70% to sZAI is essentially improving the risk management on the first suggestion whilst compounding RWA investment.
I think youâve just misunderstood what is being proposed here. sZAI is the safety pool, and 70% of revenue is being directed to stakers in it. So im not sure how you arrive at the conclusion that it is worse for risk management and security when it is the complete opposite.
Once again, âsZAIâ is staked ZAI in the safety pool, which is backstopping any potential bad debt from RWA investment, whilst also building collateral to mint ZAI to farm the sZAI rewards.
Nowhere is it written that the 70% go into the âsafety poolâ, so perhaps you have misunderstood.
I also think that is very unlikely. I think they are mainly used for incentives in ZAI farming and staking.
And as described above, the âsafety poolâ is just one small risk minimization element among many.
My ânoâ came at that moment when Steven said that the distribution key will completely replace the old one in the docs and not only affect the RWA income. And if you look at the two distribution plans, you can see that key points are missing in the new distribution plan. Which I have also described above.
Just to add some context since I guess there might be some parts that might be missing to add into the docs.
This probably shouldâve been clarified more and that is yes 70% of the revenue should go to the Safety Pool who are now called as Stakers (sZAI is previously sUSDz).
The reason for doing so is that stablecoin models where there is a normal version and staked version has done significantly well over the last few quarters. Starting with Ethena and then moving on to MakerDAO (USDS and sUSDS), Aave (GHO and stkSHO), Angle Protocol (USDA and sUSDA) etcâŚ
The reason why this model works is because if the underlying collateral backing a protocol is generating say 10%, and if all that yield is redirected to the stablecoinâs stakers, then that yield gets magnified based on how much % of the stablecoin is staked.
Currently on ZAI the yield is heavily amplified since lesser percentage of the supply is currently staked.
So the question is, how do we plan to grow the rest of the liquidity farms and incentives? This is where the upcoming points campaign will play a role. Maha Bytes is a highly scable points campaign giving out a fairly large % of the MAHA supply as an airdrop to LPs and holders. Incentivizing activity that weâd like to reward.
A preview of the upcoming Bytes campaign.
So things like supplying LP or holding ZAI or staking MAHA will receive points as incentives that eventually translate to MAHA rewards.
As of now there really is no other source of revenue besides the stablecoin & RWA stuff. Hence why I said so.
Currently we are generating around 50k$/yr revenue from the RWA backing.
In the future yes, if we are building more products (which we most likely will be doing), weâd look at redirecting most of that revenue back to MAHA stakers than the stablecoin stakers.
I can add a clarification in the docs if that makes.
1 Like
Thanks for the infos.
On the screenshots I read about 4x and 8x bytes/boosts. The height (whether 1x or 4x etc.) depends on the number of sZAI or staked Maha you have, right?
Yes correct. The more MAHA you have staked, the bigger the overall boost.
This topic was automatically closed 30 days after the last reply. New replies are no longer allowed.