MT token staking mechanism explained

With the MetaTower Team constantly working on a game-changing metaverse, recently, a new article and document (“Token Engineering Simulations Model Design Document for MetaTower by Tokenomia.pro”) has been published with some insights about the system infrastructure. We got to know about the new MetaTower V2 Token (MTFI) and its “synergy mechanism” with V1 Token (MT). With both tokens having their roles in the MT Metaverse they work together balancing themselves. One of those new features is V1 (MT) token staking which has a very unique mechanism that will be explained in this article. The understanding of mathematical formulas behind V1 staking mechanism is crucial for the community to actively participate in maximising earnings and raising the price of MT for everyone’s profit.

V1 staking formula — the “MT price-rise loop”

Let’s take a look at the formula of calculating the staking rewards from the official MetaTower document:

At first glance it can look scary, but it’s actually really simple if we analyse it step by step.

The most important thing to understand and the reason for this article is staking_v1_user_reward definition. Almost all of the staking protocols generate rewards in the staked token — e.g. for ETH staking you receive ETH. It leads to the inflation of the token. Not in MetaTower’s case! Here, when staking V1 token, you get rewarded not in V1 — but in V2 token from its staking pool. With almost 100% of V1 token in circulating supply it leads to interesting consequences — you can (and in my opinion — you should) sell V2 token rewards to USDT and buy even more V1 token with this “free” reward money. It creates the “MT price-rise loop”. By buying and re-staking V1 token you increase its scarcity, which leads to the price rise, and in result: you earning more rewards which you can again use to buy more V1 tokens to increase the price. Without adding any money from your pocket, you can actively influence the value of your investment and make it grow!

One may ask — isn’t it better to keep my V2 token and simply wait for its price to rise? Well… V2 token has higher market capitalization than V1, so V1 token’s price will probably rise more than V2’s — hence it’d be more profitable to own more of the V1 tokens. By keeping V2 you would be missing out on the influence of the “MT price-rise loop”, and therefore not boosting your MT investment.

What about the price of V2 token? Isn’t it gonna dump? Isn’t it bad? The whole system was carefully simulated by Tokenomia.pro and the sell pressure from V1 token staking was part of that simulation. V2 token has its own mechanics to ensure its growth so I wouldn’t be scared of V2 token dumping because of selling rewards. It’s a built-in mechanic of balancing the prices of both tokens. It’s not an exploit, it’s a built-in feature.

USDT reward formula

With all that being said, the modified equation that results in USDT reward is more useful for further considerations.

Starting from the original formula:

USDT reward is the number of received V2 tokens (staking reward) multiplied by the price of that token on a given day:

Which results in the formula for USDT rewards from staking:

To know the final result, both of the segments must be calculated separately and the lower number is taken into account:

Now let’s go through every component of both segments to fully understand what’s behind these parameters names.

1st formula segment

• The number of all V2 tokens to share between all participants of staking on that day. V2TokensInStakingPool value is different every month — it rises quickly thanks to the vesting schedule so the rewards are increasing significantly every month. (specific amounts can be found in the official document and in a “part 2 article”)

• User share in the staking pool. E.g. having 10M of tokens with the pool size of 100M results in having 10% of the share.

Now, by knowing the price of the V2 token on that day, you get to know how much USDT you make when you sell the V2 token.

2nd formula segment

• Annual Percentage Rate (APR) specifies how much % can be earned per year. The rewards are calculated daily, so by dividing by the number of days in a year, we get the daily reward share. Notice that the max APR in the formula refers to the value of your V1 tokens on that day — not the moment when your staking started! It means that if the value of your tokens increases, you get much more % (relating it to the starting investment) than “theoretical” max APR. You can easily earn, every month, many times your initial investment when V1 token price rises.

• This is basically the value of your V1 tokens. The more V1 tokens you have and the higher its price… the higher the reward! Which is exactly why you should take care of the V1 price by using the “MT price-rise loop” and promote the project.

Staking mechanism simulations

Now that you understand the formula — what are the numbers?! Which segment of the formula will be lower in which scenarios? What rewards are you gonna get? Is it profitable?

Come back next week for part 2 of the article in which we will simulate a discussed modified formula! You are gonna see in practice the relations between the parameters and what amounts of earnings can be expected from staking Meta Tower V1 token!