MESH Tokenomics Driven by vMESH Holders

Published in

Meshswap

7 min readSep 5, 2022

Dear Meshswap Community Members,

In this article, we would like to introduce who the vMESH holder is, what can be earned from vMESH, and MESH tokenomics for Meshswap development.

Content

- MESH Tokenomics

1. MESH staker (vMESH holder); A strong supporter of the MESH Token Economy
2. Benefits for vMESH holder

- Driven by vMESH holders

1. Inflation: Distribution by vMESH holders
2. Deflation: Buyback & burn
3. MESH value boost: A virtuous cycle combining inflation and deflation mechanisms

- Frequently Asked Questions

- Guides & Tutorials Links

MESH Tokenomics

1. MESH staker (vMESH holder); A strong supporter of the MESH Token Economy

① MESH staker locks up MESH for a certain period and acquires vMESH (pool voting right).

② The vMESH holder is a core & key supporter of the MESH token economy, and only the vMESH holder can participate in the Meshswap DAO.

③ Inflationary rewards are redistributed directly by the holder’s voting on which liquidity pool to allocate more MESH rewards.

④ They serve as DAOs and receive various rewards such as Transaction Fees, Staking rewards, Pool Voting rewards, and Drops rewards.

2. Benefits for vMESH holder

(1) Staking rewards: Earn up to 169.16%

Staker locks up MESH for a certain period, which means freezing MESH distribution in the market and this results in stabilizing the price of MESH.

60.93% 12,091,850 MESH) of the total distribution (19,845,024 MESH) has been locked up from the date of the Meshswap launch (May 2022) and the staking ratio has been increasing continuously.

Staker, who maintains the value of MESH reliably, receives 40% of the MESH rewards allocated to Meshswap ecosystem participants (lenders, license providers, stickers).

Staking now can earn up to 169.16% APR.

☞ Link to Stake MESH

(2) Voting rewards: Earn up to 59.06%

Staker earns not only MESH staking reward but also obtains Pool Voting Right according to staking period. Staker can earn a pool transaction fee as an additional reward by voting on the liquidity pool with vMESH. Therefore, the more MESH and the longer the period stake, the more voting power(vMESH) can be acquired. This means greater influence on MESH distribution decisions and more transaction fee returns as a reward. Meshswap distributes 50% of transaction fees from all liquidity pools to voters.

Join Pool voting and earn up to 59.06% of your yield.

☞ Link to Pool voting with vMESH

(3) Drops & Ecopot rewards

Drops and Ecopot rewards are for stakers and offer the opportunity in advance to meet projects that newly join the Polygon network. Preempt financial opportunities and earn additional rewards.

** Please note: All numerical information is based on the date of publication. Users must check the real-time information on Meshswap.

Driven by vMESH holders

MESH is not just a one-time reward, but a strong incentive reward for ecosystem participants to provide more liquidity to Meshswap.

A token economy is formed that distributes greater rewards to the vMESH holder to develop Meshswap ecosystem which organically combines Staking, Reward system (inflation), and Burning (deflation) mechanisms.

The MESH inflation reward system and the deflation mechanism allow the rise in the value of MESH to be directly linked to the profits of the vMESH holder DAO and make the growth of the Meshswap protocol possible by utilizing limited MESH resources more efficiently.

The MESH token economy consists of an inflation mechanism and a deflation mechanism.

Inflation: Distribution by vMESH holders

As mentioned earlier, the MESH distributed to each liquidity pool is directly determined by the vote of the vMESH holder. The vMESH holder acts in the direction of maximizing its own profits because it can receive 50% of the transaction fees from the liquidity pool. As a result, the liquidity pool, which generates more transaction fee revenue, will be supported by more vMESH holders and will be able to distribute more MESH rewards to the pool’s liquidity providers.

Deflation: Buyback & burn

50% of transaction fees from all liquidity pools will be used for MESH buyback & burn (the remaining 50% will be distributed to the vMESH holder).

In addition, the MESH Buyback & Burn contribution of each pool is measured and reflected in the next MESH distribution. It leads to a structure in which more MESH can be distributed to the liquid pool where the volume of transactions occurred.

This will increase the MESH burning amount and increase the value of MESH as the volume of transactions in each liquidity pool increases.

MESH Buyback & Burn is carried out daily, and the amount of buyback has completed a total of 1,092,203.42 MESH since the launch of Meshswap May. The details are as follows.

<Table1: Monthly Buyback & Burn amount>

MESH value boost: A virtuous cycle combining inflation and deflation mechanisms

In the combined structure of inflation and deflation mechanisms, 50% of the transaction fees from Meshswap’s liquidity pool are distributed to pool voters, and the remaining 50% are used for MESH Buyback & Burn.

① Pools with a high frequency of transaction fees offer greater rewards to voters. Pools with large rewards can naturally get more votes from the vMESH holder and distribute more MESH rewards. This makes the pool’s own reward APR(Y) increasingly powerful.

② The more reward is distributed, the more liquidity is inflowed. The additional inflow of new liquidity creates a better trading environment, resulting in more trading volume in the pool.

③ Increasing the volume of transactions in a particular pool means a greater reward for transaction fees and also means increasing the resources used for MESH Buyback & Burn. The pool burns many MESHs, contributing to the increase in MESH’s value.

④ As Meshswap has more of these beneficial liquidity pools, the value of MESH continues to grow.

In terms of MESH indicator,

As the volume of transactions in the liquidity pool increases, the vMESH holder can earn more revenue — increasing pool voting revenue and the value of MESH increases. This expands the number of participants who want to be part of the vMESH community. Moreover, it creates a stronger token distribution structure due to rising MESH demand in the market and rising MESH staking rates.

In terms of protocol’s entire indicator,

The more liquidity pools that provide their own high APR rewards through higher trading volumes, the newer liquidity inflows and trading volumes increase, and the overall TVL of the protocol expands. The additional inflow of new liquidity creates a better trading environment, resulting in more trading volume in the pool.

As such, MESH forms a virtuous cycle of protocol growth and MESH rises in value, continuing to grow the stable token distribution structure, liquidity (TVL), and volume of transactions that make up the fundamentals of tokens. In the future, the profits of vMESH DAO participants will continue to increase through solid tokenomics. In addition, with the continued rise in the value of MESH, its influence within the polygon ecosystem will become more powerful macroscopically.

Frequently Asked Questions

Q1) Where can I check the burned MESH quantity and the buyback MESH quantity?

A1) You can find it in the Burned MESH, Burn Details, and Buyback completed section of the Dashboard.

Q2) What is the MESH buyback share and where can I find it?

A2) This is the distribution rate applied to the total quantity of MESH buybacks on 1/7/30 days. Meshswap’s deflation mechanism aggregates the MESH indicators burned as transaction fees in each liquidity pool, objectively measuring the extent to which they contributed to the rise in MESH value, and reflecting them in the MESH distribution ratio.

Click the “Pool Vote Status” button on the MESH Governance > Staking and Pool voting page to check the buyback distribution, user voting distribution, total MESH distribution, and MESH APR for each pool that is updated daily.

Q3) In addition to the MESH burned for full transaction fees, are there any other MESH burned through other channels?

A3) Yes, MESH is spent creating a liquidity pool or registering governance voting and is burned at the same time.