March Monthly AMA — Buyback & Make and Feeder Pools
Non-stop development for mStable
Q’s were asked by our Discord Community.
A’s were given by James Simpson, Co-founder of mStable and Onur Solmaz, Protocol & Token Engineering R&D.
Q: Hey guys! Excited for the AMA. So with regard to the buy back and make, it seems by looking at the vote it will be 10% of treasury funds dedicated towards it. How will this work? Will the pool buy MTA tokens as as soon as funds are generated or will it buy MTA tokens after a set period of time, e.g. every week?
A: Hey — this was put up by a member of the protocolDAO, not by me, but as I understand it a portion of the fees that mStable generates (looks like 10% from the vote) will be send to a balancer smart pool.
These funds will be used to purchase back MTA was they are sent — the purchasing back is actually just the pool rebalancing to its set weights
Q: In the MTA staking platform…would it be possible to allow rewards to be added to MTA staked in current lock period without having to Withdraw the MTA first?
A: This is a bit separate to the buy back and make proposal but a good point to bring up ahead of staking v2. There are some great ideas floating around for staking v2, including using the MTA staked as liquidity in a 80/20 MTA/ETH pool.
There are over 6.5 million MTA staked at the moment so this would dramatically increase capital efficiency and even enable MTA stakers to earn BAL on top over any other rewards:
Q: Let's say we decide on 10% of the fees will be rerouted to the balancer smart pool. How much would we be looking at in terms of USD monthly if it was implemented today. Estimate would be nice.
A: Check out the cumulative fees chart on our dune. We expect that TVL and trading will increase a lot with feeder pools coming out but obviously we can’t predict what will happen. https://duneanalytics.com/alsco77/mstable_5
Q: Hey guys! The new AMM for mUSD is based in Curve’s stableswap invariant correct? This will end the zero slippage swaps and the 1:1 hard peg while trading in Swap right?
A: That’s right. mBTC has stableswap implemented right now and there’ll be a vote on migrating mUSD to stableswap. If that goes through the hard 1:1 will end in favour of stableswap, which we as a team see as a positive move (it’ll mean guaranteed liquidity for mUSD in all major stablecoins, more efficient swaps, and we predict more fees).
The mUSD peg will remain very hard though — it’s hard pegged to have +5/-5 bAssets/mAssets.And will only in very extreme scenarios move to the 5% range.
Q: Why do you expect fees to be increased due to release of the balancer pool?
A: Not of the balancer pool, of the feeder pools, explained in this forum post:
https://forum.mstable.org/t/mip-7-masset-amm-with-feeders/344/12
There would exist n number of feeder baskets per mAsset that would be composed of 50% pegged asset / 50% mAsset. These pools will “feed” into the main mAsset pool. For example you could have GUSD/mUSD feeder pool and trade GUSD to USDC and that trade would be through the mAsset.
They will be incentivised, i.e. MTA Governors decide which feeder basket to incentivise and by how much. We propose that there will be 0 or very low fee when trading into mAssets, making this AMM the most efficient place for mAsset liquidity.
The pools will be permissionlessness, i.e. anyone can create them. Other benefits:
- The 50% mAsset requirement is comparable to a “listing fee” where users must contribute to mAsset liquidity in order to start a new feeder.
- This 50% mAsset requirement also leverages the save rate for that imAsset while adding to mAsset utility and liquidity.
- Feeder baskets could reweight incentives from from Earn pools now on third-party platforms to liquidity natively on mStable, and in so doing: bring mAsset liquidity back to mStable, effectively doubling possible TVL, incentivise baskets with no impermanent loss, making these popular with yield farmers.
Q: Feeder baskets could reweigh incentives from Earn pools on third party platforms to liquidity natively on mStable. Meaning this will help increase mStable’s liquidity in the space and grow the platform?
A: That’s right. Feeder pools can enable mStable to incentivise native liquidity directly instead of incentivising mAsset liquidity on say Curve as we do now. This is a massive deal, combined with our ability to add any asset to mStable. Combined with revamped tokenomics coming out this month, we should see higher TVLs and trading volumes.
Q: So supposing that this proposal passes the governance process will the fees associated with Swap be reviewed?
A: They will be. There’ll be a vote on the swap fees. The idea is that it should be cheap to move into mAssets but the Meta Governors will choose
Q: I’m unaware how much liquidity MTA incentivises on curve. If we incentivise bringing liquidity ‘in house’, how much TVL could we see coming into MTA?
A: Yes there are currently MTA going to users to put liquidity on curve, uniswap and sushi. we think that we can quite easily get to the 100s of millions in TVL with feeder pools and the right tokenomics. we’re looking to innovate on how we give out MTA to liquidity providers.
Such as time weighted rewards — the only you are a provider, the more MTA you recieve.
Q: Wow. And I assume that’s not even taking into account mBTC TVL?
A: We will be doing feeders with every mAsset, including mBTC. There’ll also be proposals for mETH and mEUR in the next month or so. I’m also excited about other projects incentivizing their stablecoin in a feeder pool.
I would be keen to support ARCx’s stablecoin STABLEx as a feeder pool asset. I’d like to ask them to deploy some of their token as incentive (additional to MTA).
Q: What do you believe that would be a fitting fee? Currently Curve has 0.04% fees, most same pegged decentralized exchanges are around the same?
A: I think that would be competitive. Swap fees are generally a race to the bottom, that’s why mStable is focused on meta assets (we think we can create a stronger moat here than just with a swapping AMM).
Q: Cool, thanks James. Sounds great. I remember there were other plans to improve tokenomics besides the buy back and make. How are those progressing?
A: Well. We’ll have a short term proposal coming out in the next week or so regarding feeder pools. We are also thinking of mStable being first movers on other chains and layers, for example Avalanche, BSC and Optimism.
We think there is some interesting land grabs we can do on these chains/layers with the right liquidity incentives. This would be part of a much larger vision we have on connecting and unifying value wherever it is (layer 2, another chain). I’ll be posting about it soon.
A (by Onur Solmaz): I’m working on determining emission rates to imAsset vaults and feeder pools which maximize mStable’s TVL.
Q: When do you guys expect the BSC integration to be completed?
A: If the community supports it we will work on a liquidity mining strategy and can deploy quickly.
Q: Will Save be indeed integrated with CEXs?
A: Actively working on mAsset and MTA listings across all major exchanges. We expect progress in the coming month or so
Q: Will the roadmap be updated with new tasks and milestones?
A: I’ll be posting a new roadmap post in the coming month. Some big things on it
Q: I’m interested in the mGLD asset. If it will be composed of let’s say XAUT and PAXG (don’t think there are other major ones) it will be difficult to trade it in size because are not highly liquid. Can you say few words about it?
A: I want mGLD to come out as soon as possible. There are some questions on how to implement it but we should be able to do it soon after mETH and mEUR.
This is a community driven project — remember anyone can suggest improvements in the discord#🗳governance channel and make a post in the forum for discussion.
