Thanks,
Agreed on the fact that Liquid staking might be a centralization vector, that being said, we are still at the initial stages of introducing staked tokens locks, we will take time to discuss strategies to mitigate that risk and avoid repeating a Lido or Eigenlayer scenario.
On this point, the idea is locking tokens can be considered as an economic risk for the user, so the longer the lock the bigger the risk, which explains higher rewards. the details are still to be defined here too.
The Numbers are not final yet, we will submit the final parameters to a community vote after we run more simulations and take into consideration some of the community feedback
These are the first steps of a long term plan to stimulate sustainable protocol growth. It needs to be done in phases otherwise it would be too many parameters to discuss and reaching consensus within the community could become complicated. Next phases will obviously cover inflation control, disinflationary mechanisms, protocol fees, composability, etc. All of these additional mechanisms are only effective if the protocol has a healthy growth and adoption rate, which is the reason why we decided to start with the TreasuryâŚ
The suggestion of an epoch is due to the fact that most calculation around staking participation and rewards happen each epoch, which allows us to use the previous epoch data to adjust the current epoch rewards distribution.
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Thanks for putting together this thoughtful proposal! I see a lot of potential here, but I wanted to share some considerations about the potential side effects of lowering the staking ratio by locking tokens.
1. Impact on Network Security: Since the total stake represents the number of tokens actively contributing to the networkâs security, reducing it could lower the overall security of the protocol. With fewer tokens securing the chain, the network might become more vulnerable to sybil attacks.
2. Governance Vulnerabilities: On-chain voting participation is usually measured as a percentage of total stake. If the total stake decreases, the threshold for passing proposals also lowers, making it easier and cheaper for a bad actor to execute governance attacks. This could potentially jeopardize the decision-making process in a decentralized environment.
It might be helpful to explore some mitigations, such as ensuring that locked tokens still contribute to governance and network security in some capacity. Let me know your thoughts!
Looking forward to more discussion on this.
Best,
JoaquĂn
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Regarding concerns about an effect on the fill rate: currently, the system has no way of discriminating between tokens that intend to participate in consensus, and those that do not. So when a block producer checks whether they can produce a block in a given slot, they use their stake, as a fraction of all the tokens in the system. Consequently, when fewer tokens are delegated (or belong directly to a block producer), the fill rate will drop.
One of the side effects of requiring locking for participation in the consensus is that the system will be able to tell which tokens are supposed to participate. If we implement this proposals, then we would also change the consensus rules so that block producers would use their stake as a fraction of the locked tokens. That way, the fill rate would not depend on how many tokens are locked (and should be higher than today, where inactive stake causes empty slots).
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We should also introduce parameter âsaturationâ of staking pool as Cardano project did, to strengthen decentraliztion
I think itâs a wonderful idea to add that to Mina. However, itâs orthogonal to the tokenomics, even though it also touches the rewards system. So I think itâs best to keep this out of this particular proposal, and save it for a separate MIP.
On this specific point, an additional clarification is: Cold wallet token holders will need to sign and approve the new staking transaction (involving token locks), but they wonât have to do it every epoch, they can keep their tokens staked until they decide to unstake them.
Thinking from holder perspective, it is discouraging to have to lock the tokens down if one is holding smaller amounts - say less than 1000 mina for example.
Could we not have a hybrid staking model where holder gets to opt in to earn higher staking rewards (say 10% apy) by locking but if one doesnât want to opt in, his staking rewards are reduced to around 2-3%. The rest of those rewards (~7-8%) will go into MF treasury. That way the treasury gets its long term sustainability as well as increases user incentive to hold and stake. This will be further useful when MF treasury hits a threshold balance, the excess amount can then be burned.
There would be a hard cap on the liquid staking where one will have to opt-in to locked staking if the amount is passing a certain threshold (to be confirmed by analysing the pattern of current wallet balance)
Once the liquid staked amount passes the threshold value - they get locked in the next epoch.
Letâs assume that all this is done. After the epoch has expired, another amount of X MINA is sent to the cold wallet. Will the received MINA be automatically considered a stake?
In this case, adjustments will only happen for the next epoch: calculations happen towards the end of the epoch, and new reward splits/ratios are applied for next epoch. The final point is: those X new tokens will also need to be Locked, which requires an approval/signature from the user.
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Although the treasury is an important piece in this proposal, as it will be a strong catalyst for the protocol growth and adoption, It is not necessarily the âmain focusâ. The problem we are trying to solve is the economic sustainability of Mina. That requires multiple initiatives and coordination to create a flywheel effect: Inflation control, growth stimulation (through treasury), no compromise on security and decentralized consensus, soon to be followed by a review of the fees structure, and potential introduction of disinflationary mechanisms.
The final numbers are yet to be determined. Our initial simulations explored several scenarios that align with the current APY averages. We will provide a detailed breakdown of these figures before submitting them for a vote in an official MIP.
From the initial calculations, it is possible to replenish the treasury without reducing the APY for stakers. The priority is to ensure a certain APY level for participating stakers, with the treasury only receiving what remains unallocated to node operators. This means that ultimately, the decision rests with the communityâif everyone chooses to stake their tokens, there will be no allocation for the treasury. The treasury only receives the leftover block rewards.
We will also explore implementing a cap on the number of tokens allocated to the treasury in each block.
All these points will be discussed, finalized, and voted on by the community, as part of a series of economic adjustments. The initial focus is on token locking because it has clear economic advantages:
When tokens are staked and locked, they are taken out of the circulating supply, reducing the number of tokens available for immediate sale. This creates economic advantages by introducing scarcity, which can lead to price appreciation due to the basic principles of supply and demand. With fewer tokens accessible for trading, sell pressure is reduced, as stakers are unable to sell their locked tokens. Over time, this scarcity can contribute to upward price movement, benefiting both the token holders and the overall ecosystem by promoting value accrual and market stability. (We are aware that VCs donât like small cap high FDV tokens, but that applies to new projects with high risks of market manipulation and rug pulls, which is really not the case for Mina)
- Inflation control
- Your proposal is no change to inflation
- growth stimulation (through treasury)
- This is a net-new outcome from the proprosal
- no compromise on security and decentralized consensus
- No change to security
So you can see how people might view the main focus of this proposal as adding a treasury.
I think this stuff about adding deflation in the future or changing the consensus mechanism in the future need to be a part of this proposal as well. I donât understand how this first step will lead to those other things, but they are apparently things that are being discussed behind the scenes. To me, all I see is redirecting rewards from inactive token holders to Mina Foundation. Any additional benefits related to consensus or inflation are not present in the proposal, so I canât consider those benefits in my vote.
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I believe the token inflation has been reduced not long ago, and will continue decreasing overtime, Introducing drastic changes to such parameters can disrupt the whole ecosystem. thus why it is being done gradually, in phasesâŚ
Growth is one of the most important objectives, and the treasury will play a key role in achieving it. Growth is also necessary before we can implement disinflationary mechanisms such as fee splits, burns, and more. These mechanisms wonât be effective at the current adoption rates.
We considered sharing a final, comprehensive roadmap, but the challenge is that introducing multiple changes across various parameters can easily lead to overwhelming discussions, making it difficult to reach consensus. Thatâs why we decided to proceed with small, incremental improvements while maintaining focus on the overall direction and long-term plan.
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I support this idea,
I appreciate the thoughts that have gone into this proposal, but at the same time i feel locked staking doesnât increase the accractiveness of holding Mina long term.
In an ever expanding market full of memecoins to tempt people new to crypto the restrictions may actually discourage people from investing.
Also in terms of the Treasury, there isnât much information about how this will be implemented and specifically where the funds will be allocated, and by who.
More details would make this more clear in order to make an informed decision.
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The proposal is that all new tokens that will be created in the Mina network in the future should be partially distributed among Mina token holders. Such a mechanism could incentivize token holders by creating additional value for them and increasing loyalty to the protocol. It could also help reduce inflation or redistribute rewards for participation in staking or other network activities.
This proposal might spark discussions about the fairness of distribution, its impact on inflation, and the incentives for active network participants.
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Balancing Incentives vs Sustainability.
Before an ecosystem matures, Staker and Validator compensation mostly comes from Staking Yields, because there wonât be enough transactions on the network for the Transaction Fee component to be sizably meaningful. But due to the inflationary nature of Staking Yields, it needs to be phased out over time and replaced by Transaction Fees as the ecosystem matures and on-chain activities increase.
Staking Yields need to be phased out over time because unchecked inflation erodes the value of the coin in the ecosystem. In general, excessive inflation tends to destroy the value of currency and should be avoided. The analogy with real life economies is however limited, for example there is no consensus on exactly what level of inflation is appropriate for a decentralized ecosystem since itâs unclear how to measure purchasing power.
Different projects adopt different strategies to achieve the gradual phase out of Staking Yields to be replaced by Transaction Fees.
Staking Yields are typically replaced over time and gradually replaced with Transaction Fees within the total Staker and Validator compensation to ensure the ecosystemâs sustainability.
Thereâs must be max supply otherwise the token will lose value every year
( Team Mina team should not compete with the US government to see who can print more money.)
Supply: The Mina native token is a capped supply token. and the total cap is fixed at 2 billon tokens.
Max supply 2B
Token utility: The Mina token will be used for transaction fees, staking, and delegation at the consensus layer.
Staking rewards: 600 million tokens will be automatically paid out as staking rewards to stakers and delegators for securing the network over years, 60 million every year.
Mina Public Treasury 200 Million
After 10 years there will be millions of transactions on the Mina network and thus the validators will be rewarded from the network transactions
The most important thing is to set a maximum supply for the token because not setting a maximum supply for the token will cause the token to lose its value over time and it cannot be predicted.
I donât see a clear benefit to MINA holders from this proposal.
While I support locking in relation to a major consensus change and instant finality, the benefits to the existing consensus mechanism are relatively marginal, and there are alternative ways of achieving this with existing parameters.
I disagree with directing block rewards to a centralized entity, no matter how good their intentions may be. Funding the Foundation with existing staked MINA, granted from the initial token allocation, keeps all interests aligned. Burning tokens, in this instance, would be an option.
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I oppose the proposed change for the following reasons:
- Locking up $MINA for higher yield is already offered by most big-name exchanges, people have the option, why change it at the protocol level?
- If I donât want to lock up my $MINA, you are saying itâs okay but I will have lower APY from the protocol level, this would feel like a systematic discrimination and is effectively telling me off.
- Instant finality is nice, but Iâm pretty sure locking up is not the only way that it can be achieved.
- I strongly oppose the formation of yet another treasury - we already have Mina Foundation for it. Are we going to dissolve MF in favour of this new treasury? Distributed Treasury has been proved to be a source of all sorts of issues. Who will control the multi-sig keys, how to ensure the safety from hacks? Who decides which person controls how much power?
- There seems to be a lack of comparison between token burn, which was requested in the original RFC, and the proposed approach? Also no information on how the approach would benefit the L2 future which Mina is destined to head into?
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