I believe a DeFi(Lend) zkApp can realize the vision of locking Mina as long as it can provide a higher APR,rather than from the protocol level.
Such as https://nostra.finance/
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I canāt understanding what the aim of this is. Are we going to move towards centralization when we want more decentralization? What are we sacrificing for the price going up? This is completely nonsā¦
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Hi.The introduction of a token locking mechanism for staked MINA tokens will reduce volatility and eliminate abuse of the pump&dump scheme. At the same time, long-time supporters of the project who have been staking for a long time and intend to continue to do so will have more financial benefit from this approach (increasing rewards depending on the duration of staking) It is important to conduct thorough testing in the test network of locks to avoid problems in subsequent implementation in the mainnet
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I think itās necessary to introduce a rule as an additional change. A validator that is applying for delegation from the fund should have 50,000-100,000 MINA in their account balance (CB). Otherwise, they will not receive delegation. This change will retain validators in the project who are genuinely interested in supporting the network and will bring additional capitalization to the project. I would suggest sending excess rewards to a burn address.
If theres a change to lock ups it should come in place with consensus mechanism changes that require lockups, not just a lock up for the sake of it.
Iām not in favour of decentralised governance. Its been an absolute disaster on the Polkadot end with proposals and entities trying to raid the treasury.
Honestly I think this is a really poor first proposal on the part of Economics Design and any sort of contract or work with them through o1 labs or the Mina Foundation should be terminated immediately.
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I havenāt had my questions answered, so I will ask them once again:
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How will the voting process be organized? Will any token holder be able to vote on the proposal?
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Please describe the measures you implement to ensure that voting is transparent, the votes are not hijacked or manipulated
Thank you!
I have serious concerns about this proposal. While its intention might be to improve the protocolās economic value, I suspect it would do the opposite, for several reasons:
- Requiring tokens to be locked up reduces $MINAās utility, since users will be forced to trade off liquidity for yield. That will reduce its price, all else equal.
- Commandeering a portion of this yield to a centralized treasury fund (of unclear governance and investment savviness) will further reduce the total public income from $MINA tokens, directly impacting valuation. This is essentially a tax on the rest of the network. Why is this necessary when the ecosystem already has a well-funded foundation and network partners (like o1Labs)? Those entities already receive staking rewards.
- As mentioned by several validators, thereās very little margin in running a validator as it stands, and further reducing the incentive to do so could damage Minaās decentralization.
- Many people purchased Mina due to its liquid staking properties. A change of this magnitude, without overwhelming community support, would call into question Minaās governance and could impact public confidence in the protocol (e.g. āMina Foundation commissions a report to give itself more fundingā).
Hereās a way to sustainably fund a foundation: They can have a treasury of Mina tokens and use the staking rewards to fund their operations. In fact, my impression was thatās how the foundation is funded. Whatās the problem with this?
6 Likes
The reason for the questions is that the previous experience of community discussions and votings has been pretty controversial.
For example, the very first voting took place in June 2021 and was about the criteria for distributing delegations for the Mina Foundation Delegation Program. There were four proposals:
- Proposal A: āProof of Synced Stateā via Snark Work;
- Proposal B: Uptime tracking with connected verification;
- Proposal C: Shadow Block Production;
- Proposal D: Testnet Competitions
The voting happenned in the form of completing the survey in the survey platform which was previously used for consumer goods surveys. The proposals were mixed with random statements and the users were supposed to agree or disagee with each statement.
So far so good, BUTā¦ there were two proposals instead of four, mixed with random statements there.
No one understood what it was, because initially it was presented as a training exercise for future votings. Later it was announced it was the real voting (with 2 of the proposals simply missing).
The next time (February 2022) the process was even simpler - one of the team members Cris f just falsified the documentation related to community discussions, forged the meeting minutes and it was later announced that the change was requested and approved by the community, which of course, was 100% false.
That case was related to the involvment of one of the major validators, Coinlist, into the process of distributing the Foundation delegations and the cases of corruption within the Foundation.
The outcome of such āvotingā which never ever happened, resulted in significant financial losses for many of the validators, including myself, because the process of removing Coinlist from the process of distributing delegations was stretched for many months, however this issue was never addressed and that individual continues to be a part of the Foundation and was never accounted for their malicious behaviour.
As you see, the previous experience has been tough.
As a validator, I donāt see any advantages for the staking pool or for the stakers in this proposal. As it was mentioned before, the only beneficiary in this case is the Foundation.
Simply put, the Foundation is asking for additional funding from the community. In case if community agrees to pay this ātaxā, what can the Foundation offer in return? Just vague promises that maybe the token will appreciate in value?
Sorry, but this is not enough. The Foundation is asking for too much.
There has been long history of trying to establish normal communication between the community and the Foundation, which always failed. Constructive feedback was never honoured, banhammer abused and community requests for transparency ignored.
My answer to this proposal is āNoā.
On the tokenomics proposal itself and any benefits from locking, we also think it would be very helpful for ED to share here the reasoning for why locking in this way should have a positive impact.
On the treasury side, for clarity, the foundation is not in support of any centralized treasury. The options we think should be considered with this proposal are:
- Create a decentralized treasury now: Tokens would go to a protocol-controlled account, not to any centralized entity. A further MIP, approved by community token vote, would be necessary to unlock these tokens. The foundation itself will itself only support such a future proposal if distributing funds from the treasury requires on-chain token voting to direct where any tokens go, we donāt want any centralized entity (including the foundation) directly receiving the rewards. We also think that that future proposal should include the option for the community to vote to burn treasury tokens if there arenāt any better uses for them.
- Do not create a decentralized treasury now: Have any tokens that would have gone to a treasury instead be burned.
We still think there should be a decentralized treasury eventually for the long term support of the protocol. ED also called it out as a component that would be helpful to include as part of the broader tokenomics adjustments. If itās distracting, we could stick to whether to introduce locking or other mechanisms for now too.
The locking part is where Iām most curious, for EDās take on what the benefits are. Hope the above helps clarify on treasury too, it would be just the tokenomics component, and we wouldnāt want it to be centralized for the foundation or anything.
2 Likes
Hey team, at o1, weāre very happy that weāve been exploring mechanisms to improve the tokenomics of Mina. We know that the target was to give feedback today, but with MinaCon prep, we havenāt been able to consolidate our thinking and post our feedback here. Weāll aim to have a draft of feedback posted here by early next week.
Thanks Evan, and thank you to all participants in this conversation for your thorough comments which will be taken into account as we proceed to phase 2 of the study.
To recap the format / structure for this tokenomics analysis:Phase 1: Initial proposal to community intended to gather input to guide the analysis:
- Community Feedback on Overall Recommendation and Parameters (towards development of an MIP with specific recommendations)
- These first proposals 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, L2ās, 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 Decentralized Treasury
- That being said, although the decentralized 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 āmain focusā. 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 a decentralized 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.
- Also to reiterate on value accrual, 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
Hey team! This is Anna from Everstake. Thank you for this proposal and the in-depth discussion. Let me share our thoughts:
1. Treasury creation
Overall, this is a great idea, especially if part of the treasury is used for funding development, community grants, etc. Within community grants I would recommend considering rewarding content creation that highlights Mina and other promotional activities that will improve the projectās visibility.
2. Redirecting part of the rewards to the Treasury
Fixing the APY at a specific value is, in our view, not the best approach. Typically, a dynamic APY is an effective mechanism to attract users to staking when the total stake decreases significantly. With a fixed APY, this advantage would be lost.
Instead, we propose that if the APY exceeds a target value (e.g., 10%), a certain portion of the excess rewards could be redirected to the treasury. The percentage to be redirected could be adjustable, ranging from 0% to 100%, with the option to modify it through governance.
For example, if the produced rewards correspond to a 15% APY and the coefficient is set at 50%, then stakers would receive 12.5%, and 2.5% would go to the treasury.
This mechanism would preserve the ability to attract stakers if the total stake decreases significantly. Moreover, since the coefficient could be governed, it could also be made non-linear, allowing different percentages to apply depending on the APYāfor instance, distinguishing between an 11% and a 20% APY.
Overall, the idea of increasing rewards for staking with longer lockups is good. The approach I described could nicely complement this, allowing for adjustments based on the chosen lockup period. If you lock up for a longer period, you receive more, and less goes to the treasury.
3. Challenges for smaller nodes
Smaller validators who win only a few blocks per epoch can be disadvantageous when realizing this approach. Over the long term, their APY should level out, but how to manage this in epoch-by-epoch calculations is still an open question.
One potential solution is to distribute block rewards proportionally among all nodes based on a stake rather than just to the producers. However, this would represent a significant change.
Overall, we support the direction of thought discussed in this proposal. But certainly, it still needs some effort to finalize the first proposal.
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Thanks, Anna. We will certainly discuss your suggestions during phase 2, and I agree that keeping the APY dynamic and āuncappedā could be a good approach. However, switching to a proportional distribution of rewards among stakers, rather than block producers, would require a complete redesign of the consensus mechanismā¦
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If entities with large liquidity, such as exchanges, can easily earn rewards without locking liquidity (which is key here), some will likely seize the opportunity and offer higher yields to their delegators, extracting value from the protocol. The goal is to internalize that value and use it to incentivize the protocolās growth.
Youāre right, instant finality can be achieved through various mechanisms, yet locking up tokens is still pretty common use in most of them. Some consensus models offer instant finality without traditional token lock-ups. However, locking mechanisms often play a role in aligning incentives, securing the network, and ensuring participantsā long-term commitment. In this case, itās about finding the right balance between finality, security, and incentive structures for the protocolās growth and stability.
Hi 01brad, Thanks for your feedback.
Locking tokens can reduce liquidity in the short term, but it also creates scarcity, which can support price stability or even appreciation as circulating supply decreases. While users may need to trade off liquidity for yield, this mechanism encourages long-term participation and alignment with the protocolās growth. Additionally, introducing token lock reward boosters creates an incentive to hold rather than sell, which can help offset any potential downward price pressure. The key is to design the locking mechanism in a way that balances liquidity needs with long-term network security and token utility.
Our approach focuses on rewarding core supporters who believe in the long-term vision of the protocol, rather than āfree-riders.ā By directing rewards to these committed participants, we ensure that those contributing to the networkās sustainability are properly incentivized. Any unused rewards can then be redirected to fuel protocol growth and encourage wider adoption, aligning incentives with the long-term success of Mina.
This is a truth,we should face this situation,that cexs dump us hard
Thatās an interesting approach, to contrast two groups of people - ābelieversā and āfree ridersā, especially the word choice.
I am not convinced thatās the best approach though. Bringing people together, making them feel important and valuable always resulted in better outcome than dividing them.
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I agree that my choice of words might have come across as āharsh,ā but my intention was to highlight the differences in intent and behavior among various participants within the protocol. That being said, it is crucial that we bring everyone together in a collaborative environment where all participants are engaged in supporting the protocolās growth. We are not aiming to exclude anyone; rather, our goal is to offer greater rewards to those who are true supporters."