Tokenomics Review and Recommendation: Introduction of Token Locking and Treasury Funding for MINA

With all due respect, collaborative environment can hardly exist in a place, where one centralized entity decides who are “true” supporters and who are not “true” ones. Sounds rather discriminating, in my opinion.

I know a lot of professional, honest, enthusiastic, well educated people, who migrated from “core supporters who believe in the long-term vision of Mina” group to the “free riders” category over time (if we use your choice of words).

There has been plenty of time in the past five years that could be used to create a thriving ecosystem. What prevented the Foundation from doing so?

Economic sustainability of any venture is achieved by slightly different methods, than simply moving financial assets from one pocket to another (to the pocket of a different group of stakeholders)

Today Coinlist sent out letters. And it contains part of what we are discussing.
Some people are moving away from it, and some are striving for it…
I am duplicating the text of the letter for consideration.

"
Hello,

We are contacting you because you have used our vault staking product. We’re upgrading the staking experience by converting SUI and AXL vaults to autostaking.

Why autostaking:
No lock-up period — withdraw at any time
Staking rewards are distributed automatically
Your funds are automatically reinvested for compounding rewards

These changes will be in place by October 31st. This is an upgrade and requires no action on your part.

We appreciate your participation in CoinList’s staking program, and we look forward to continually providing you with a better experience!
"

Ironically, this is exactly what I was talking about a few years ago, that the team has to think about the future and to think about how the project will evolve. The implication was that VC funding would not last forever, that it was high time to wake up, to become more serious and to start doing something that would bring some positive results. It seems that very limited number of people was interested in that at that period of time.

Shortly after making this post I received an email from the so called “Mina Moderation Team”, which contained nasty defamatory statements about me.
They also informed me that they had blacklisted me in the Mina Foundation Delegation Program, O1 Labs Delegation Program, banned me on Discord, Telegram, Reddit and the Mina Research forum. One of these folks even went an extra mile and removed ALL my posts for the previous 3 years in the Telegram group (which were a lot, because previously I was a moderator there).

After a few years we returned to where it started - the problem of economic sustainability of Mina (why it even became a problem - we all remember the amounts that were raised in seeding rounds?) The only change is that the Foundation asks for additional funding from the community now.

I’m not sure you understand what I’m saying. Imagine you have two tokens: One provides liquid staking and the other requires you to lock it up to stake. Which would you pay more for? Obviously the liquid staking one is more valuable because it has additional utility: it’s liquidity. Therefore, by making a proposal where you’re removing some of that utility it will reduce Mina’s price, all else equal.

In terms of increasing scarcity supporting future price appreciation, I’m not sure that point holds empirically. Recently, we eliminated supercharged rewards which increased scarcity of the token. But Mina certainly hasn’t appreciated since then, either in BTC or USD terms. To the contrary, it’s possible that cryptocurrencies operate similarly to emerging market currencies, where increases in yield/interest rate actually support increases in price.

I don’t find the characterization of people who hold Mina to be “free-riders” accurate or fair. By choosing to buy and hold Mina, they are foregoing using their capital for any other purpose, and are therefore paying a significant opportunity cost. There could be extremely committed network participants who can’t afford to lock up their Mina, for example, node operators who have to pay operating costs to have a viable business. I find this to be a simplistic and unproductive dichotomy.

I appreciate Evan’s clarification that the Mina Foundation wouldn’t want to be recipients of any network rewards. If that’s the case, perhaps we should try to see if the “decentralized treasury” concept works (i.e. people do vote and fund economically viable ideas) before funding it with significant changes to the token’s economics and a socialized network tax.

As a higher-level comment, it seems like the community’s reaction to this proposal is mixed or negative. Rather than restating your reasoning behind the proposal, which I think you did a good job explaining initially, it might be worthwhile to explore other ideas that improve Mina’s tokenomics and can rally broad community support.

4 Likes

Hey everyone,

We were able to discuss tokenomics at a Minacon session earlier this week, and much of the feedback in person echoed the feedback here on the forums.

We’re currently bringing feedback to economics design and discussing next steps, we’ll follow up soon with a more complete summary of what was discussed at Minacon and proposed next steps for this work.

Thanks everyone for your feedback so far, we’ll follow up with next steps soon.

2 Likes

Hey everyone, catching up here since I’ve been focused on initial tests of the decision-making process for managing the decentralized treasury, summarizing the outcomes, and aligning on the next steps. As mentioned in the responses above, the blog post about these efforts is getting its final touches, aiming to publish it in the coming weeks.

I just wanted to quickly share that some comments seem unrelated to this thread’s main objective. Please create a separate thread if you want to discuss a different topic. Multiple discussions in one thread might confuse and distract from achieving a consensus.

This is related to some of the comments from user Berkeley. Some of your responses are off-topic or personal accusations misaligned with our CORE values and the Code of Conduct. Please understand if you keep posting similar messages, your account could be banned.

Please let’s ensure we focus our discussion on the specific objective - potential improvements to Mina’s economics. Otherwise, it’ll be difficult for us to achieve consensus and align on the next steps.

Before a decentralised treasury is even considered, Id really ask that the community take a look at the various proposals on the Polkadot, OP and Arbitrum forums where there are obvious cases of people and organisation attempting profit off these treasuries with ridiculous ideas (some of them successfully receiving funding).

The idea that a decentralised community will lead to better community decision has little basis in fact. Im totally willing to change my mind on this with some evidence.

I’d rather see something similar to Gitcoin matching where an entity matches donations given by the community.

4 Likes

Hey all,

Between feedback here and Minacon last week, we would like to propose the following next steps.

Much of the feedback at Minacon echoed the feedback here on MinaResearch; In particular, that locking staked tokens for tokenomics purposes would be a big change for Mina, since it’s not required by Ouroboros, so should be carefully considered. Additionally, given that not having locking may itself have advantages, there has to be a pretty strong argument that it is beneficial.

Additionally, that many people were looking for a report that was aligned with the requirements in the RFP as the first deliverable, and that it is hard to productively engage with a proposal on a high level focused at just locking and a treasury without first reviewing the analysis performed on mina tokenomics in general. From the people I’ve talked to, most are looking for a draft report that has something more substantial to engage with. And particularly, for it to have an analysis of Mina’s current tokenomics, how it compares to other chains, and from that, recommendations on changes to the tokenomics.

That report can have locking as one of the recommended mechanisms, but if it does it should include a really solid analysis of the tradeoffs of having / not having locking, given not having locking may currently be a benefit. To make that case, it should include both quantitative and empirical arguments of impacts. Beyond that, people are looking for the report to include discussion on other possible mechanisms too so that the community can consider the set of possible changes and their potential benefits, risks, and tradeoffs.

To share also, there was sentiment from some of the folks at Minacon that this RFP was potentially originally raised with such high priority due to supercharged rewards remaining on; and now that they have been turned off, there may be less immediate urgency. Additionally, there seemed to be openness to a decentralized treasury at some point, but potentially decoupled from this tokenomics discussion, and perhaps once there is a tested ready mechanism that the community believes in.

It seemed regardless, there was interest in moving ahead with a comprehensive review of tokenomics and possible mechanisms, with priority of implementation contingent on what those mechanisms were and the further discussion on them.

Given all of this, we are recommending the following next steps:

  1. Consider the current proposal stopped / paused for now. This thread will remain open, but please know that for now there will not be next steps on this specific proposal.
  2. We are discussing with Economics Design developing a detailed report on Mina’s current tokenomics matching the requirements in the RFP as a next step, including possible benefits and risks of token locking and other mechanisms. This report will be shared in a new thread for further discussion and collaboration.
  3. After that new report has been available for a few weeks and discussions and any changes to the report have taken place, we will follow up with further polling and surveying to see if there is interest in moving forward with any of the proposed mechanisms as MIPs.
  4. Regardless of the outcomes there, we will follow up with a survey on discord to gather broader perspectives on tokenomics priorities.

Thanks everyone for your feedback so far! Please let us know anything else, and we look forward to next steps, and a draft report to collectively evaluate.

7 Likes

Hi everyone,

Economics Design, an independent third-party consultancy commissioned by Mina Foundation, has finalized their tokenomics study.

After incorporating your feedback from last fall, the comprehensive report examines Mina’s current tokenomics, compares it with that of peer projects, and simulates potential changes to inform community discussion about inflation and other economic aspects of the protocol.

Please note that this in-depth analysis is an educational resource to inform potential community-led tokenomics changes through future Mina Improvement Proposals (MIPs), and is not intended as an endorsement of any specific approach.

Our hope is that this report empowers you, the community, to craft one or more MIPs to better align Mina’s tokenomics with your values and objectives.

FULL REPORT

Furthermore, we are moving this discussion out of the MIP Mina Research category and starting a new thread for fresh discourse HERE