1. Background
Currently, Magpie’s yield generated from PNP is in stablecoins. Under the existing mechanism, these stablecoins are used to buy back PNP and then distributed to vlMGP holders. However, this approach has several issues:
1. PNP is a mature project — it no longer requires additional incentives or buyback support.
2. Extremely low liquidity in PNP — buybacks result in significant slippage and market inefficiency.
3. Exposure to PNP price volatility — since rewards are tied to PNP price after buyback, vlMGP users face unpredictable fluctuations in their actual yield.
As a result, the current mechanism not only generates inefficiency but also reduces the stability and reliability of rewards.
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2. Proposal
This proposal suggests changing the reward distribution mechanism for PNP-derived yields as follows:
Instead of using yields to buy back PNP and distribute it,
Distribute the stablecoin yields directly to vlMGP holders.
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3. No Changes to Other Subprojects
Reward mechanisms for other subprojects remain unchanged.
This adjustment applies only to PNP-derived yields.
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4. Expected Benefits
1. Reduce market inefficiency: Avoid slippage caused by PNP’s low liquidity.
2. Improve capital efficiency: Stablecoins can be distributed directly without additional conversion steps.
3. Eliminate price risk: vlMGP rewards will no longer be affected by PNP price volatility, ensuring stable and predictable returns.
4. Enhance user experience: More transparent and reliable reward distribution.
5. Maintain ecosystem stability: PNP, as a mature project, can avoid unnecessary price interventions.
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5. Conclusion
This proposal aims to optimize Magpie’s reward distribution by delivering stable, predictable, and efficient returns to vlMGP holders. It removes the dependency on PNP’s price performance, reduces market friction, and maintains system stability.
The community is encouraged to support this proposal to allow vlMGP holders to receive stablecoin rewards directly, while keeping other subprojects’ mechanisms unchanged.