Proposal for MGP Emission Reduction and Reallocation.
Abstract:
Magpie is a yield-boosting platform that allows users to earn passive income by depositing their assets as liquidity providers. The main purpose of Magpie is to lock WOM tokens as veWOM on Wombat Exchange in order to earn and share increased WOM revenue and to access voting power. The platform utilizes the MGP token for governance and revenue-sharing, and users can lock their MGP tokens to access these benefits. This proposal suggests decreasing the MGP emission rate on Magpie and reallocating a percentage of it into the mWOM pool to further incentivize WOM conversions into mWOM on Magpie and align the MGP weight of the other pools to match the updated allocation weight of the Wombat pools to maximize the value and sustainability of MGP. Also, is proposed to stop the emission of MGP for the WOM and mWOM pool on Wombat to use it as bribes.
Motivation:
For Magpie, it is important to accumulate veWOM on Wombat Exchange in order to offer maximized benefits for users on the platform. The proposed changes aim to increase user participation and support for Magpie by decreasing the MGP emission rate on Magpieâs pools and simultaneously increasing MGP rewards for mWOM stakers. By decreasing overall MGP emissions we continue to support the long-term sustainability and value of MGP. mWOM stakers will be more highly regarded for their contributions to maximizing the platformâs functionality. This action will enable users to earn higher WOM rewards for depositing their assets on Magpie. By incentivizing users that support the core mechanism of Magpie, we ensure the protocolâs efficiency. Now that the mWOM and WOM liquidity pool on Wombat can earn WOM rewards, we aim to use the MGP emission to bribe voters and get higher WOM rewards for WOM/mWOM liquidity providers. This will ultimately provide more benefits to users and increase the value of MGP moving forward.
Specification:
Change MGP emissions on Magpie
Decrease MGP emissions per second from 3.0 to 2.0
Increase the mWOM weight for MGP rewards from 280 to 500
Align the weight of the other pools to match the updated allocation weight of the Wombat pools
Change MGP emissions on Wombat
Stop MGP emission to WOM/mWOM pool instead use the emission as bribes
I am fully agree with this, without increasing mWOM rewards, we canât focus on our main goal - to have as much as veWOM as possible -
Once we create a real demand for veWOM the cycle will start :
More mWOM conversion-> more veWOM that Magpie has â the more veWOM brings more APR for stable coin pools â more Apr brings more TVL and more natural platform revenue-> more revenue means more Apr for vlMGP holders!
So : increasing mWOM emission while cutting stable coin MGP emissions will be beneficial for overall success of Magpie ! It will bring more mWOM conversion, more veWOM treasury( which constant for a long time while the competitorsâ treasury was increasing) , more Apr , more Tvl and more platform revenue!
Platform revenue is the key component of vlMGP usecase and increasing mWOM conversion will bring it naturally!
After the launch of the bribery market, I propose allocating some of the emission from the vlMGP pool to the WOM/mWOM pool on Wombat. This will result in:
A higher APR for vlMGP voters (not in vlMGP cooldown period) and the WOM/mWOM pool on Wombat â increased demand for vlMGP and mWOM â more veWOM acquisition by Magpie â an increase in TVL and revenue for the protocol.
Sorry Alan, I didnât notice this proposal until you redirect me to here
Alright, as I said in my proposal, reduce emission without create new demand might not effective enough. In this proposal, basically youâre trying increase the weight of mWOM and vlMGP so both pools remain the same emission of around 0.55 MGP/s.
But, this will reduce the total APR of all LP. If the MGP price managed to spike after reduction in emission, then would be fine. Otherwise, we wonder where will those LPs move.
One more thing, mostly (or some) LPs might be frequent MGP seller, probably you have data to support this statement. Meaning they prefer to Mine-and-Sell to secure the earning asap, so reducing emission brings immediate effect to these LP.
I would prefer to create demand first, then reducing emission step by step, although adjusting/reallocation weight & emission of each pool might help to find the best balance or optimize the Magpieâs current tokenomic.
I agree that creating demand for vlMGP is crucial and should be our main focus this year. To do this, we plan to focus on generating real yield through the use of bribe markets and integrating with more protocols. We should also conduct surveys to gauge the comfort level of LP with holding vlMGP, as they may withdraw their liquidity if they are not comfortable.
Additionally, reducing total emission is necessary as the current emission rate generates over 100M MGP per year, which is detrimental to MGP/BUSD liquidity providers.
Based on data, LP helped generate 600K WOM revenue last month, with 8% of it (48K WOM) being converted to mWOM and distributed to vlMGP holders. To keep the TVL, we emit 5M MGP to LP, which results in spending $55K MGP to get $8K WOM conversion. This is not cost-efficient and we propose reducing emission to LP and increasing emission to mWOM & vlMGP in order to achieve better WOM conversion. Allocating MGP to WOM UP party and mWOM pool is likely to be more capital efficient.
Great, a detail data is always a need for making decision. Actually i hv got a crazy idea, which will also help to reduce emission while create demandđ not sure should i share as i think this might be too out of the box from magpie current model
Please share your thoughts. The government forum is a place for everyone to come together and brainstorm ways to improve Magpie. We should not limit the ideas based on any concerns, as we will evaluate their feasibility later on. Even ideas that may not be feasible can potentially inspire other viable ideas.
Hi Alan, I read again your suggestion and not quite get what u mean. How âallocating emission from vlMGPâ can results in higher APR for vlMGP voter? Can you please kindly elaborate more? thx
The match refers to aligning the allocation weight of different pools with the weight set by Wombat. For instance, the current weight of the USDC pool on Wombat is 220, so we will also set the weight of our BUSD pool to 220. This aims to align the MGP incentive with WOM emission, encouraging more liquidity in pools with higher WOM emission.
Currently, we offer 30% APR in MGP, in addition to bribes for vlMGP holders. If we allocate 10% of the APR in MGP as bribes for the mWOM/WOM pool, vlMGP holders will still receive 20% APR in MGP, along with the original bribes and additional MGP bribes (which should be higher than 10% APR considering the 30% of vlMGP in cooldown period). This will result in an increase in the APR for vlMGP voters, and the MGP bribes will attract more votes for the mWOM/WOM pool, leading to increased WOM emission.
I got it now. And one more thing need your confirmation, as I read thru the doc. seems like there will be 12% of revenue to be distributed to mwom stakers. However, u mentioned there was 8% mwom converted and distributed to vlmgp, does that mean vlmgp and mwom staker sharing that 12% revenue pool? 8% to vlmgp and 4% to mwom staker?
I apologize, the information about revenue distribution in our documentation is not updated. Currently, 12% of revenue is distributed to mWOM stakers, primarily in WOM, and 8% is distributed to vlMGP holders in mWOM.
