[PIP #10] Enhancing mPENDLE/PENDLE Peg Stability

Enhancing mPENDLE/PENDLE Peg Stability

Abstract:

This proposal introduces targeted measures to bolster the mPENDLE/PENDLE peg’s stability and deepen its liquidity. By refining the revenue sharing model, directing all PENDLE revenue to the mPENDLE liquidity pool, and employing a portion of vePENDLE voting APY for mPENDLE buyback and burn, we aim to enhance yield for mPENDLE holders and support the peg more effectively. These changes are designed to foster a more robust and financially sustainable Penpie ecosystem, directly benefiting liquidity providers, mPENDLE holders, and the broader community.

Motivation:

The mPENDLE/PENDLE peg is vital for maintaining the health and attractiveness of the Penpie ecosystem. Enhancing the peg’s stability can significantly benefit Liquidity Providers, mPENDLE holders, and the broader Penpie community. The proposed measures are designed to:

  • Increase liquidity in the mPENDLE/PENDLE pair, thereby supporting the peg and making it more resilient to market fluctuations.
  • Enhance yields for mPENDLE holders through strategic burns by improving the mPENDLE:vePENDLE ratio. With less mPENDLE circulating, effectively each mPENDLE will enjoy yields from more than 1 vePENDLE.
  • Strengthen Penpie by reallocating revenue more efficiently, ensuring a sustainable ecosystem that can adapt and grow over time.

Specification:

  • Adjust revenue share:

    • Liquidity Providers decrease from 80% to 78%
    • Treasury increase from 3% to 5% - All funds are used to seed liquidity for mPENDLE/PENDLE pair to support peg deepening liquidity
  • PENDLE Revenue: All PENDLE revenue distributed to the Penpie mPENDLE liquidity pool will be converted to mPENDLE via a smart converter prior to distribution. 20% of the converted mPENDLE will be burned to enhance the mPENDLE:vePENDLE ratio therefore resulting in higher yields for each mPENDLE from more than 1 vePENDLE.

  • vePENDLE Voting Revenue Allocation: Allocate 50% of vePENDLE voting Revenue to vlPNP, with the remainder used for mPENDLE buyback and burn.

For the PENDLE Revenue part, is the Penpie mPENDLE liquidity pool actually means the PT mPendle – SY mPendle pool on the Pendle Protocol? And we are using all the PENDLE incentives to buy back mPendle instead of distributing them directly to stakers, and for the mPendle tokens be brought, 20% will be burned and the rest will be distributed to stakers, so that stakers now receives mPENDLE as reward instead of PENDLE. Did I understand correctly?

Yes, that’s correct!
Thank you for your engagement and for being part of our community.