MIP-015: Enhanced token functionality and new treasury allocations

[green-jeff]

MIP 015: Enhanced token functionality and new treasury allocations

Summary

A proposal to enhance the MET token functionality and allocate treasury MET for wider distribution. 

Motivation

Currently, MET serves as the governance token for the Metronome ecosystem. However, the broader vision for MET goes beyond just governance, with tokenomics being used to enhance the overall user experience and address long-term limiting factors, such as liquidity.

Specifications

esMET

A notable development in DeFi was the introduction of the vote-escrow model, which has since been adapted and refined in many different projects successfully. While this provided both users and protocols with certain perks, there were still some challenges with regards to lockup commitments, voting power decay, and restricted transfers.

Metronome builds upon this foundational model but introduces key differences to address these challenges. Specifically, Metronome facilitates transfers of locked positions through the ERC-721 standard, offers options for early exits, and enables users to hold multiple positions.

With this also comes the next step toward on-chain governance where users can take a more active role in emission-related decisions, including voting on what assets should be added to the application, making choices on protocol-specific matters, such as increasing or decreasing collateral ratios, and much more. This move seeks to build a secure and reliable model, designed to ensure fair outcomes and establish a robust governance process.

Smart Farming Boost 

A crucial element of Smart Farming involves maintaining sufficient liquidity and addressing associated challenges. To achieve this, users will be incentivized to provide liquidity to eligible pairs, such as msETH and msUSD. The boost a user receives depends on two factors: their contributed Synth LP and their esMET holdings. The more liquidity a user provides, the greater the esMET boost will be when participating in Smart Farming. Additionally, global factors such as the total amount in Smart Farming, total Synth Liquidity, and overall esMET holdings will influence a user's incentive multiplier. To avoid excessive boosts, this multiplier is capped between a minimum of 1x and a maximum of 10x.

To keep the ecosystem dynamic and fair, liquidity benchmarks and time commitment requirements will be determined biweekly through community governance votes.

Trading Fee Discount

Within the Metronome ecosystem, the Metronome Marketplace offers users the ability to swap their synthetic assets at a low fee of 0.25%. For users holding esMET tokens, a tiered fee structure provides additional discounts as follows:

500 esMET results in a 0.20% fee.

5,000 esMET reduces the fee to 0.15%.

50,000 esMET, the fee drops to 0.10%.

500,000 esMET further reduces the fee to 0.05%.

Gated Pools

Designed for flexibility, the Metronome synth contract enables the creation of gated pools, offering a variety of benefits to esMET holders. These benefits could range from higher collateral ratios to specialized pools that focus on particular assets.

Access to these gated pools will be determined by a user's esMET holdings and specific pool parameters. For example, pools offering higher collateral ratios may require a larger esMET holding compared to other gated pools. By offering varied pools and structures, users stand to gain potentially much higher APY from real yield which wouldn't need to be subsidized by the MetronomeDAO treasury.

New Treasury Allocations

This proposal aims to allocate MET tokens from the Metronome DAO treasury for the proposed enhancements and strategic partnerships. The first allocation will be 2 million MET tokens designated for incentive programs to further decentralize the ecosystem. This incentive allocation will be used for the Smart Farming boost program and liquidity incentive campaigns.

Secondly, an additional 1.5 million MET tokens will be allocated for strategic partners. These partners are expected to include projects that either integrate Metronome, utilize Metronome in their products, or contribute to the growth and development of Metronome by providing professional resources, capital, etc.