Marginfi token mechanics

Repost from my message on the official Telegram chat

Feedback on the MRGN token from a community member

Assuming that:

  • The points system will be used as the basis for an airdrop
  • Sybil protection and related issues will be sorted out with the assistance of Allium or similar solutions
  • There was a previous SAFT with tokens committed to original investors (speculating)
  • The token is meant to be a single governance token for every product, e.g. lending/LST/yielding stablecoin
  • The focus is to operate with a DAO structure and let the community slowly take over the protocol’s management
  • Decisions haven’t been made already

We could discuss a series of choices and suggestions to derive a community vision for the MRGN token. I’ll start.

I believe the governance rights of the token should be attributed to a secondary token obtained by staking (the proper term would be locking) MRGN into a dedicated smart contract to generate a “veMRGN” or, better, “mamaMRN”.

The role of the secondary token would be to abstract away the upcoming complexity with LSTs. If the governance token were used to govern certain parameters of the LST product, it would be better to break the direct relationship between simple ownership of MRGN and governance rights given to the holder. The UK has already become problematic with the whole “unit in a fund” problem with LSTs. Hong Kong seems to be on the same page, but it will also be a key market as soon as the Chinese capital flows in. If MRGN will also allow to govern the yielding stablecoin protocol, then there is an even stronger case for a second token representing the voting power.

Regarding the distribution and supply, without knowing about pre-existing deals, it could be something like this:

  • Total supply: 1,000,000,000 MRGN
  • Investors (vested tokens): 15%
  • Existing and future core contributors, milestones-based (vested tokens): 20%
  • Airdrop for the TGE: 10%
  • Community DAO reserves: 52.5%
  • Day 1 grant scheme for core needs: 2.5%

The community DAO reserves could include:

  • Growth incentives (for liquidity providers and protocol participants)
  • Future development and operations support
  • The grant program
  • Anything the DAO will vote on

The ideal structure would involve the existing development company, subject to DAO budget approvals, while a new entity is created to act as a steward for the community. The second entity could be a Foundation, Association, or even a trust, again under the full control of the DAO. The DAO would demand full transparency reports to be issued initially twice per year and then quarterly.

The 2.5% urgent grant would be needed to cover two main areas of critical importance:

  • A grant for the development of an alternative frontend to access the protocol, ideally hosted both traditionally and through IPFS or similar (and perphaps more Solana-aligned) solutions, to immediately reduce the upcoming MiCA pressure (and more) on the team and the protocol
  • A grant for a community leader to form and lead a DAO council to immediately give substance to the decentralized structure and act as an organized voice for the community

Any feedback is welcome.

11 Likes

During the first stage “The points system will be used as the basis for the airdrop” I want to ask a question, how do you deal with people who have less points than “JITO BAGS BOYS”, we all want to admit that many people came after what with big bags , and there are many people like me here, for example, I bet 200 dollars in a month and I only have 10 thousand points, at the same time a person who found out about us a few days ago drops his bag and in a few days has more than us and we all remain in the background. I think that not only I am interested, but also the mamas from the telegram group, how you look at it . Juat question, coz its a forum, right? Thank for answer

5 Likes

Intresting question. It boils down to how much importance “deposit time” will have in the calculations.

I’d also like to know more about the distribution ideas so far.

2 Likes

Deposit time serves as the foundation of the protocol. Early adopters (i.e. the users before hyper-optic events caused people from other ecosystems to bridge) are important given they were lending huge amounts of capital that served as structural support for the protocol.

2 Likes

I believe the discussion is best met with the critical focal point on the assumptions front.

  • Granted, we can reasonably assume the point system is going to be used for airdrop criteria.
  • Sybil protection is something that is out of the users hands and something that will be decided by the internal stakeholders, regardless of what users have to say. I don’t think it’s a point of concern for users to focus on.
  • If there was a previous SAFT one would assume the team already has structure in place internally.
  • It would probably be best to wait and see what the team has to say regarding structure, investors, and most importantly what Glizzy wants.

Suitman

1 Like

My comment is a very simple one

As we all know. Recently many farmers have started farming MRGNfi and other DeFi protocols , and surpassing a lot of the OG MRGNfi users on their points ranking.

I just hope some type of multiplier or boost is given to the people who have been supporting for months , (I held top 2k rank for a very long time and recently been falling down the ranks due to whales farming , and I’ve been here since the inception of marginfi)

4 Likes

Well seems good so far,I think the points should be the criteria,but first there should maybe an extra multiplier for people that joined before the day of jito airdrop claim,and it’ll be nice if the airdrop was more widespread to people with lesser points and smaller bags, unlike what jito did , rewarding the people with bigger bags,the minimum points requirements shouldn’t be too high please,some of us contribute to the ecosystem but don’t have alot of money, we’ve been MGRN MAMAS SINCE DAY ONE, it’ll not be nice to shut us out because of people with bigger bags

5 Likes

That’s what i say. Agree with you

3 Likes

I think you have to be careful because like JUP you want to still reward new participants and not only day 1s before JITO etc. And also the people who have deposited large sums of money have also shown that they trust the protocol so that should also be rewarded. Some combinations of points plus some type of multiplier for deposits before JITO and then some minimum number of points to receive airdrop like JITO. So even small wallets that have been since day 1 would still qualify even if they didnt have size. Also something to think about is wallets that tried different tokens, isolate pools etc. Could be a tier system/multiplier for people who lended/borrow X amount of tokens etc.

4 Likes

My 2 cent is don’t be like jito, rewarding only certain users and completely ignoring the smaller contributors. Be like Jup who knows how to include everyone regardless of the weight of their bags. At the end, it is about the entire marginfi MAMAs and not only for the bigger MAMAs.

2 Likes

How do you define “smaller”, that’s very sunbjective and I’d like to understand what you are referring to

1 Like

not sure what @Web3damsel but imo smaller would be people without high 4 to 5 figs in the protocol?? Idk tbh. Maybe there is some type of average you can take that and looks at even if a smaller user deposited X amount and held in protocol they would’ve minimum got to Y points by Z date and use that as a basis. IMO jito did it perfectly cant cap… even if you only had 1 sol if you staked with them you still would have qualified. Small bag + consistency/early adopter is rewarded while someone with a heavy bag deployed in the protocol also still saw a large sum. But tbh as I type this out more it seems points really already accounts for that tbh

2 Likes

JITO didnt leave out smaller contributers? All you needed was 100 points to qualify, you couldve done that with 1 sol and been with them from early days. If you dont have a big bag you have to trade ur time instead of ur money

1 Like

A way to avoid dilution with mercenary farmers who came after the jito drop (while still giving them something) is to weight the points each account received on a daily basis.

The weight applied could be 1/n, with n = number of accounts that received points on that day. The sum of these weighted points would be the users “score”.

That way, rewards are proportional to the risk taken by users (if we define risk as being relative to the number of users of a protocol).

2 Likes

I agree with you. Airdrop should serve as a tool to incentive small bag early enthusiastic adoptors who with lower means and resources want to partake in the inception of defi revolution. They will be long term users and their word of mouth is way stronger. User retention strategy should be played from the beginning. I felt left out with JITO although I like the project. We can do better.

Edit: I agree that if you have small bag, then you have to trade time with money. That is how things were/are happening in tradefi. If you are wealthy from beginning you can accumulate more wealth.

For eg: First 2000 adoptors with small bag > 30000-32000 adoptors with big bags. If first 2000 didn’t trusted the team’s vision and product 30000th user may not necessarily be there.

1 Like

Honestly that’s a good sound, Idk how easy this would be but indeed rewarding people with a multiplier who were here before the Jito airdrop date sounds reasonable.

1 Like

Can’t there be a tiered airdrop, still based off points but time weighted so those that stuck through volatility/early adopters and whales are rewarded

Hey Sawsa here, wanted to chip in a bit.

To reward the users that believed in the platform before the JTO Hype/ craze, why not potentially implement these ideas:

An “early bird" bonus/multiplier to users who deposited funds before a certain date , e.g a week or something before the JTO hype.

Could also have a “veteran user” bonus/multiplier to reward users who started lending/borrowing within first 2 months or so when points first started. (acknowledges and compensates users who were among the first to join the project)

Veteran user would have the highest multiplier , while early bird would have also have one.

Just a potential idea.

Adding on it is also important not to dilute too much, so I believe a minimum point requirement should be utilised in combination with the previous veteran and early bird user. Would have to ensure that the minimum point requirements are high enough to exclude users with minimal engagement but low enough to include a significant portion of the loyal user base.

Smaller means people will lesser points ( since points are determined by the amount Lent /borrowed,as a result people with more money,have alot more points,so it’ll be nice if the points threshold for the Airdrop isn’t too high, it’s wouldn’t be nice for people with smaller bags to be left out,like it happened with jito, it’ll make people lose faith in the ecosystem as more money means more reward and less money, probably means no reward