Staking Rewards

⛏ Meta Governors earn an income to compensate them for their voting decisions, responsibility, and risk

Why?

To incentivise sound decision making, Meta Governors will be rewarded when mStable grows securely and are partially liquidated as part of Recollateralisation.

To participate as a Meta Governor, token holders must stake their MTA and participate in governance decisions. MTA holders who choose to stake their MTA will be partially liquidated in the event of a Recollateralisation. In return, those who stake may be rewarded for their risk in MTA, interest, and other fees that the platform collects. Ultimately, these rewards will be decided by the governors themselves once mStable reaches sufficient decentralisation.

This staking reward may be a floating value, and if so will change dependent on how much MTA is staked versus the fees and interest the platform receives. We expect the staking return to increase as the mStable platform matures, with return approaching an equilibrium that reflects the perceived risk of a re-collateralisation event taking place, the opportunity cost of that Meta, plus some liquidity premium.

Example

Our user has 1,000 Meta that they wish to stake. As soon as this user stakes their Meta and participates in governance decisions, she begins to earn rewards from fees and interest on the platform alongside a portion of MTA allocated to staking (if there is any) as decided by governors. Her staked Meta entitles the user to a share of fees equal to the portion of Meta staked relative to the total amount staked. Our user stakes her 1,000 Meta over a month, with 1 million Meta staked in the total system, during a month where 50,000 mUSD in fees and interest are collected in the mStable ecosystem allocated to Meta stakers. 10,000 MTA has also been allocated as staking rewards. She calculates her return with the following formula:

return=s/S(Fm+Fs)return = s/S ⋅ (Fm+Fs)

where:

  • s = amount of Meta staked by user

  • S = Total amount of Meta staked in the system

  • Fm = Income from fees and interest collected over the month directed to Meta (mUSD)

  • Fs = MTA allocated to staking reward over the period

Substituting our values in, we can calculate our user's staking return:

return=1,000/1,000,000(50,000+10,000Meta)return = 1,000/1,000,000 ⋅ (50,000+10,000 Meta)

Our user staked 1,000 Meta for a month, and received a 50 mUSD and 10 MTA as a monthly return for doing so.

  • Cost: Gas, opportunity cost of Meta

  • Risk: partial liquidation in event of a bASSET losing its peg

  • Reward: staking return

It is worth noting that since the amount of Meta staked in the system changes, return will be dynamic, changing in response to Meta being staked and withdrawn. It may also change in response to governance decisions that alter staking rewards. Our example assumes a fixed amount of total Meta staked in the system for simplicity.

Contents
Why?
Example