Governance is an emerging yet critically important area in cryptocurrency design. The MTA token will coordinate decentralised governance by incentivising stakeholders to act in the best interests of mStable. MTA holders are incentivised to maximise the overall growth, use and stability of mStable given:
Redemption fees being used as a reward pool for staked Meta Governors.
System instability risks staked MTA liquidation and/or dilution and subsequent loss of value (see re-collateralisation).
Governance decisions will initially be determined by the core team, but will shift gradually to a community-based proposal system once mStable’s network activity achieves critical mass. The initial protocol contains an upgradable governance module, with the first version facilitating proposals between a closed group of participants whilst remaining visible and transparent. In future versions, the protocol is well placed to capitalise on existing DAO toolsets.
The proposal system will govern the parameters of and execute actions in mStable, encompassing the:
addition/removal of mAssets;
addition/removal of bAssets and their max weights, wi;
selection of price oracles;
upgradability of system modules: Re-collateralisation, Oracles and Governance;
other parameters, such as the auction time period during Re-collateralisation, and the threshold for triggering an Auto-Redistribution Event (or ‘ARE’, see Glossary).
Robust governance includes a large and decentralised stakeholder-base. A single entity or a small group of closely aligned entities would centralise mStable and potentially create dangerous single points of failure. It is a core project aim to ensure a broad MTA distribution.
The mStable Open Reward Pool is our first significant step in this direction. The Open Reward Pool pays early contributors to mStable's liquidity and utility. This has been designed in the spirit of generalised mining, whereby users are paid for their work in growing and contributing to the growth the mStable.
More granular information about MTA's distribution will be released as we approach launch.
mStable will be controlled not by a single entity but by a global community of Meta Governors. Each system parameter will be determined by these users.To participate in governance, users must stake MTA and vote on proposals. By staking MTA and voting, a user becomes a Meta Governor. The amount of MTA a user stakes is proportionate to that user's vote weighting.
For staking and governing, Meta Governors receive all mStable redemption fees, proportionate to their stake amount.
Critically, participating and profiting as a Meta Governor is not risk-free: a portion of staked MTA is the first source of re-collateralisation value. A portion of staked MTA will be liquidated in the event of an underlying asset (bAsset) failing. Only after this liquidation, and only if required, will Meta be diluted, up to a point, in order to cover any remaining losses due to a peg break.
Meta Governors make all system decisions. If they make the wrong decisions, they should be the hardest hit. If they make good decisions, they should be rewarded the most. These tight incentives direct Meta revenue directly to those who have the chosen to take the most responsibility and risk in the system.