Maple has found product-market fit, and wishes to share growth with participants who take an active role in the protocol. On Monday 30th May, holders of MPL can come to the WebApp, stake MPL and immediately begin to benefit from Maple’s growth.
We are excited to introduce xMPL because at this moment in time, MPL’s major utility is in granting holders the power to vote on key Maple Improvement Projects (MIPS), such as tokenomics updates just like this. With xMPL, MPL holders keep their voting power and gain the additional utility of earning a share of Maple’s revenues, as a reward for long-term participation and their work in guiding the Maple protocol.
How it works
By staking MPL into a Maple owned smart contract, stakers receive xMPL. In simple terms, Maple’s protocol revenues accrue to xMPL, and as a result the amount of MPL increases.
In more detail, Maple will use protocol revenues to buy MPL back from the open market. As determined in MIP 008, at launch 50% of monthly protocol revenues will be used to purchase MPL.
This MPL will then be issued to the xMPL smart contract, and MPL will be evenly distributed to xMPL holders over a defined period of time.
We plan to bootstrap the launch of xMPL by providing an initial deposit of revenues accumulated since the beginning of 2022. Although subject to change, we estimate initial APYs to be 5–10%, dependant on protocol revenues, level of participation in staking MPL, and the MPL price.
As an example, if a MPL holder stakes 1,000 MPL at launch they can expect to have between 1,050 and 1,100 MPL after one year.
Overtime Stakers will vote on any changes to % of revenue used to buy back MPL. We therefore urge all stakers to utilize their voting rights, and register to vote by simply connecting a wallet and following steps in collab.land.
Stakers can stay in control of their position by returning to the WebApp to monitor gains, stake more MPL, partially or fully unstake at anytime. Returns compound overtime and additional utility will be introduced in Q3, more on that below.
Simply holding MPL will not earn a share of Maple protocol revenues, MPL must be staked to participate.
How reward amounts are determined
The amount of additional MPL accrued by Stakers will vary each month based on protocol revenues, the price of MPL on the open market, level of participation in xMPL, and the % amount of revenues stakers decide to use to buy back MPL.
As agreed in MIP008, at launch Maple will use 50% of monthly protocol revenues to buy MPL on the open market. However, as mentioned above, the % of revenues used may increase or decrease overtime, determined by a governance vote.
How the Maple protocol generates revenue
Maple protocol revenue is derived from loan establishment fees paid by borrowers for each loan originated on Maple. Establishment fees are 0.99% annualised and two thirds, or 66bps, is paid to the Maple Treasury and one third, or 33bps, is paid to the Pool Delegate that issues the loan.
Source: Token Terminal
The business model of Maple is simple. The more loans, the more revenue. As revenue rises, so does the cash available to buy MPL from the open market.
Watch this 15 minute video from Token Terminal, where Joe speaks to revenues in more detail.
To summarize, MPL holders will be able to stake on Monday 30th May, and immediately begin to earn a share of protocol revenues, so mark the date in your calendar and prepare to have MPL in your wallet on 30th May.
Potential future utility of xMPL
At this stage, it’s important to make a clear delineation between staking MPL and single-sided Pool Cover as the language has understandably caused some confusion.
Staking MPL — to earn a share of Maple revenues accrued to xMPL, as explained above.
Providing Pool Cover — this has been referred to as Staking in the past, but for clarity this will now be referred to as Pool Cover, and explained below.
We are currently exploring 2 additional utilities for xMPL. The first is determined and scheduled, and the second is being explored through market research.
Firstly, xMPL will become the principal asset to provide Pool Cover.To date, Pool Cover has been provided via a Balancer pool, exposing providers to impermanent loss, so we will be pleased to introduce single-sided Pool Cover in Q3.
Both the protocol and participants will benefit from the updates to Pool Cover. For participants, there will be no exposure to impermanent loss, and provides an additional opportunity to earn yield in return for the risk of providing Pool Cover in case of default. For the Maple protocol, the incentive to provide Pool Cover will increase volumes, in turn ensuring potential defaults are accurately covered by xMPL and other assets.
Maple’s thesis is that participants must be rewarded for taking on the risk of providing Pool Cover as first-loss. We will therefore enable market mechanics to dictate that APYs for Pool Cover are greater than APYs for providing pool liquidity.
Being both a ‘Staker’ and ‘Pool Cover’ provider will allow participants to earn yield from two sources, whilst also retaining exposure to MPL market price movements. The graph below provides a potential scenario, when staking alone, or when staking and providing Pool Cover combined, assuming no MPL price fluctuations.In the above example, an APY of 10% for Staking and an APY of 25% for combined Staking and Pool Cover is modelled.
The price of MPL is illustrated as being stable to better illustrate the xMPL growth potential. Both the potential 10% APY in Staking and the potential 15% APY for Pool Cover is based upon a sustainable and fast-growing business model.
The second development we’re exploring is specific to borrowers, where holding xMPL could entitle borrowers to reduced borrowing costs, more easily understood as a rebate. The benefit to the Maple protocol being borrower retention, and ultimately more loans issued to borrower beneficiaries.
As always, we will continue to provide updates to tokenomics for improved utility, and share further updates on these upcoming releases and explorations. Stay up to date, and join our thriving communities listed here.