Pay Staking Rewards in UST

The lack of utility for staking MIR (and its consequent price movement) is an ongoing discussion in the community. Several proposals have been discussed here, mainly focused on increasing the rewards (and thus raising costs elsewhere).

To my understanding, protocol fees are currently paid in UST, which is then used to but MIR to distribute to stakers, who the partly/largely convert these back to UST. Though I understand and appreciate the fact that this creates a demand for MIR in the MIR/UST-pair, it also creates supply in step 2 with people converting back to UST.

My main point however is that I reckon people would much prefer MIR if part of the staking rewards are paid in UST directly, for example 50% of the staking rewards. This would currently give about 12% return in UST and 12% in MIR (for a combined total of 24%). USD-equivalent staking rewards are pretty unique (and therefore attractive) and would in my opinion lead to a lot less selling of MIR, in the end this would create more scarcity and drive up the MIR-price. Alternatively we could have people decide in the app whether they would like (part of) their rewards in autocompounding MIR of in UST.

  • A large part of the people prefer only some exposure to volatile assets and also enjoy stablecoins.
  • Paying in UST would also create a pricebottom, of 10/15/20x yearly dividends as a reasonable price for MIR.
  • It also gives a clear valuation model for MIR. If 100% of rewards would be paid in UST, with a current APR of 24%, price would easily be driven up to 10-20x rewards (currently 4x rewards), increasing price 2-4-fold.
  • Unique type of staking rewards
  • Less selling pressure. Creating your own demand through selling protocol fees for MIR is not the way forward, real demand is better.

How do you guys and girls see this?

This is a horrible idea.

Firstly, the majority of the rewards actually come from MIR distributions not the 0.3% trading fees…so if the rewards were purely UST then the rewards would be much smaller and result in a loss of liquidity etc.

You may say ‘but you can just sell the MIR that is minted and then give the UST back to the LP’ers’. Yes, but that would result in huge automated selling pressure and result in MIR price to tank leaving LP’ers back to much much smaller rewards either way.

You have not fully thought this through. Mirror requires MIR price to be high as the majority of the rewards are minted (cannot mint UST), so using the LP to buy MIR creates some upward pressure on the MIR price. Sure some ppl will automatically sell MIR, but other will hold onto it and speculate on its price. MIR is their incentive mechanism. If you cut it out, then how are you going to incentive anyone to do anything (LP, short, etc)?

If you want UST for LP’ing just sell your MIR; it’s not that hard (:

First of all, the MIR staking rewards come from the protocol fees for closing minting positions, see Mirror Token (MIR) - mirror. I am purely talking abour MIR staking not LP’ing.

Thes fees are paid in UST and converted to MIR.

So the logic of the proposal holds and would in my view lead to a higher MIR-price.

Second. Lets keep a positve discussion amongst community members.

I personally and I’m sure many other folks prefer the automatic compounding of the current system. Such a change would actually make me value MIR less.

My proposal is to pay part of the rewards in UST, not all.

Alternatively to have people decide for themselves how to receive their rewards (in autocompounding MIR, or in UST).

I’m not really understanding what value this would add.

You can always just sell your MIR if you want UST (which of course many people do). This however is neutral to buying and selling pressure on MIR, just like paying staking rewards straight in UST.

1 Like

Sure, but we automate stuff everyday that can be done manually, also in Mirror Protocol. And just because there is a manual way to get to where you want to be doesn’t mean that the automatic way isn’t much more attractive and intuitive to many people.

A UST-based ‘dividend’ would be a decisive factor for a pricepoint for MIR. A DCF (Discounted Cash Flow - Discounted Cash Flow (DCF) Definition) can be used to determine a fair price. We all want a better MIR-price, this could be trigger for that.

You can still do a DCF when rewards are paid in MIR.

The main reason i don’t think this is a good idea, is that the mirror platform requires MIR price to be high to support LP, if MIR tanks no incentive to LP. This is one mechanism to increase the price of MIR by using the UST to buy MIR and distribute to stakers. Again, if you want UST, just sell your MIR you’re only taking a 0.3% hit