Whitepaper Update: Adapting to a Changing Market
“The species that survives is the one that is able to adapt to and to adjust best to the changing environment” – Charles Darwin, Origin of Species.
Since the Fed started tightening interest rates in 2022 to curb inflation and reduce market liquidity after a record cycle of qualitative easing, markets have completely changed. Sharply rising interest rates created a liquidity blackhole. Terra Network’s collapse initiated a market-wide correction, and crypto entered into a clear bear market.
Markets move in cycles, including booms and busts. This is not the first time crypto has found itself facing strong headwinds. And with each cycle, markets often go through a cleanse. Projects with unsustainable fundamentals get wiped out, removing them from the ecosystem. It happened in the infamous 2000 dotcom bubble with technology companies and crypto is no exception. Just as post-2000, the current bear market provides a new dynamic for emerging entrants to adapt to and exploit.
Minterest was built during a bull market and the protocol’s tokenomics were designed to satisfy the prevailing demands of both retail and institutional users. Post Terra’s collapse, everything changed. In some ways this works to Minterest’s favour, but it requires being aware of and accommodating the newly emerging dynamics of DeFi demand.
To that end, we’ve made adjustments in the features and token economy of the Minterest protocol, and with it a corresponding revised whitepaper. The current DeFi ecosystem emphasises strong fundamentals and sustainability, and we believe Minterest excels at both. This blogpost explains in summary some of the changes that have been made.
DeFi’s New Reality
During the 2021 bull run, liquidity providers maximised yields using DeFi models with unsustainable inflationary emission rewards. Such projects’ high yields attracted tens of billions of dollars in liquidity. Super-returns became the ‘new normal’, fuelling even further boom-market speculation.
What happened next? Terra Network collapsed, markets followed suit, and the contagion of counterparty risk evaporated capital, adding fuel to the inferno of bankruptcies and insolvencies across the sector.
The super-yield party was over. The resulting hangover from unsustainable, hyper-inflationary models caused liquidity providers to fundamentally reassess how they deployed capital.
Minterest’s Revised Tokenomics
The revision of Minterest’s tokenomics takes full advantage of DeFi’s new environment.
- Circulating supply is highly disciplined, on-market supply even more so.
- For project supporters, other than LBP participants, MNT is locked for 12 months prior to 12 month vesting.
- All emission rewards vest over 12 months.
- Standard emission rewards are markedly reduced; only one-third of previous rewards, better reflecting DeFi’s new reality.
- Governance rewards emissions are maintained, strongly favouring staking and governance participation andincentivising long-term holding.
- A new Strategic Reserve accumulates MNT from buyback processes, supporting on-market scarcity and MNT demand.
Disciplined tokenomics that constrict supply powerfully support the protocol’s token economy. The new tokenomics protect Minterest from likely worsening macroeconomic headwinds while allowing the protocol to successfully attract long term TVL despite such conditions.
Finally, Minterest’s tokenomics achieve something else. Standard emissions that vest over 15 years and the Strategic Reserve enable the protocol to become fully self-sustaining.
Minterest Circulating Supply Comparison
This Whitepaper Update is the tip of the iceberg. Detailed tokenomics analysis will follow, then protocol Private Launch, NFTs, an offer specific to LBP participants (including the CAE), the roadmap to full public access, new branding and interface design, plus much more.
Stay tuned and watch this space for more information!
Welcome to Minterest – seriously DeFi.
11, October 2022