Last year, we launched the MCDEX V3 protocol, which accomplished several key milestones like reaching $7.2B cumulative trading volume, attracting more than 5000 users and accumulating $2.6M DAO treasury revenue. However, we have also identified room for improvement in the AMM and liquidity mechanism, which caused an unstable trading experience, decreasing trading volume and a lack of resistance toward token selling pressure.
The learnings we accumulated from V3 guided us to build a more trader-friendly, efficient and self-sustainable DEX. Since November 2021, the MCDEX team has been planning, building, designing and fine-tuning the V4 protocol, and we are excited to launch it soon.
In terms of investments, we closed two successful rounds last year:
- In May 2021, we closed a $7M investment round led by Delphi Ventures and Alameda Research.
- In October 2021, Binance Smart Chain also reinforced their commitment to MCDEX via an investment under the $1 billion fund.
The investment allows us to continue building with a sustainable runway, even in a down market. Therefore, we are proposing to utilize the funds more efficiently via the DAO so that the team can continue building and shipping new products, starting with the MCDEX V4.
This proposal includes three main topics:
- Tokenomics improvements
- Deploying treasury funds to seed V4 protocol-owned liquidity (POL)
- Deploying treasury funds to the MCDEX Research & Development team
We look forward to learning community opinions regarding the topics above, and we’ll initiate community voting for each topic.
We propose improving the tokenomics with upgraded MCB utilities and releasing three new tokens for the V4 protocol. The new tokenomics involves four tokens:
- MCB - Main Token
- MUX - Reward Token
- veMUX - Governance Token
- MUXLP - Liquidity Provider Token
MCB is the protocol’s main token. Users can lock MCB to receive veMUX which entitles them to protocol income and MUX rewards.
MCB token supply cap: 4,803,144
- 3,803,144 MCB tokens are from the current circulation.
- 1,000,000 MCB tokens are reserved for future MUX vesting.
We hope the supply change can make the tokenomics more sustainable, reduce token inflation and cultivate long-term token holders.
The supply cap won’t change unless a governance proposal for increasing the cap is initiated and passed. If the supply cap is voted to increase, the change should take effect after a 14-day timelock.
Users can lock MCB and / or MUX (from 2 weeks to 4 years) to obtain veMUX. The locked-staking is time-weighted, so longer time locks will be allocated with more distributed veMUX.
- 1 MCB or MUX locked for 2 weeks = 0.009589 veMUX
- 1 MCB or MUX locked for 1 month = 0.020548 veMUX
- 1 MCB or MUX locked for 1 year = 0.25 veMUX
- 1 MCB or MUX locked for 4 years = 1 veMUX
MUX is the protocol’s reward token. Users can earn MUX through holding veMUX or staking MUXLP.
MUX tokens can be utilized in two different options: stake MUX to obtain veMUX, or vest MUX into MCB.
The current supply cap for MUX is 1,000,000, and the daily emission is 1,000. The supply of MUX tokens will decrease if they are vested into MCB; the vesting process will take one year. The MUX supply won’t increase unless a related governance proposal is initiated and passed. If the supply cap is voted to increase, the change should take effect after a 14-day timelock.
The locked-staking rules and rewards distribution for staked MUX are identical with staked MCB.
Vest MUX to MCB tokens linearly over one year. Two channels are available for vesting:
- Quota channel: Vest MUX allowed by the quota, which is correlated with veMUX. The quota increases as veMUX generates new MUX and decreases as MUX converts into MCB.
- Capacity channel: Vest MUX allowed by capacity, which is determined by users’ reserved MUXLP tokens. The capacity will not change as long as users’ reserved MUXLP tokens remain staked.
MUX tokens are non-transferable and only available on Arbitrum.
veMUX is the protocol governance token; with more veMUX comes more voting power on protocol governance. Users can obtain veMUX from locking MCB and / or MUX. Holding veMUX will grant users protocol income (protocol fees and third-party DEX mining rewards) and MUX rewards. veMUX tokens are minted when users lock MCB and / or MUX and will be burnt as the lock time decreases.
veMUX tokens are non-transferable and only available on Arbitrum.
MUXLP is the protocol’s liquidity provider token, which users can buy with assets allowed by the pool portfolio. After buying the tokens, users can stake them to earn protocol income(protocol fees and third-party DEX mining yield) and MUX rewards.
There is no supply cap for MUXLP tokens. MUXLP tokens are minted when buy orders are filled, and burnt when sold.
The protocol income collected from trading fees and DEX mining yield will be allocated as follows:
- Total Protocol Income × 50% × POR: Allocate for veMUX holders in ETH
- POR is the rate of protocol owned liquidity
- Total Protocol Income × 50% × (1 - POR): Allocate for MUXLP stakers in ETH
- Total Protocol Income × 50%: Purchase MUXLP and add as protocol-owned liquidity
1,000 MUX will be distributed to veMUX holders and MUXLP stakers daily, allocated as follows:
- 1000 * (1-veRate) *(1-POR): Allocate for MUXLP stakers
- veRate is the MCB and MUX staking ratio
- veRate = veMUX Total Supply / (MCB Total Supply + MUX Total Supply)
- The rest will be allocated for veMUX holders
For - Agree to change MCB tokenomics
Against - Disagree to change MCB tokenomics
Sufficient liquidity is crucial for trading protocols, as deeper pools can support higher open interest. However, acquiring and maintaining liquidity can be costly and unstable if solely reliant on liquidity providers (LP). Therefore, instead of “renting” all liquidity from external sources, we are exploring using more sustainable approaches to promote growth.
We propose to add “Protocol Owned Liquidity” (POL) on V4 and use the funds raised from previous rounds to seed the initial POL; furthermore, 50% of V4 protocol income will be continuously used to add liquidity as POL. The growing POL will help the protocol to become self-sustainable gradually.
Upon the V4 launch, a certain amount of funds will be added as protocol-owned liquidity, and the rest will be added phase by phase, depending on the operation status and market situation. The funds will include:
- 5,977,000 USDC
- 105 ETH
- 9.276 BTC
- 945 BNB
For - Agree to deploy DAO’s treasury funds to seed V4 protocol-owned liquidity
Against - Disagree to deploy DAO’s treasury funds to seed V4 protocol-owned liquidity
The MCDEX DAO treasury currently has crypto assets(USDC, ETH, BTC, BNB) valued at about $7.5M. Therefore, we believe we are in a healthy position to optimize our treasury strategy and effectively invest in future protocol growth. We propose to allocate 1,000,000 USDC to the Research & Development team to retain and attract talents to contribute to the protocol over the next year, so the team can remain nimble on product developments and competitive in this challenging market. Currently, MCDEX has 12 full-time equivalent (FTE) employees, and the team remains 100% committed to the long-term vision of MCDEX.
For - Agree to deploy treasury funds for R&D
Against - Disagree to deploy treasury funds for R&D
We look forward to discussing the proposals with the community!