AIP12: Keep Sell Fees Until ARTH Grows to a 20mn Market Cap Coin

Hello MahaDao community,

I have a proposal I feel will greatly increase both adoption and awareness for Maha and Arth. I will outline this plan of action in this proposal.

As many of you have witnessed the addition of MahaSwap has resulted in the following:

-The ability to limit the amount of ARTH being sold through fees on MahaSwap
-The creation of an ARTH side market that does not involve fees for selling (Uniswap and Bitmax)

The price of ARTH on MahaSwap and other side markets will not equalize until we are in an expansionary phase, which will drop the fees on MahaSwap for selling ARTH and allow arbitrage to bring the price on side markets up to the price of MahaSwap. Thus far, this has not occurred due to our community being relatively small and not adding a significant amount of new investors. New investors are vital to the process of price equalizing between MahaSwap and side markets because without new investment and growth of the community expansion will be quite difficult without AIP 10 active.

I realize that we can grow the MahaDao ecosystem through partnerships and other efforts to raise awareness, however what is it that really grows a community? Growth.

When other investors see a new concept like an algo value coin that rewards its community with expansionary rewards and staking during non-expansionary periods, this generates a lot of buzz and interest. It is my firm belief that partnerships and announcements that are great for our current member base will not be enough to take MahaDao to where we all want it to go.

We need GROWTH and SIZE to really make a splash and maximize all the great innovation and progress we are making.

The Method: I propose we leave the powerful tool that is AIP 10 active at $1.10 for the next 30 days and then gradually scale down to $1.05.

AIP 10 has allowed us to repay ARTH Bond holders in a few epochs. Currently AIP 10 will reduce our rewards/fees peg from $1.10 to $1.05 once all ARTH Bonds are redeemed.

Implementing AIP 12 will accomplish a few things:

1.) Expansion by default: The system will default to a state of expansion which will increase demand for ARTH and equalize the price difference between the side markets and MahaSwap. This gives us more credibility and liquidity.

2.) Increase in Market Cap for our product: Growing the ARTH market cap will attract more adoption. Size makes a big difference in how seriously other projects and potential investors perceive of us. With ARTH being so small, it’s easy to pass it up as just another project in the background.

3.) Drive the demand of Maha: Maha use case is directly correlated with ARTH use and adoption. ARTH growing in size will dramatically increase the value of holding Maha, which has a limited supply and is also burnt by the oscillation of contraction and expansion phases.

4.) Eyes On Us: Nothing drives adoption more than growth. Success makes more success. With ARTH expanding and MAHA’s Market Cap growing many will see the true beauty of our community driven value coin. WE MAKE OUR PARTICIPANTS WEALTH DURING EXPANSION AND CONTRACTION AND WE ARE A VALUE COIN BEATING INFLATION… What else can someone ask for? The only thing that can kill a good project like MahaDao is not enough people knowing we exist in the first place. It’s time to get eyes on us in a big way.

Counterargument to AIP 12:

-Won’t this create artificial demand?-

Response: MahaSwap is an artificial marketplace because of the incentives and fees system used to manipulate the buying and selling of ARTH. I don’t see how this is different. We are an algorithmic value coin with a lot of rewards for participation. Let’s embrace this and use all the tools in our toolbox to gain adoption. We will never be able to compete with Tether or Dai, but that isn’t our objective!

We want an ecosystem where the participants choose ARTH and MAHA over Tether and Dai because we NOT ONLY offer stability but also a LUCRATIVE REWARD system with our staking and expansion incentives. This is unique to us. No one cares for another stable coin that is already in existence and working. Let’s show the entire cryptospace the POWER of a Value Coin that generates an attractive ROI in rain or shine, expansion or contraction.

THAT IS THE REAL USE CASE that is our unique value proposition and what we should be focused on.

I hope you found some insight on my proposal.

I really care about this project and its success.

Long live Maha Dao!!!

6 Likes

I’m at a crossroads here tbh. Initially when 1.1$ was suggested by Rob to be maintained until we get some attentions from the outsiders, I didn’t think that was a good idea for the longevity of the project. But after reading this proposal again and again, it started to make some sense into me that without some fireworks, we won’t see any growth/adoption like we wanted. Yes, sure plenty of partnerships down the line but we don’t want ARTH to lose steam, especially not during this bull market. I particularly like what Rob emphasized here that is the unique proposition we have is being able to create wealth be it contraction or extraction. That’s what ARTH can do. That’s the power of ARTH and I’m too thinking maybe it’s not a bad idea to extend the penalty fees/reward price until we see a sizeable MC that people don’t disregard straightaway. The number and length of this implementation could be made dynamic but really the goal here is to bring ARTH to a higher level!!! Thanks Rob for this wonderful proposal!

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Nice work Rob :smiley:

I like these two points you mention here;

We have discussed this back and forth a few times, and now seeing AIP 10 come into effect and how successful it has been, I am starting to align with your view more. I believe there is concern over AIP 10 being lifted and 1 million redeemed bonds worth of arth quickly pushing us back below $1 and effectively ‘trapping’ arth holders between low price on other markets, and high fee due to AIP 9 changes.

Instead, by triggering expansion that solely aims to reward arth holders, and LP stakers - this is likely to induce greater demand whereby the market can gradually absorb any sell pressure from the redeemed bonds, or encourage them to hold for inflation rewards, all the while increasing the situation of an arth price above $1.10 whereby fees are no longer in effect either.

Yes this is important that Mahaswap gains a greater sense of validity as the core price - more so since it already is the exclusive market that the protocols TWAP’s utilize, and where most liquidity is positioned. It deserves to be recognized as the true price of Arth over these fringe markets that do not represent Arth’s value.

Further more, when we introduced AIP 10, we did see interest grow again for bond purchase during the short duration where the 1hr twap remained them to be available. This proposal is simply an additional step to increase interest and grow from Arth as we allow stakers and holders to be rewarded by expansion.

I think this also creates a positive sentiment overall - as LP stakers, and inline with the new staking pools to be released monday, it is good to give those stakers “their day” of rewards, rather than just having a temporary expansion to clear bonds before nesting just under $1 again. Having the peace of mind knowing that there WILL be distribution rewards flowing to the stakers, and not just to clear bonds, will certainly encourage buying pressure in anticipation of that - thus absorbing any negative impact from the bond redemption.

My only concern here is the 30d duration in effect - I think the purpose of it should be to help trigger momentum, but then allow that momentum to carry itself. I would recommend perhaps an equal opposite duration of effect in relation to the time period that was required for bonds to clear.

That is;

  1. 3 days of expansion that cleared bonds, whereby AIP 10 was in effect.
  2. 3 days of additional expansion whereby stakers are also rewards once bonds are cleared.

Equalize the extended time in effect of AIP 10, according to the time required to first clear the bonds. This becomes a fair balance to encourage both bond purchases and staking equally once the protocol states to clear prior debt.

Cheers

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Thanks for the feedback Warren. I appreciate the time you took to read over the proposal and yes we are unique and valuable! It’s time others see this :slight_smile:

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Yes I had a similar initial hesitation towards it - but this was mostly based on principal and aligning with the longer term result. However this is a time sensitive opportunity with all things considered to add a little juice to the machine in order to get things rolling.

Im still not sure about 30d duration, but I think a period duration that is equal to the time of clear the bond debt is suitable and reasonable. It atleast does the task of eliminating the guess work of what will happen once bonds are cleared, and provides solid opportunity to stakers and LP’s to be rewards just as much for their commitment. This means that everyone will know that expansion rewards will follow clearing of bond debt, and a rough approximation of it based on the time in force for AIP 10 while bonds were cleared. However, it may be sufficient to trigger momentum that last longer - which would be organically driven by demand.

2 Likes

Thanks for the detailed response bud. You are one of the key dudes in MahaDao and I value your opinion greatly, even if we don’t always agree! :slight_smile: Which I see as a good thing because it pushes us into deeper discussion and a better outcome.

Truth is the 30 day and then slowly scaling down can be refined, no question. I chose 30 days because we have been in about 30 days (less but crypto time is slowwww) without expansion rewards so I felt it was good to use that as a metric to balance the contraction period we are just getting out of.

Further discussion about the details are welcomed! :slight_smile:

I understand your logic, however I feel the duration of this last contraction should be considered also. Not just the recent bond redemption.

Perhaps a happy medium?

True and the fact that we spent all these weeks under contractions with nothing happening makes me agree with you that perhaps a 30day extension is a fair period. If 30 day extension seems too extreme, maybe we can meet in the middle, 2 weeks? And then we will re-evaluate and adjust accordingly.

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Likewise, you helped me refine the proposal for AIP 9 and it has been a great success thus far.

Perhaps a 1:2 ratio of epochs. Given that contraction is a smaller % than the threshold of expansion %, capping a +10% or higher ($1.10+) for extended AIP 10, would still push growth of the mcap. What if we made it;

For every 1 epoch used to clear bonds, AIP 10 is extended for an additional 2 epochs?

Since contraction % is generally always going to be less that the expansion % relative to an epoch, it makes sense to see longer contraction periods and shorter expansion periods if we consider the same amount of demand recycled.

I think equalizing the extended duration of AIP 10 to match the time of contraction would explode the supply disproportionately to demand - almost a hyperinflation, because the % difference during contraction and expansion are not the same.

While we did spend longer in contraction - only about 33% of the supply was issued as bonds, while we saw supply increase by 30% in consecutive epochs during last expansion. I am ok with encouraging momentum and growth, but not at the expense of creating a massive bubble that would make bitconnect proud.

Since we contract at roughly 5%, and can expanded at a maximum of 30% each epoch - I think we do need to consider this difference when justifying how long to extend AIP 10.

1:2 ratio of epochs is pretty high (e.g. 5 epochs to clear bonds, 10 epochs of AIP 10 extension). I would suggest either 1:1 or 1:2.

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Really good ideas here. I have one critical concern. I feel the likelihood of Bonds getting issued is reduced significantly with the fees for selling ARTH on MahaSwap, which is used to determine if ARTHB is issued or not. I know the fees will be relaxed in time, however I am not sure that using bond issuance as a definition for how long AIP 10 should be extended at 10% over GMU ($1.10) is the correct metric.

Any thoughts regarding using time under GMU+AIP 10 (12h epochs under $1.05 to $1.10) as the trigger for how long AIP 10 is active?

Would also be good if it was scaled down vs dropping from $1.10 to $1.05 for a soft transition into contraction.

So as Monday approaches we will see how expansion effects the price of ARTH on UniSwap. Demand for ARTH will increase, however the demand for DAI to bond as a Liquidity Provider will also be very high. I would imagine we will have choppy price action as new participants enter and buy up discounted ARTH and also some community members selling ARTH for DAI to bond.

After chatting with @enamakel and other Maha Chads a valid point was suggested:

Length of expansion could be extended by reducing expansion rewards from 30% (during the first expansion), to 5%

This would give new participants in our ecosystem more time to onboard and learn about MahaDao. I feel this modification would accomplish three things:

1.) More new users for the same amount of growth, due to extending the time duration of each expansion.

2.) Significantly less risk of a demand bubble forming.

3.) A more even ratio of time for expansion vs contraction.

After reviewing valuable feedback from community members in regards to the mechanism that would trigger AIP 10 to activate:

-1:1 ratio of time of expansion vs contraction could work-

Meaning if we have 40 epochs of contraction, AIP 10 would activate for 40 epochs.

This coupled with the reduced expansion rewards (5%) would make sure the ecosystem grows at a reasonable rate, positive investor/participant experiences and more time for our marketing team to spread the word of our wonderful ecosystem a capitalize on all the positive vibes we are generating.

Looking forward to your thoughts on these adjustments.

The issue here is that if we have 40 epochs of contraction, we have likely created a large bond debt to clear off. And by reducing the expansion %, it means that most of those counterpart expansion epochs will be spent on paying off bonds.

We should aim to minimize the period at which bonds are no longer available, to when they are cleared off. Because during this period the by-in-large beneficiary is the bond holders given that 90% of the expansion supply is used to pay it off.

This means that by reducing the expansion percent to 5, we create a longer period where demand for arth is limited - people will wait until they see bonds cleared (or close to it), to then start buying in for the anticipated distribution rewards that go mostly to the LP stakers instead.

My suggestion is this;

AS Bond debt is being cleared

We fix the expansion rate to 30% while bond debt is being cleared - this pays off debt faster, and with the changes of AIP 10, there really is no sense in waiting more epochs than less to do so, as they will get paid off regardless.

AFTER Bond debt is cleared;

We keep the first expansion at 30% Even if Arth is at $1.01. What this does is encourage demand when it is most needed after bond redemption, to build on momentum.

After each consecutive epoch of expansion, we reduce the expansion percent by 5% - to a minimum of 5%. This achieves the goal of a more sustainable expansion, maintaining and building momentum and demand when it is needed most, and creates conditions for a longer overall time in expansion.

ADDITIONAL structure suggestions

We can create ‘Price Tiers’ that adapt to demand like such;

Tier 1: $1.01 to $1.10 (Starts at 30%, reduces by 5% for each consecutive epoch within Price range of Tier 1)
Expansion 1: 30%
Expansion 2: 25%
Expansion 3: 20%
Expansion 4: 15%
Expansion 5: 10%
Expansion 6: 5%
Minimum expansion rate capped at 5%.

Tier 2: $1.11 to $1.20 (Starts at 30%, reduces by 7.5% for each consecutive epoch within Price range of Tier 1 + Tier 2)
Expansion 1: 30%
Expansion 2: 22.5%
Expansion 3: 15%
Expansion 4: 7.5%
Expansion 5: 5%
Minimum expansion rate capped at 5%

Tier 3: $1.21 to $1.30 (Starts at 30%, reduces by 10% for each consecutive epoch within Price range of Tier 1 + Tier 2 + Tier 3)
Expansion 1: 30%
Expansion 2: 20%
Expansion 3: 10%
Expansion 4: 5%
Minimum expansion rate capped at 5%

Tier 4 $1.31 or higher. (Starts at 30%, reduces by 12.5% for each consecutive epoch within Price range of Tier 1 + Tier 2 + Tier 3 + Tier 4)
Expansion 1: 30%
Expansion 2: 17.5%
Expansion 3: 5%
Minimum expansion rate capped at 5%

NOTE* Moving down into lower price tiers does not ‘restart’ or ‘trigger’ the 30% - it is considered a consecutive expansion epoch, however the rate of reduction changes - unless has already reached 5% minimum, at which point it will remain at 5%.

However, moving price up into a higher Tier, DOES restart the %.
Example:
3 epochs of Tier 2 will have a 15% expansion rate, moving to tier 3 will create a 30% expansion rate that begins to diminish each epoch by 12.5%.
Moving down from Tier 3 after reaching 5% expansion rate, will continue to keep expansion rate at 5% until price moves back into a higher tier.

TIME in force of AIP 10

To address this I think we could certainly match it with the contraction epoch count - providing we consider the changes I have mentioned above about reducing the time it takes to clear bonds once we are above $1, and encouraging more demand in the first epochs after bond debt is cleared.

3 Likes

Really nice analysis and response Michael. You always give gifts to this community and I hope that soon you will be rewarded for your good work and patience.

I understand you points regarding clearing debt quickly. How about this. To keep the model simple and also accomplish what you suggest, why don’t we just do the following:

First expansionary epoch pays for all outstanding bonds if there are any (I’m not sure we will have many bonds due to the fees/incentives structure of AIP 9). So as an example, if there are 357,998 bonds issued the system would simply create 357,998 ARTH so the bonds can be redeemed.

If the conditions are still met for an expansion on the following epoch, then a 5% expansion would occur. This model addresses your legitimate concern of paying off bonds quickly and also allows us to have longer expansionary periods, while not making things overly complex.

So the system will eliminate all issued dept once the criteria for expansion is met on the first epoch and allow distribution to occur at 5% for a slow but steady expansion that many feel is better than an aggressive expansions with shorter duration.

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To provide a few examples of the protocol running, assuming conditions for expansion are met:

Scenario 1: (No Bond Debt) Protocol would mint 5% more ARTH every epoch.

Scenario 2: (Little Bond Debt, under 5%) Protocol would pay bond debt on first epoch and send the remainder to Distribution pools.

Scenario 3: (Loads of Bond Debt, over 5%) Protocol would pay 100% of bond debts on first epoch and assuming conditions are met, mint 5% more ARTH on subsequent epochs.

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Scenario 1 is good and I think would have a stable result
Scenario 2 is also good and would have a stable result

Scenario 3 has an issue where loads of arth has entered the circulating supply via enforced minting due to protocol AIP 10 (and not necessarily demand). That large amount of Arth issued needs to be supported by demand, and I don’t believe a 5% expansion epoch following a much larger % of new arth is sufficient.

However if we keep AIP 10 in effect, this would prevent dumping while demand gradually comes in to support those bond payments - but overall, AIP 10 was to help clear bonds, not hold peoples capital ‘hostage’ - and doing so I think leans more towards a potential discouragement.

The key is, giving people the option to sell - but just making the logic behind doing so not sound, but also not overwhelmingly expensive. This is why I think a larger expansion % immediately after bond redemption is the better option. Cleared bonds can exit if they wish, however they forfeit large rewards as opposed to being penalized from their existing asset.

With large bond debt cleared, having a large expansion % on following epochs makes alot of sense from this perspective - and we can quickly scale that expansion % down to manage stability and sustain longer growth.

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So you feel starting out with a higher percentage expansion and then tapering would reduce the incentive to sell ARTH after ARTHB redemption? I would agree with you if AIP 10 was not active, however with AIP being active and set to be active for a minimum number of days after (proportional to the length of the contraction) the incentives with over a 10% daily expansion in supply would be sufficient, but I’m not 100% against tapering. Starting out with say 15% for the first epoch and gradually reducing to 5% wouldn’t be bad either. Really I am waiting to here from @enamakel to give his take on AIP 12 as a whole. There has been a lot of good discussion and ideas shared. Now it’s time for the founder to take this all in and give his take on this. Hopefully we can put this to vote soon with a defined mechanism to activate and deactivate AIP 10, which I feel is very important.

I mean larger expansion epochs that taper off while AIP 10 remains active.

So lets use the current situation as an example;

  • 1 million bonds cleared
  • AIP 10 in effect $1 - $1.10
  • Increase big demand with large expansion % on next few epochs (that taper off)
  • Price likely moves above $1.10 (similar as we seen with prior expansion that pushed to $3)

Now while AIP 10 is still in effect, it is likely we would be above the $1.10 price - in this situation, people can exit Arth to by Dai for the purpose of reinvesting into the Arth/Dai LP.

Reinvesting back into the Arth/Dai LP makes it harder for price to move, but also doing this at a higher price above $1.10

Now with expansion epoch reducing down to say 5% after the higher % epochs, less rewards are distributed. This means less potential sell pressure, which makes it difficult to push price lower against the prior ‘larger stakes’ in LP.

You could have AIP 10 in effect, or potentially it may not be needed if price is well supported above $1.10 with gradual supply growth. This makes it easier for people to sell half their Arth rewards into Dai in order to stake more Arth/Dai LP. Which otherwise would not occur that much, if at all when price is below $1.10.

I’m happy with your tapering model. I am sure it will be way more fun than flat 5 :wink:

Just want to see if Steven is cool with it.

So this is an awesome suggestion because many of the feedback we’ve gotten so far, is that the ARTH market cap is still small.

So in this vote, I believe we should do the following:

  • Keep high sell fees until ARTH expands to a 10-20mn mcap coin and then gradually (and slowly) decrease sell fees.
  • Keep expansion rewards to max 5% per epoch so that we have a longer expansion cycle and also take into account for liquidity on Mahaswap.

With respect to tapering off expansion rates, I think it’s best we kept a fixed rate of 5% max because this is what other protocols (like ESD) use. What we have seen is that a very high expansion rate can make things go out of control by the 4th-5th epoch.

With respect to keeping AIP10 active, I do agree that let’s go aggressive at keep high sell fees and keep a target price of 1.10$ until ARTH is a 10mn cap coin and reduce the sell fees to 1.05$ gradually over a period of 2-3 weeks or so.

There many new applications that’ll be coming onto MahaSwap but until they go live, we should be expecting a lot of sell pressure because there is no external demand created for ARTH yet (all the demand is internal atm).

Let us push this for a vote! :v:

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