MGP-19 | Adjust MIMO Token Inflation Distribution on Ethereum & Polygon PoS

Summary: This proposal seeks to adjust MIMO token inflation distribution.

Rationale: Following MGP-14 & MGP-16, MIMO inflation is now distributed as follow:

• Ethereum: (80% of MIMO incentives)

  • vMIMO holders: 5%
  • Liquidity Incentives: 95%
    • wUSK/paUSD/USDC: 40%
    • wFRK/PAR/EURC: 35%
    • MIMO/wETH: 20%

• Polygon PoS: (20% of MIMO incentives)

  • vMIMO holders: 5%
  • Liquidity Incentives: 95%
    • wUSK/paUSD/USDC: 40%
    • wFRK/PAR/EURC: 35%
    • MIMO/wETH: 20%

In the meantime, Mimo Labs, a key contributor to the Parallel Protocol has accumulated 550,000 (550k) vlAURA, leading to around 375,000 (375k) USD equivalent (in $BAL & $AURA) inflation redirected to Parallel & KUMA pools. Moreover, the Parallel DAO treasury has currently accumulated 23,000 vlAURA (23k), leading to around 15,000 (15k) USD equivalent (in $BAL & $AURA) inflation redirected to Parallel & KUMA pools. This leads to around 390,000 (390k) USD in incentives for Parallel / KUMA pools without any MIMO inflation required from the protocol.

We then propose to the Parallel DAO to reduce the MIMO inflation dedicated to liquidity incentives by 100%. Below is the rationale behind the proposition:

• Less selling pressure from liquidity providers farmers
• Increase protocol net revenues (spending - revenues)
• Increase MIMO token treasury holdings

We also propose to keep 5% of the total MIMO inflation for vMIMO holders, with 2.5% of total inflation for vMIMO holders on Ethereum, and 2.5% for vMIMO holders on Polygon. It means that total MIMO inflation would be reduced by 95% (inflation itself reduces by 5% each week, currently sitting at around 260k MIMO per week). MIMO not distributed will be send to the DAO treasury on Polygon PoS.

Breakdown of adjusted MIMO tokens inflation distribution: (% of total distribution)

• Ethereum: 2.5% (of total distribution) vMIMO holders: 2.5% DAO Treasury: 0%

• Polygon PoS: 97.5% (of total distribution) vMIMO holders: 2.5% DAO Treasury: 95%

Means:

• Human Resources: Multisig signers will need to execute transactions to adjust MIMO token inflation distribution on the Ethereum and Polygon PoS multisig.
• Treasury Resources: No cost for the treasury to adjust MIMO token inflation distribution on Ethereum and Polygon PoS.

Technical Implementation: On Ethereum, Parallel DAO multisig will call following smart contracts:

• MIMODistributor contract: Call ‘_changepayees’ function with these parameters: ‘_payees’ : 0x5Bde160d26937DdFcEA9706D778d6411D5f2a681; 0x741550176fCd0B8a235bF2982ba3ecbE9a25Ab17 ‘_shares’ : 250; 9750
• EthereumDistributor contract: Call ‘_changepayees’ function with these parameters: ‘_payees’ : 0x654645FCeFCe0AEbEB4a988544B4e42ED2963331 ‘_shares’ : 10000
• PolygonDistributor contract: Call ‘_changepayees’ function with these parameters: ‘_payees’ : (Parallel DAO l Mimo Inflation Multisig); 0xF8cDE3E56b72fD0D7bE77604F396A366912e332f ‘_shares’ : 9744; 256

Voting options:

• For the adjustment
• Against the adjustment
• Abstain

Authors: @JeanBrasse from Mimo Labs