As a decentralised protocol, Minterest will be governed by its Decentralised Autonomous Organisation (DAO). Governance functions will be initiated either during private launch or from public launch and will evolve alongside the protocol.
Foundational for any community seeking to capture value is harnessing the protocol's ability to sustain financial incentives over the long-term, in a non-dilutionary manner. Empowering people to participate in new ways due to new, sustainable financial incentives means the model of a lending protocol like Minterest is designed to capture value in new ways, and to distribute it for the future benefit of the protocol's community of users.
To manage key decisions and the growth of the Minterest protocol, Minterest will be governed by a Decentralized Autonomous Organization (DAO). Initially, this will involve a structure supporting management simplicity and composed of members of the team behind the protocol's development, key partners, and industry experts.
The exact nature of the DAO organization and governance structures will be further developed to be as decentralized as possible, with such structures occurring post the protocol's Public Launch. The evolution of the Minterest protocol will therefore require regular decision-making to be undertaken by its key stakeholders, the holders of Minterest MNT tokens.
The economics of the MNT token have been designed to support and incentivize user participation in the protocol's governance. Tokens are distributed to lenders and borrowers issued per block. Users who provide liquidity and stake their MNT tokens in Minterest's governance processes earn Buy Back Rewards in the form of MNT tokens acquired on-market via the protocol's Buy Back mechanisms, and accumulated in the Treasury.
As the Treasury's surplus tokens are exchanged for MNT tokens via the Buy Back, users are incentivized to participate in such staking. This reduces the overall on-market supply of MNT tokens, which helps to support the token's value and, in turn, the APYs provided by the protocol to its users.
Minterest token holders can opt to stake their MNT tokens in the protocol’s governance processes in order to participate in voting on governance proposals. Staked MNT enables voting rights on key proposals where the number of tokens staked determine the voting weight for each user with each token representing one vote. Participation in governance voting is further incentivized through the distribution of MNT rewards from the Minterest Buy Back feature. The health of the Minterest ecosystem necessitates regular participation in governance, so each staker is required to participate in voting at least once per year, i.e. once within a 12-month period, in order to continue receiving Buy Back Rewards.
Voting rights are activated when users stake MNT in the protocol. Users receive a dynamically calculated multiplier benefit, or ‘loyalty reward’, applied to their voting weight based on the length of time they participate. The longer their MNT is staked the greater their voting weight becomes. Users may unstake MNT at any time, but forfeit the accumulated voting weight, and with it loyalty reward, they have attained. In order to maintain their voting weight users must vote, or delegate, on proposals a minimum of once every 6 months. Failing to do so results in a forced withdrawal of staked MNT from governance, forfeiting their accumulated voting weight and loyalty reward.