Fee Value Capture
The above features create high performance value in MINTY, and so closely links token performance with TVL.
Liquidity providers create value for borrowers by supplying assets they wish to borrow. Borrowers create value by paying interest on loans from suppliers. Minterest captures a small portion of this value in the form of user fees, enabling the protocol to continue managing token markets. Similar principles apply to the provision of flash loans and execution of liquidation events. In the latter case, the fee capture mechanism is highly significant and an industry first.
Fee value is captured as token assets used in the protocol’s various markets. Captured tokens are swapped for Minterest’s native MINTY token and distributed as Governance Rewards to users.
The protocol swapping captured value for MINTY via buyback mechanisms imparts value to its token economy. While many factors are influential, all things being equal, increased TVL correlates to increased buyback value. Increased buyback value causes increased demand for MINTY, generating three positive outcomes for protocol users:
- 1.Supports the value of emission rewards, given the value of MINTY is supported by greater demand due to buyback activity.
- 2.Boosts long-term governance participation, through more valuable Governance Rewards.
- 3.Attracts TVL, given more valuable emission rewards for supplying and borrowing.