Hey everyone, the current $MCB market cap has deviated from the net value of POL. To improve $MCB liquidity and ensure that the $MCB market cap does not remain below the value of POL, based on community discussions, MUX contributors propose allocating POL to execute $MCB buybacks.
The goal is to bring the $MCB market cap up to 100% of the POL value, while ensuring it does not fall below 80% of the POL value. Since the total POL value is constantly fluctuating, the $MCB market cap threshold for buyback will also change dynamically. The $MCB bought back through this process will belong to POL.
Very good proposal and I’m fully in support. On the technical side, I’ve a few questions:
1- How productive are PoL assets right now?
2- Are there safe ways to utilise PoL and future investment(s)’ yield for this program rather than liquidation only to preserve assets?
To avoid mechanistic front-running - I recommend having a central banker level ambiguity on buyback threshold and timing. If the protocol is the main LP - set trading fees to 1% before the program begins to generate extra yield on bot and arbitrage activity.
Currently, POL is deployed in MUX 3 to provide liquidity and generate passive income through transaction fees. Over the past year, POL has generated approximately $327k in transaction fees. It’s difficult to provide a precise figure because the value of POL fluctuates, but the annual yield has been roughly in the 3%–4% range.
Based on the number above, this level of yield is likely not sufficient to support $MCB liquidity. In addition, any yield generated will be retained and added back into POL. Therefore, the current plan is to liquidate reserve assets when needed. Given BTC’s recent price performance, the general order of liquidation would be: stablecoins → altcoins → BTC.
And yes, there will be a high-level ambiguity around the timing and amount of buybacks.
Thanks again for the suggestion — it was really helpful, and we appreciate it!