Funding Maladex Development

Maladex is a promising project but they have admitted that like all projects, it requires money to develop to the level that we all want it to be at.

There are several ways to do this.

The easiest would be to get VC investors however this has the problem of giving away some of your company and allowing profit driven people to try influence the development of Maladex.

The next easiest would be to have a public token sale to raise money. However, the developers have stated a commitment to a fair-launch where most token sales simply end up as the person with the most money gets the largest share and can therefore dump them on the market upon release.

This brings us to the two most likely options.

Maladex currently has a singular stake pool that is set to 0% fee and is running a stake pool token offer to entice people to stake with Mal to earn Mal token (the token offer is for 5% of token supply).

One option would be to create more stake pools in order to earn of the block fee while still maintaining a 0% fee. The one issue with this is that having more than one stake pool risks network centralization when taken too far. Additionally, more stake pools mean more delegation which means that people will receive less MAL token as the 5% needs to be spread across all delegators. So, if there are 2 full pools you would earn 50% less MAL. It may also be hard to fill the pools.

The other option is to raise the pool fee. This would mean that we would receive less ADA rewards but the same Mal rewards. However, fees may discourage people from staking.

I am not very acquainted with stake pool operator rewards and would like it if someone could compare the revenue of both approaches and at what fee % the rewards become equivalent.

However, there are other issues such as what happens when the token offer is over? Will people just leave and reduce the funding? Will raising the fee drive people away?

I would like to hear people’s thoughts on this so we can have a discussion that may help Maladex.

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Thank you for posting it.

Another dimension to the discussion and running single pool is the fact how quickly the pool is filling up, potentially increasing the variable fee would help to prevent over saturation and at the same time help with the project funding.

As of today the project is solely funded by my private funds. We’ve got 2 applications in Catalyst, but we’re in the same category with people with much higher following on social media, so it’s very unsure, and almost 2 months from access to those funds.

We’ve been approached by multiple VCs and large private investors in the past, but we didn’t take the offers out of the concern to become focused on price goals instead of the right development goals and research. The way VC investment works is that they receive a share of the company rather than tokens, and that share of the company entitles them to influence on decision making, share of any tokens minted in the future, etc. The fact alone that single entity might hold a significant share of the tokens is a big risk to governance, decentralisation, and ensuring that people invested in MAL will be happy with how the token performs on the market. We’ve been turning down VCs exactly for that reason, but also VCs often provide much necessary money for healthy project development.

We’d be happy to increase M parameter (total amount of MAL tokens distributed per epoch), or even make it dependent on the variable fee to reflect the changes to the fee structure of the pool.

Also if this source of funding is successful, we’d be open to moving all tokens allocated at the moment for private sale to ISPO.

I’m curious what variable fee people would be happy with given we’d increase the allocation of MAL tokens per epoch accordingly. 10% would let us start hiring more developers, 100% would put us in a very comfortable situation to start scaling hiring even more quickly and reserve funds for audits, etc.

Naturally more funds means we can scale up work, which translates to more features, more output, and everything that we’ve got in the roadmap potentially being delivered faster (programmable swaps, indexes, hedge fund style investing, derivatives, swaps, etc.).

I’ve included 2 pools below asking what is the highest variable fee you’d be ok with and what is your ideal optimal fee (given the higher fee would mean more MAL tokens to be distributed per epoch - higher M parameter)?

The pools are only to understand what community thinks, once we’ve got better understanding about it, we’d create MIP (Maladex Improvement Proposal) with the exact suggestion and put it to the vote.

Given increase in total M parameter (MAL token distribution to delegators per epoch), what is the highest variable fee amount that you’re comfortable with?

  • 0%
  • 5%
  • 10%
  • 20%
  • 50%
  • 100%

0 voters

What’s the optimal variable fee for you (given if higher fee means more MAL tokens per epoch)?

  • 0%
  • 5%
  • 10%
  • 20%
  • 50%
  • 100%

0 voters

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Another point to consider is that increasing variable fees can put downward pressure on the amount of ADAs delegated to the pool. We know that projects like MELD have heavy marketing and reach, I’m not sure about MALADEX reach…

Realistically, some whales make up a large part of the delegation, would they be interested?If a higher variable feee is given and the pool starts to lose many delegates, what could be done?

I believe that it would be important to define an M per epoch so that we have a clear time window in which there will be the ISPO (if chosen), so it would increase the predictability of MALS per epoch.

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My thoughts: With only 5% of tokens going to the ISPO I would label it more like a sign of good will and attracting attention and not as an actual substantial part in earning rewards on the user side and financing the development on the other. Therefor a 5% fee would be the most for me.

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I believe in the team and its technical ability and I think that we have a very competitive ecosystem for DEX’s on Cardano right now, so whatever you guys need to scale and have a satisfactory progress rate I would be willing to give (even 100%).

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First, its important to understand that the more ADA rewards the team gets, the faster they advance and this is in direct conflict with the stakers interest of receiving rewards for low to no cost.

The team should worry about itself first. If you are rewarding MAL for ADA delegated, you want as much stake as humanly possible, even if that reduces the amount of rewards for everyone, stakers will be getting it for free after all.

" Additionally, more stake pools mean more delegation which means that people will receive less MAL token as the 5% needs to be spread across all delegators. So, if there are 2 full pools you would earn 50% less MAL."

I believe this rationale to be a little flawed. MAL rewards should be calculated per total stake in the pools, having 1 or 10 pools will make no difference to this respect. However, more pools opens the possibility to cash in more rewards. Owing the fast growth of the pool, that’s something to consider “in order to earn of the block fee while still maintaining a 0% fee”. I believe the concern with decentralization is not valid. With over 3000 pools, even if Maladex opened 10 pools, that would not be an issue. Given that 2-3M stake is able to mint blocks reliably, opening up more pools would be a valid way to increase revenue.

Regarding pool fees, either you maintain negligible fees (0-5%), which can by all means still be treated as a regular pool where MAL tokens are obtained mostly for free. OR you opt to trade ADA per MAL. If that is the case, it makes sense a system similar to MELD with 100% and maybe a 50% for the least invested. Personally, I am not a fan of the latter and I would keep only a small percentage of my stake (1-5%).

I agree very much with this “I believe that it would be important to define an M per epoch so that we have a clear time window in which there will be the ISPO (if chosen), so it would increase the predictability of MALS per epoch”. As far as I can tell, at the moment there is no window of time for the ISP. The current M seems on the low end in comparison with the ongoing ISPO’s (yes, I am taking into account the much smaller token supply) and the time frame under which it is being distributed is not obvious. Defining a clear window for token distribution and increasing the rewards would make the project more competitive and attract more stake, and by extension more funding for the team.

The ISPO’s are not all from similar or direct competition to each other, but they compete for the same resource - stake. As a delegator, for me it boils down to which are more rewarding given the amount of ADA that I am staking considering the differences in total supply.

The more attractive the project becomes in this regard, the more stake and funding it will attract. Other projects prove that it is possible to be funded with ISPO’s in low fee pools. I believe that with a few tweeks Maladex will be able to do the same. opting for full trade between ADA rewards seems unwise given the low exposure of the project, you might end up losing more delegators.

I am excited about this project and happy to give feedback, but remember that I am only ONE delegator with ONE opinion.

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What if (after the stake pool reaches saturation) smaller pools can pay a fee to the team so they can offer some MAL tokens as a part of their block rewards to their delegators rewards? Maybe a 10% fee of each epoch they mint to sponsor Maladex. Sponsors can be selected on a random basis through a lottery system.

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Hi.

I guess most of us are here because we believe in MALADEX and we want to support it. Thus we can risk to loose ADA rewards for getting MAL tokens which hopefully one day will be worth much more than simple ADA. But I think for the development you need a lot of $ not ADA, because so far we all pay our bills in fiat.

So I guess it would be fair to use $ as a start point to this analysis. Currently your pool stake is let say 16M ADA. With this stake you can get average total rewards 12K ADA per epoch which should not be less than $25000 => $100000 monthly. I’m not sure what are the costs but I think this is quite a lot.

I’d like to suggest a mechanism which would connect % of fee with ADA/USD exchange rate. 100% fee when average ADA/USD is let say less than $2. On the other hand we would have small % when ADA is close to $10. So exact fee would change epoch by epoch depending on average ADAUSD exchange rate. (Exact values should be calculated. I used $2 and $10 just to describe an idea).

The other idea is to have 2 stake pools with different fee scenarios. Pool1 MAL-MAXIMALISTS pool with maximum fee = 100%. In this pool MAL rewards would be let say 3 MAL for each ADA of “delegator rewards” consumed by fee.
Pool2 : MAL-Supporters with max fee e.g. 50%. In this pool MAL rewards would be 1ADA fee = 1MAL token.

Too many pools is bad, but with current 16M delegated stake and nearly 50% of voters voted for 100% fee you can assume 2 pools which can share 8M/8M is an option which makes both pools profitable and reasonable. … and I guess these pools will grow more.

Again. All values given above is just an example - no math behind it :slight_smile: Should be calculated. Also I think 100% max fee is not good… but maybe 75% is OK and 35% for 2nd pool. You know math… you can optimize it.
regards
mikwit

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Understand the rationale behind the USD value, but I think we are overcomplicating the issue if we follow that path.

If there will be different regimes rewards should be proportional to the fee.

If the USD value of the rewards you show here is true, I believe that the team probably does not need to get their hands on our ADA. 100K a month is a lot of money and the pool stake is increasing at a steady pace. I see little to no reason to go take ADA rewards if a negligible fee system can give them the support they need.

I think you misunderstood. I’ll try to me more clear but I cant wirte it now…

This way Maladex can support decentralization and attract delegators to small pools while still making some money off of it. 10% per epoch sponsorship can be upped to 20% or 30% depending on how many delegators you attract to pools.

Should do a FISO like Min. Just pick pools that are in Min’s pool list they didn’t use. :slight_smile:

MELD is a pain and US investors will get shattered with a 100% fee.

Need more promotion as you just pulled a bunch off the other ISPO’s today from what I see with your tweets.

Maybe it’s a bad idea, but I’m gonna share what I thought: and if we establish a regressive fee until the results of Catalyst are published and Dex get (if get at all) those funds or maybe one month after that? We can start with 100% until arrive at 5%. If proposal is aprooved by Catalyst comunity, then fee come back at 0% after Dex get the funds. If isn’t, then 5% fee is kept.

I think that in this way, the benefits of delegators can be receive more MAL tokens, proportionally current % fee, maybe increasing the total ISPO rewards from 5 to something like 10% or more. On the other hand, the DEX can rise initial funds for development in the meantime until we know if it will get Catalyst funds. If doesn’t, then fee remains fixed at 5% until when it is necessary.

Probably the values would need to be adjusted to balance the actual needs of development and delegator’s rewards if this plan is adopted, but I think you guys can get my point.

Cheers!

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THE.ONE.ORACLE :
To explain my thinking I’ll use an example of existing pool having 50% of stake of current MAL pool. It should be similar if MAL pool splits (50/50) into 2 pools with different reward scenarios.

Below example is a pool with stable stake of 8.8M ADA through last 10 epoch.

Maybe I will show my ignorance now, but as far as I understand “Delegator Rewards” is a number of ADA which is split between all delegators - all of us.

“The fee” that we are talking about is a % of this value. 100% fee means ALL that ADA stays with MAL pool owners. Am I right?
(In my previous post all numbers referred 2x bigger pool than current example, but I simply just doubled amounts from this example.)

Anyway… such pool generates approx 6000ADA delegator rewards each 5 days, which gives 36000ADA per month (as long as average month is 30 day). With current ADA price it gives about $80000 each month. Please correct my thinking if I’m wrong.

I have no idea how much money is needed for development, but let say $80000/month is what they need. What if ADA price will soon jump to $5? (I hope it will). In such case MALADEX will get not $80K but $180K per month, which is $100K extra money. That is why I think fee should be correlated with ADA price and assure quite stable amount of $ for the development.

And I don’t think it is complicated to manage, I think there may be a small daemon managing it :slight_smile: efficiently.

I also do not agree that people will move to other pools. Why? With having 2 pools you can leave 1 pool with very low fee and the other one with high fee. Those who want more ADA may choose or stay with current 0% (or low %) pool and some (like me) will re-delegate my stake to high% fee pool if fair amount of MAL tokens will be offered :slight_smile:

I hope it is much more clear now.
regards
mikwit

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two pools with different fee % could be a solution…

I get your point now. From what I read before it sounded like that was the current amount of rewards with a 0% fee. my bad.

Going into dollar cost can be done, I don’t see a necessity for it. I am against fees over 5% and I will most likely redelegate if we opt into anything above that with the current rewards. Tokens distributed need to increase substantially for me to trade ADA for MAL, that’s where I stand.

As it is now, MAL is one the least rewarding projects currently in a ISO, I am not going to add ADA on top of that.

This is the way to go. The project is good and with an attractive reward ratio and some effort into publicity it is very capable to attract 100M in stake over a couple weeks and increase its financing ability substantially

Thank you to everyone who participated in the discussion and voting.

Especially, many thanks to @tflynn for starting this discussion.

I’m closing the thread as we’re publishing the decisions made based on this discussion.

The below article is unlisted and will become listed and published on Twitter in about an hour, but we’re publishing it first on Discord, Telegram, and Forum first.

Read about the future of Maladex ISPO:
https://blog.maladex.com/the-future-of-the-maladex-ispo-283116459116.

The first change is variable fee increase to 5% starting in epoch 295 and increasing MAL airdrops by 5 times.

More changes are coming based on the community feedback. Check the medium article for all the details.

Also we are changing the way users preview the airdrops on the site (formula stays the same), which will help to get rid of the issue where some delegators were not able to see their rewards. Patch is coming in the next few days.

As this discussion is closed, I’m closing the pool and the thread, and will open a new one for the feedback for the decisions made: Changes to Maladex ISPO.