Since Mithril Cash was handed over to a new team, many improvements have been in the works. The changes written about in this article do not encompass all of what is planned, but included are some of the already laid-out improvements that are not yet in place in the protocol.
1.0: Buy Rewards
Mithril Cash ($MIC) has a new feature in the works: Buy rewards! These rewards are active while Mithril Cash trades below peg, and they entices users with a 1% buy reward bonus for each cent $MIC trades below the dollar. Some examples are as follows:
$MIC Price $0.90 -> Buy Reward: 10%
$MIC Price $0.80 -> Buy Reward 20%
$MIC Price $0.50 -> Buy Reward 50%
$Mic Price $0.10 -> Buy Reward 90%
So, if Sally wants to buy $MIC and the going rate is 80 cents, her purchase of 100 $MIC actually sends 120 to her account. Should $MIC rise in value to 90 cents, a purchase of 100 $MIC will net her 110.
To further illustrate how Buy Rewards are calculated, here is a visual representation:
According to this formula, the farther $MIC drops from peg, the larger the buy reward becomes, up to a theoretical maximum of 100%. On the flip side, when $MIC is close to peg, the buy reward diminishes.
Note: Because Sell Taxes were not initially enabled, the Buy Reward contract will likely require an initial liquidity deposit or an idle period collecting funds before it is enabled.
1.1: Peg Bonus
Mithril Cash’s buy reward contract has a “Peg Bonus” feature as well. This bonus functions to incentivize price action in and around $1.00. During Epoch, if $MIC has a TWAP (time weighted average price) of $1.00 or higher, the Buy Reward contract empties itself out by sending half of accumulated $MIC to the Boardroom, and the other half to a vault where users are allowed to stake Mithril Bonds. This Peg Bonus can only be activated if the TWAP from the previous Epoch was under $1.00, and can only be activated once every 10 Epochs (2.5 days), and if the contract has funds.
1.2: “The Bondroom”
Mithril Cash is unveiling a new feature intended to begin rectifying debt to Mithril Bond holders: The Bondroom. The Bondroom is a temporary solution only active while there are outstanding Mithril Bonds, and it receives equal payout to the Boardroom. When the Bondroom receives a payout of any kind, staked users are paid proportionally and Mithril Bonds are burned. Here’s an example of the Bondroom receiving a Peg Bonus:
Mithril Cash trades for a TWAP (time weighted average price) of $1.00, so the Buy Reward contract is emptied and half of this is paid to the Bondroom. Sally and Jeff are the only users of the Bondroom. Sally has 800 staked Bonds and Jeff has 200 staked Bonds. The “Peg Bonus” set aside for the Bondroom is 100 $MIC. When Epoch hits, 80 of Sally’s bonds are burned and converted into $MIC, and 20 of Jeff’s bonds are converted and burned as well.
These payouts follow proportions of how many bonds are staked in the MIB vault versus how much $MIC is stored in the Buy Reward contract. Should the Bondroom receive an expansion payout, users are similarly rewarded proportionally until no bonds are left in the Bondroom. If no bonds are in the Bondroom, all payout goes to the Mithril Shares Boardroom instead.
1.3: Funding:
1.3.1: Buy Rewards
Mithril Cash Buy Rewards are paid for by sellers of $MIC. Starting from $x and selling $MIC pays for Buy Rewards all the way up to said price, so if the contract started collecting fees from $1.00 it could support rewards all the way up too. Unfortunately, sell fees weren’t initially collected while $MIC was sold down from the $1.00 level. Therefore, the contract won’t immediately have enough funds to pay for buy rewards all the way back up. The bright side is that when $MIC price rises, the contract is able support buy rewards up to the peak level that users pumped it to after it gets dumped down, even if the contract couldn’t fund buy rewards during the pump’s peak. Here’s an example:
Consider $MIC price is 60 cents, and the contract can funds buy rewards until 70, but it gets pumped to 80. The reward contract will have to be shut off when it runs out. However, the action of prices falling back down will then pay for buy rewards up to that peak price of 80 cents. Trading in an enclosed zone will increase funds in the contract. Trading from 50 cents to 60 cents back down to 50 leaves the contract with more funds in it than it started off with, and thus can support buy rewards to a higher price than before.
1.3.2: Peg Bonus
In the event $MIC is sufficiently pumped to $1.00, there is a likelihood that excess funds will remain in the “Buy Reward” contract. This contract fills itself as price goes down, so any funds stored when $MIC is $1.00 can be considered excess. Therefore each time $MIC hits $1.00, the buy reward contract is paid out in what is known as a “Peg Bonus”. Half of this bonus is sent to the Boardroom, and the other half is sent to the Bondroom. A Peg Bonus happens during Epoch and can occur once every 10 epochs (2.5 days) in order to prevent manipulation and accrue funds.
1.3.3: Fee Adjustments
Properly funding a Buy Reward incentive requires the payout of taxes to be adjusted. Half of the existing sub $1.00 sell tax will be dedicated exclusively to a new buy-reward contract. Additionally, a burn of Mithril Cash while it trades sub $1.00 levels was planned but not implemented, and will now take place. The Bondroom will receive a portion of tax payout as well:
50% Tax to Buy Reward Contract
20% Tax to Boardroom
20% Tax to Bondroom
10% Burned
It should be noted that any payments to the Bondroom will only occur while Mithril Bonds are outstanding and staked. These proportions have been chosen to make sure there is enough money to pay for buy rewards, while also providing payment for Mithril Shareholders and reducing the protocol’s overall debt.
Conclusion
Buy rewards are a planned incentive not yet in place in the Mithril Cash Protocol. Buy rewards don’t guarantee Mithril Cash will be worth $1.00, though it’s likely that buy rewards will attract new users. Mithril Bonds will slowly start to be redeemable in the form of Mithril Cash, if only a small portion at a time. This article is not investment advice.
