1/ Recent events have revealed a mismatch in incentives between some actors in a Balancer/Uniswap pool launch and the long-term interests of a protocol and its users.
After team & community review, the MTA Genesis will be marginally delayed.
Learn more: https://t.co/fKMz1Adw9m
— mStable (@mstable_) July 15, 2020
While the MTA Genesis event was originally scheduled to launch on Balancer today (Wednesday, July 15th), the core team and its community have elected to delay the offering due to incentive concerns seen from similar token launches on Automated Market Making (AMM) protocols like Uniswap.
Now, MTA will launch on Friday using Mesa – a Gnosis based DEX offering ring trades and batched orders to prioritize fair pricing over the instant settlement. The new offering will also kick off an MTA/mUSD pool, with 125,000 MTA in incentives being offered to liquidity providers over the course of the next few weeks.
1/ The mStable team is excited to share a new way to release a token to market.
Learn more: https://t.co/UjmPGXzkAz
— mStable (@mstable_) July 16, 2020
The delay comes after the recent BZRX token launch where the offering was subject to a degree of front running by early actors leveraging automated bots to purchase tokens in the same block as the initial deposit. With capital immediately flooding into the BZRX Uniswap pool, the price of tokens skyrocketed nearly 12x in minutes – ultimately pricing out retail investors looking to participate in the offering. Within the hour, the price of the tokens declined back down as savvy whales dumped their tokens, leaving many retail participants who were early to the offering deep in the red.
With that in mind, it’s becoming apparent that Initial DEX Offerings on permissionless liquidity protocols like Uniswap and Balancer have their own set of problems. With every offering passing, it’s becoming harder and harder for retail investors to have a fair opportunity at purchasing tokens at reasonable prices. As a result, mStable is addressing the issues by delaying its launch in order to add in some preventative mechanisms to the token distribution. In the MTA Genesis announcement last week, the core team highlighted two core goals with the distribution of the token:
- To build out a distributed community of Meta Governors
- To start the market that enables mStable’s collateralization process
While no official details on the updated approach have been released, prospective participants can expect an official publication from mStable within the next 24-36 hours.
Openness vs. Fairness
While the emergence of Initial DEX Offerings (IDOs) offers a mechanism for anyone to participate in token distribution events, the permissionless nature of these liquidity protocols has opened up the opportunity for bad actors who aren’t aligned with the long-term vision of the respective protocol. They are there to just make a quick buck (reasonably so).
Even though it’s still early to the IDO game, the DeFi community will need to start implementing innovative mechanisms to align long-term incentives among all actors. We’re very interested to see how mStable chooses to approach the issues and what solutions they come up with. On the other hand, an alternative option for future offerings is for the DeFi community to build a specialized platform offering identical benefits (openness and accessibility) while mitigating the issues present with previous offerings.
Despite the controversy, it’s great to start seeing legitimate DeFi protocols leveraging IDOs as a distribution plan for their native tokens, providing the protocol with a mechanism for decentralizing their community and governance beyond just liquidity mining.
For anyone looking to participate in the MTA offering, make sure to check out the official announcement from the team to learn more about the Mesa offering. mStable will also release a step by step guide on how to participate later today for those who have yet to use the Dxdao incubated product.
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