As the protocol controls the funds in its treasury, MAMA can only be minted or burned by the protocol. This also guarantees that the protocol can always back 1 MAMA with 1 DAI. You can easily define the risk of your investment because you can be confident that the protocol will indefinitely buy MAMA below 1 DAI with the treasury assets until no one is left to sell. You can't trust the FED but you can trust the code.
As the protocol accumulates more Protocol Controlled Value (PCV), more runway is guaranteed for the stakers. This means the stakers can be confident that the current staking APY can be sustained for a longer-term because more funds are available in the treasury.
It is extremely important to understand how early in development the MAMA DAO protocol is. A large amount of discussion has centered around the current price and expected a stable value moving forward. The reality is that these characteristics are not yet determined. The network is currently tuned for expansion of MAMA supply, which when paired with the staking, bonding, and yield mechanics of MAMA DAO, result in a fair amount of volatility.
MAMA could trade at a very high price because the market is ready to pay a hefty premium to capture a percentage of the current market capitalization. However, the price of MAMA could also drop to a large degree if the market sentiment turns bearish. We would expect significant price volatility during our growth phase so please do your own research on whether this project suits your goals.
When you buy and stake MAMA, you capture a percentage of the supply (market cap) which will remain close to a constant. This is because your staked MAMA balance also increases along with the circulating supply. The implication is that if you buy MAMA when the market cap is low, you would be capturing a larger percentage of the market cap.
Rebase is a mechanism by which your stakedMAMA balance increases automatically. When new MAMA are minted by the protocol, a large portion of it goes to the stakers. Because stakers only see stakedMAMA balance instead of MAMA the protocol utilizes the rebase mechanism to increase the staked MAMA balance so that 1 staked MAMA (sMAMA) is always redeemable for 1 MAMA.
Reward yield is the percentage by which your staked MAMA balance increases on the next epoch. It is also known as rebase rate. You can find this number on the MAMA DAO staking page.
APY stands for annual percentage yield. It measures the real rate of return on your principal by taking into account the effect of compounding interest. In the case of MAMA DAO, your staked MAMA represents your principal, and the compound interest is added periodically on every epoch (8 hours) thanks to the rebase mechanism.
One interesting fact about APY is that your balance will grow not linearly but exponentially over time! Assuming a daily compound interest of 2%, if you start with a balance of 1 MAMA on day 1, after a year, your balance will grow to about 1377.
The APY is calculated from the reward yield (a.k.a rebase rate) using the following equation:
It raises to the power of 1095 because a rebase happens 3 times daily. Consider there are 365 days in a year, this would give a rebase frequency of 365 * 3 = 1095.
Reward yield is determined by the following equation:
The number of MAMA distributed to the staking contract is calculated from MAMA total supply using the following equation:
Note that the reward rate is subject to change by the protocol.
As illustrated above, your MAMA balance will grow exponentially over time thanks to the power of compounding. Let's say you buy a MAMA for $400 now and the market decides that in 1 year's time, the intrinsic value of MAMA will be $2. Assuming a daily compound interest rate of 2%, your balance would grow to about 1377 MAMA by the end of the year, which is worth around $2754. That is a cool $2354 profit! By now, you should understand that you are paying a premium for MAMA now in exchange for a long-term benefit. Thus, you should have a long time horizon to allow your MAMA balance to grow exponentially and make this a worthwhile investment.
There is no clear answer for this, but the intrinsic value can be determined by the treasury performance. For example, if the treasury could guarantee to back every MAMA with 100 DAI, the intrinsic value will be 100 DAI. It can also be decided by the future DAO. For example, if the DAO decides to raise the price floor of MAMA, its intrinsic value will rise accordingly.
Let’s say the protocol targets an APY of 100,000%. This would translate to a rebase rate of about 0.6328%, or a daily growth of about 2%. Please refer to the equation above to learn how APY is calculated from the rebase rate.
If there are 100,000 MAMA tokens staked right now, the protocol would need to mint an additional 2000 MAMA to achieve this daily growth. This is achievable if the protocol can bring in at least 2000 DAI daily from bond sales. If the protocol fails to achieve this, the APY of 100,000% cannot be guaranteed.
No. Once you have staked MAMA with MAMA DAO, your staked MAMA (sMAMA) balance will auto-compound on every epoch. That increase in balance represents your rebase rewards.
You can track your rebase rewards by calculating the increase in your staked MAMA balance.
MAMA DAO is currently unaudited. It is a fork of Olympus DAO on the Polygon Network, audits will occur at a later stage.