Baking & Staking
Our staking program will initially offer two types of staking. This means there will be two staking pools (bMONSTA & sMONSTA) with two different settings that aim to allow participation of highly committed holders that want a boosted APY, as well as new holders that want to maybe test the feature first with less commitment and a lower unstaking penalty.
Pool 1 — Baked MONSTA (b, s)
- bMONSTA (baked till cycle end, extra rewards with time-based APY boost, early unbake penalty)
Baked Monsta (bMONSTA)
Pool 2 — Staked MONSTA (s, b)
- sMONSTA (unlocked, APY rewards, no commitment boost, low unstake penalty)
Staked Monsta (sMONSTA)
Holders will deposit their MONSTA tax free into either the bMONSTA or/and sMONSTA pool and will receive an 1:1 equivalent of bMONSTA / sMONSTA tokens in return as proof of their stake.
1 MONSTA = 1 bMONSTA | 1 MONSTA = 1 sMONSTA
The new tokens are wrapped versions of the original MONSTA token and are pegged 1:1 (linked USD value) to MONSTA. They serve inter alia as proof of your MONSTA stake (IOU) and are used to earn MONSTA rewards in the staking pools. These new tokens also open up CEX listing opportunities for us because there is no taxation on the transactions involved.
For example We can list bMONSTA on a CEX because it does not contain complex smart contract logic like the original MONSTA. With MONSTA, we would have had to whitelist the CEX hot wallet containing MONSTA to exempt it from the protocol tax. This would have obfuscated and undermined the overall concept of Cake Monster, as deflation and reserve accumulation would not have been borne by the generated CEX volume, while a custom implementation of taxed tokens undermines the business model of a CEX.
This will open up entirely new game theories for traded bMONSTA to earn MONSTA rewards. bMONSTA in this case will always be an IOU for MONSTA, so any demand for bMONSTA represents inherent demand for MONSTA!
MONSTA tokens baked in the bMONSTA pool receive a significant time-based APY boost.
- Their boost is based on how early they get baked in.
- The APY Boost starts at 420% and will remain there for 6.9 (~7) Days from official launch day of the baking program.
- Thereafter the APY boost will gradually reduce by 1% a day until it reaches 69%.
- Thereafter it reduces by 0.33% per day until it reaches a floor boost of 33%. [There are 471 days until the cycle ends].
Your APY boost will be locked in when you bake your coins in the bMONSTA pool. So the sooner you ‘bake’ your coins in the bMONSTA pool, the larger your APY boost is for the full duration of the lockup period (until cycle end.)
If a new wallet then receives that bMONSTA (via transfer for example) the APY boost on the bMONSTA in the receiving wallet will be based on the receiving day APY, not the original staking day.
bMONSTA & sMONSTA will both still receive Crumbs & Diamond Claw NFT dividends, as well as counting towards DC holding thresholds (remember 1 bMONSTA/sMONSTA= 1 MONSTA.)
Rewards still need to be claimed and will not accrue automatically.
Neither bMONSTA nor sMONSTA will be subject to iTax or transfer tax. Think vanilla!
A total of 1 billion MONSTA (10% of initial supply) from the community wallet will be used to reward stakers and bakers during cycle 1. These tokens already exist and we don't have to mint any new tokens. This gives us a great benefit, and the possibility to create a staking program that actually accelerates token scarcity (deflation of supply) instead of constantly diluting supply like so many other projects, that then inevitably lose value due to the nature of their emissions.
NO NEW MONSTA WILL BE CREATED!
The emissions of the reward base will be ‘U’-shaped and will reward early lockups as well as those who hold closer to vault opening towards the end of the cycle.
We believe that rewarding holders who are committed to the long-term vision of the protocol is the most equitable and economically astute use of these funds!
A total of 500 million MONSTA will be burnt from the community wallet in a series of Fire in the Kitchen (FITK) events in order to offset some of the increase to circulating supply due to staking rewards. More info soon.
The U-Shaped Emission curve has the following game-theoretical implications:
- Encourages early lockup into staking pools for high emissions in month 1.
- Combined with the APY boost that starts at 420% and slowly decreases, this will create an interesting launch dynamic incentivizing early commitment.
- The U-shaped emissions curve will decrease emissions over a 9 month period after which, it starts to increase again.
- The decrease in emissions will reduce potential sell pressure.
- The staking rewards will generate demand for more MONSTA.
- A proportion of stakers will become impatient. Those will likely unstake and be taxed / farmed accordingly.
- The protocol will farm impatience and the remaining stakers will receive larger rewards and vault shares.
- After the 9 months of emission decrease, they will increase again to encourage holding until the cycle ends.
U-Shaped emissions curve
Inflationary monetary systems encourage spending of assets. Deflationary monetary systems encourage holding of assets.
High time frame preference versus low time frame preference. Hard money versus easy money.
Neither of these systems work sustainably in the long run without the other. A dynamic balance between the forces of inflation and deflation must be reached with utility being the arbiter between them.
This is the genius of Cake Monster. It is the first protocol released in a public market with substantial volume, that balances these opposing forces in a automated and sustainable way.
Baking & Staking is a game theoretical incentive module in a hyper-deflationary ecosystem, yet due to the distribution & tax mechanism, it only rewards patient capital. We expect it also to attract a lot of impatient capital, which the protocol is then well positioned to ‘farm’.
The relative holdings of committed members (patient capital) increases and the relative holdings of uncommitted members (impatient capital) decreases.
The two systems are in balance. Opposing forces, dynamically working together.
Baked MONSTA (bMONSTA) has an early unbake tax of 40%.
70% of that 40% will be burnt and 30% sold to add to the reserves in the Gravity Vault.
Total Tax : 40%
By baking your MONSTA in the bMONSTA pool, you are showing your commitment to the protocol’s cycle end and ultimately, THE VAULT.
Breaking your commitment to the protocol carries this tax and farming of impatience takes place.
Although the final value of the vault is unknown, locking in that commitment early (with less known information) gets rewarded much more than locking it in later (with more known information about THE VAULT size) via the APY boost variable.
- Baked till cycle end
- 0% deposit tax
- 1 MONSTA mints 1 bMONSTA. User receives bMONSTA in return for a MONSTA deposit.
- bMONSTA future rewards formula Share of total pool (bMONSTA+ sMONSTA) [User bMONSTA* APY Boost / total pool incl. boosts] * daily MONSTA Reward]
- User receives bMONSTA every minute representing their boosted share in the pool.
- APY boost is locked in on baking and stays constant till the cycle ends or when the bMONSTA moves. Locking early is rewarded more as per the “APY boost”. APY boost is linked to wallets. Not individual coins.
- bMONSTA rewards (need to be claimed, but can be accumulated and don’t expire) are also baked and receive APY boost as per the date received in the wallet. APY boost will get weighted averaged per wallet.
- Pool gets fed MONSTA from Community Wallet as per the emissions schedule (to back the bMONSTA)
- 0% Cycle End Unbaking Tax
- 40% early unBake tax (70% burnt. 30% vault) (includes deflation tax)
- Total Tax : 40%
- No lockup
- 0% deposit tax
- 1 MONSTA mints 1 sMONSTA. User receives sMONSTA in return for MONSTA deposit
- sMONSTA rewards formula Share of total pool (bMONSTA+ sMONSTA) [User MONSTA / total pool] * daily MONSTA reward]
- User receives sMONSTA daily representing their unboosted share in the pool. Rewards need to be claimed but do not expire.
- Pool gets fed MONSTA from Community Wallet as per the emissions schedule (to back the sMONSTA)
- 0% Cycle End UnStaking Tax
- 7.5% Unstake Tax +2.5% Deflation Tax + 5% Withdraw tax (70% Burnt. 30% Vault)
- Total Tax : 15%
Baking & Staking Flow
Given the above dynamics we have done some modelling to show the effect on the total locked supply + APY rewarded.
We will never be able to know the ratio of bMONSTA / sMONSTA so the actual amounts will vary per individual user.
However, using just the total, these are the total APY’s one can expect in the first month of baking/staking and on average:
Month 1 & Average APY
The above outlined the core staking principles planned for the MONSTA staking program.
Phase 2 of the staking program is where the newly minted bMONSTA & sMONSTA gets additional utility.
Once live, we plan to make the following developments to the baked & staked MONSTA:
- 1.Setup bMONSTA <> MONSTA LP pool (should trade at around 40% discount).
- 2.Setup sMONSTA <> MONSTA LP Pool (should trade at around 15% discount).
- 3.CEX listings
- 4.Build staking games (think Lotto etc.) / Monsta Party integration
- 5.Integrate with a lending platform to make bMONSTA liquid and usable as interest bearing collateral
- 6.Be able to use bMONSTA & sMONSTA to participate in voting
We are looking at innovative gamified auction bonds to improve liquidity depth & give continued buy & burn pressure on the core MONSTA<>BNB Liquidity Pool.
Will staking not reduce the burn rate / volume?
The goal of staking is to emulate the actions of someone that buys, holds, and only resets his wallet every 49 days till cycle ends without the hassle of actually having to take care of it (in essence you’re outsourcing that function to the smart contract and are taxed on the transactions as a result). The cost of doing this equals (0.25%) every 50 days + transfer taxes (included in unbaking/staking tax).
Staking will also force the ‘movement’ of a lot of tokens that would otherwise never have moved. Now the ‘intentions’ of those tokens can be signaled via the baking program, and any break of that ‘signal’ carries a penalty tax that contributes to the protocol.
The baked/staked MONSTA will therefore still be subject to the core deflation and tax (“deflation tax” included in unbake/stake tax) as any other user of the protocol would have experienced if they had followed these actions.
However, the additional volume that can be generated by having an incoming generating CEX-listable token, combined with arbitrage opportunities and the added layers of game theory that this will present, will help drive enormous volume through the core protocol.
In keeping with the philosophy of rewarding active holders. All unclaimed (after the cycle end claim period ends) Baking & Staking rewards and the underlying VAULT share & MONSTA they represent at the end of cycle 1 will be burnt.
All unclaimed CAKE (VAULT) will be added to the Gravity Vault for cycle 2 and the unclaimed bMONSTA & sMONSTA will be burnt.
Baked or Staked MONSTA still accrues value as normal MONSTA would, but it rewards people that are willing to commit to the long term vision, whilst at the same time helping them keep their investments liquid, yet hassle free.
The Cake Monster protocol is a hyper-deflationary value-accruing machine.
Baking & Staking helps the value accrual process as it removes MONSTA supply from circulation, which ultimately increases the price and therefore as a result the VAULT and speed of value accrual.
Baking and staking is an opportunity for the real supporters of the project to be rewarded for their “Diamond Claws”.
We believe these are the people who need to be rewarded, and we look forward to building this with all of you.
Harder Hands. Harder Vault. Harder Money.