Maple Finance is considering using protocol profits to buy back native SYRUP tokens and distribute them to stakers as rewards, the decentralized finance (DeFi) protocol said in a governance proposal on January 13.
The proposal, which awaits a token holder vote, would allocate 20% of Maple Protocol profits to monthly buybacks as an additional incentive for stakers. Maple said voting begins Jan. 20.
Redemption takes place on decentralized exchanges (DEX) and over-the-counter (OTC) trading desks. According to the proposal, Maple was generating approximately $5 million in annual revenue from its on-chain lending services as of January 13.
“By distributing repurchased tokens to SYRUP stakers, the DAO (Decentralized Autonomous Organization) rewards those who are committed to the long-term health and growth of the Maple ecosystem,” Maple said in the proposal.
Additionally, “(a) aligning the incentives of SYRUP stakers with protocol performance through rewards links their interests to the success of the protocol.”
Maple is an on-chain lending protocol. source: maple
relevant: DeFi TVL Nears 2021 Highs in Bitcoin L2 Liquidity Restaking
The buyback will complement existing staker incentives resulting from inflation-driven SYRUP emissions, Maple said. Under the proposal, stakers would receive 20% of new SYRUP emissions, or approximately 1% of the total annual SYRUP supply.
“Based on the current staked SYRUP balance, stSYRUP’s estimated reward rate (due to token release) will be ~5.0% APY,” Maple said.
The remaining 80% of annual SYRUP emissions, or 4% of the total annual supply, will be held in the protocol’s treasury, it said.
According to CoinGecko, the SYRUP token is currently trading with a market capitalization of approximately $88 million.
SYRUP is down about 60% since its launch in November. source: CoinGecko
DeFi token value generation
DeFi protocols are under increasing pressure to provide token holders with a portion of protocol revenues, with projects such as Aave, Ethena, and Ether.fi experimenting with value generation mechanisms for their native tokens.
This is in part because the November 5 US election victory of cryptocurrency-supporting President-elect Donald Trump signaled the start of a friendlier regulatory environment for DeFi protocols, asset manager Grayscale said in December.
On November 15, yielding stablecoin issuer Ethena agreed to share a portion of approximately $200 million in protocol revenue with token holders.
Last December, Liquid Restake Token (LRT) issuer Ether.fi proposed allocating 5% of the protocol’s revenues to buying back native ETHFI tokens and distributing them to stakers.
magazine: Ethereum may ‘struggle’ in 2025, SOL ETF odds may rise. Hodler’s Digest, December 29-January. 4