How to convert your MINt tokens
Two days ago, we announced that you now can claim the MINt tokens earned from delegating in the FISO. Thus far, more than 1100 users have claimed their MINt tokens, and we are happy to have gotten very good feedback on the claim system. As a reminder, these are some important dates to bear in mind:
- January 10th 2022: MIN tokens can be claimed on mainnet.
- From February 24th 2022 to March 11th 2022: all FISO participants with unclaimed MINt tokens will be able to claim both MINt and MIN in one transaction.
- March 11th 2022: Last day to claim MIN and MINt tokens.
- Q2 2022 (currently expected): Yield Farms Launch.
While the original idea was to have those MINt tokens converted to MIN tokens through Liquidity Provision on the MIN/ADA pair exclusively, after close inspection, and following a proposal on our forum that had the overwhelming support from our community (98% of votes in favor), this will no longer be the mechanism. Instead, you will be able to convert the MINt tokens, and use them to boost yield farming rewards, by providing liquidity in a wider array of pairs, and not just the MIN/ADA pair. This is done to avoid having a gigantic MIN/ADA Liquidity Pool with a big overexposure to Impermanent Loss (IL), and to have a healthy DEX that incentivizes many different trading pairs. Please see below a series of terms and definitions that are useful to understand the MINt conversion process:
Essentially, a user who wants to convert their MINt tokens, will first have to provide liquidity in our DEX. This means they will have to provide an asset pair (e.g., ADA and MELD in the ADA/MELD pool), to one of a series of predetermined pools (to be chosen by governance first in our forum and later on, when the infrastructure is ready, through on-chain voting). Once they have done so, they receive LP tokens in exchange, which represent their share of the pool based on the assets they deposited. Then, the user will take those LP tokens along with the MINt tokens they want to convert, and stake them in a Yield Farm on our DEX. The LP tokens will be locked, meaning the user will not be able to redeem them for the underlying assets, for a period of 45 days.
Meanwhile, the MINt tokens will be burnt, and the same amount of MIN tokens are minted into a vesting smart contract, set up to have 45 days of lock up and 45 days of linear vesting. This means that, after 45 days, the LP tokens will be unlocked, but the converted MIN tokens will go through an extra 45 days of linear vesting until they can be fully redeemed. We will have a Web3 interface to harvest any released MIN, and the process to harvest will be the same as harvesting MIN tokens from the FISO rewards.
We call this method “boosted yield farming”, because the users that are staking LP tokens with MINt tokens for the conversion receive not only the converted MIN, but also a bonus (estimated to be up to 2.5x) on their Yield Farming rewards for staking the LP tokens.
It is to be noted, that the amount of MINt tokens that can be converted is not set as 1:1 with ADA (you will not need to provide 1 ADA of liquidity in the pair for every MINt you want to convert), but will depend on multiple factors such as what tokens/assets are being provided or what pools are chosen to be incentivized. Moreover, since the conversion of MINt tokens to MIN tokens requires Yield Farming, it will only be possible with the launch of Yield Farms on Minswap, which is currently expected for Q2 2022. We would also like to mention that it will not be possible to convert MINt tokens in a pair where MINt is also an asset, that is, you cannot provide MINt plus another asset to a pair and convert other MINt tokens by staking them with those LP tokens. Furthermore, as we have mentioned previously, all MINt tokens must be converted to MIN tokens within 82 epochs of Minswap’s launch.
Please see below more illustrations for clarification on the process:
We know this is a complex process. Thus, we would like to lay out in this Appendix a numeric example, to illustrate this process further. To avoid misconstrusion, we will use imaginary names for the tokens. Please note this is for illustrative purposes only.
Let’s say we want to use this boosted yield farming mechanism to convert a series of MEOWt tokens into MEOW tokens. We assume 1 ADA = 40 MEOW. We also assume we are the ones creating the liquidity pool, by depositing 1000 ADA and 40,000 MEOW tokens. In return, we would receive 6325 MEOW/ADA LP tokens. This amount of MEOW/ADA LP tokens received is calculated using the formula of: LP tokens minted = √(xdeposited · ydeposited), as is specified in the Uniswap V2 White Paper. We are assuming for simplicity that we are the ones creating the pool, as otherwise the formula to calculate the LP tokens that are generated for Liquidity Providers to an existing pool is more complex.
Now, for every liquidity pair through which the conversion can be done, there is a ratio of MEOWt tokens to LP Tokens. The LP token/MEOWt (LP/MEOWt) ratio will depend on the characteristics of the assets in the pair of tokens underlying the LP tokens. For instance, if the user is providing a pair of “HUSKY” and MEOW, and we assume “HUSKY” is a crypto with an insanely high supply, this will end up generating a very high amount of MEOW/HUSKY LP tokens as well. Then, of course, the LP/MEOWt conversion ratio will be much lower for MEOW/HUSKY LP tokens than for a pair such as MEOW/ADA.
For our example, let’s assume the LP/MEOWt ratio for the MEOW/ADA pair is 10. This would mean a user could convert up to 63250 MEOWt if they stake them among their previously generated 6325 MEOW/ADA LP tokens. We also assume a bonus of 2x for the boost ratio.
Therefore, if we want to convert 100 MEOWt and we stake them along with the 6325 MEOW/ADA LP tokens, then 1000 LP tokens will be boosted. This means they will earn 2x yield farming rewards than any other LP token that is staked. On the other hand, the other 5325 LP tokens will earn a normal yield farming rate. If we choose to convert all the possible 63250 MEOWt tokens, then all the LP tokens will receive boosted Yield Farming Rewards. The 100 MEOWt would be burnt and 100 MEOW tokens would be generated.
Finally, the timeline therefore would be:
Day 1: You create a liquidity pool with 1000 ADA and 40,000 MEOW, for which you receive 6325 MEOW/ADA LP tokens (NFT) in your wallet.
Day 1: You stake the 6325 MEOW/ADA LP tokens plus up to 63250 MEOWt in the DEX´s Farm.
Day 1: Lockup period starts.
Day 45: Your 1000 ADA and 40,000 MEOW (please bear in mind this amount is subject to IL) are now free to be withdrawn. If you withdraw the LP tokens, you would also withdraw the MEOW tokens earned from Yield Farming rewards from the staking accumulated during those 45 days.
Day 46: You can withdraw the first portion of the linear vesting of the MEOW that was converted from MEOWt.
Day 90: You can withdraw the last portion of the linear vesting.