Is the Minterest team sustainably funded?

At protocol launch, the team will be funded for the medium term and so will not require support from the protocol. This is deliberate because it means the protocol does not have to pay for administration services from its treasury surpluses, so more is available to accelerate its buyback processes. The buyback has a very significant positive influence on Minterest’s ability to attract liquidity which is why this is important.
The team is incentivised through team token allocations, although in a way we have not seen in other projects. A large proportion of team tokens will be held in an escrow account, with the intention they are not traded.
These tokens will be staked in the protocol and earn MNT from its buyback which will then be distributed to team members. It means the team is incentivised to focus on long term outcomes and in a way that aligns very much with protocol users.
The team’s tokens also vest block by block over 5 years, and after a 6 month cliff post launch, and again this is an indication of the team’s long term commitment to the project.

What is Minterest value proposition for the VCs?

Mostly, the VCs were attracted by the only thing that matters in any startup - network effects. Specifically, Minterest’s ability to generate more powerful network effects than DeFi peers. It does this via what is known as a flywheel effect, which powers the protocol’s liquidity mining architecture.

What does that mean and how does it work?

Positive network effects occur when each new user joining creates increased value for all other users. It results in more users making the whole system better, which also attracts more new users, which then makes it even better, and so on. Social media is an obvious example of how this works. With Minterest, the protocol captures 100% of the value it generates from its activity. This comes from interest rate income, auto-liquidation fees (via the protocol’s auto-liquidation process) plus flash loan fees (when governance processes enable these post-launch).
Minterest exchanges this captured value for MNT tokens on-market and then distributes these to users who stake their MNT to participate in governance processes.

Why does this matter?

Minterest issues 27,400 MNT tokens a day equally to lenders and borrowers, doing so over 5 years. This incentive mechanism in lending protocols is known as liquidity mining. This is very influential in users deciding to supply liquidity, since the value of these tokens directly contributes to overall yield. Minterest refers to these tokens as Emission Rewards. Two things determine the value of liquidity mining to users; the number of tokens they receive and their value.
In general, the number of tokens a user receives is largely determined by the amount of liquidity they supply and the amount of borrowing they undertake. This is calculated algorithmically based on a user’s individual proportion to all other users. It also means the number of tokens each user receives decreases as the protocol’s community gets bigger and more liquidity is supplied, since more people are sharing a fixed number of tokens. Such an incentive structure is therefore becoming less effective.
With Minterest, the more liquidity it attracts the more borrowing can occur.. More borrowing is what enables more value to be captured, which is what enables Minterest to spend more on the MNT buyback. This obviously positively impacts the value of MNT, given the protocol is a buyer in the market who otherwise wouldn’t be there. Increasing the value of MNT tokens positively impacts the value of its Emissions Rewards and so Minterest user yields, which in turn is instrumental in attracting more liquidity.
In short, increased liquidity is correlated to increasing MNT value and increasing MNT value is correlated to increasing liquidity. This architecture creates a powerful self-reinforcing flywheel effect, where each new user supplying liquidity creates added value for everyone else, and allows Minterest to outcompete its DeFi peers.
When VCs understood this, it really caught their attention.

What do Minterest's partners think about Minterest?

That’s a hard question to answer simply because it’s something best left for them to say. Also, a significant number of our upcoming partnerships are not yet public. I’m also aware of the danger of bragging before we have delivered anything. What matters in our team is not what has happened so far but launching the protocol and growing out TVL and its user ecosystem.
In an attempt to answer your question though, to some extent the quality of our current publicly announced partners, and there are more to come, does say something about the project and team.
We would also like to believe the quality of our advisors indicates much about the quality of the project. People like David Post, General Manager for Chainlink, is a key advisor we work closely with and Minterest is the only project he is involved with external to his work. We’d like to believe it’s a strong quality statement.
The same goes for Simon Schwerin, a partner at Iconomy, a key leading blockchain think tank, Matthew Niemerg, CEO at Alephzero, itself a sovereign cross-chain project being built out to cater for enterprise, plus Joeri van Geelen, previously Head of APAC for Prysm, the world’s leading blockchain economic modelling firm.
Finally, the quality of Minterest’s investors cannot be overstated, of whom we have a large portfolio, and so much so I wrote a blog post about it here: https://minterest.com/blog/introducing-our-partners
Last modified 1mo ago