Governance Spotlight : Revisiting Tokenomics

A new chapter is unfolding for Mozaic as we propose an updated approach to $MOZ tokenomics. These moves are vital to aligning our protocol’s growth with our community’s aspirations and ensuring that the rewards of our achievements are distributed fairly among all involved.

These proposed changes aim to increase the utility of $MOZ tokens, align incentives with protocol growth, and involve the community in shaping these developments.

We welcome all members of the DAO to review these changes and share feedback in our protocol Discord server. We are excited to have you collaborate with us in shaping the future of Mozaic.

Mozaic has been evolving over the past few months and the team has been working hard to launch Theseus Vault V2 which launched to our lucky 300 beta testers last week. Behind the scenes, the team have also been redesigning the protocol’s technical stack to enable even better vaults products that will enable Mozaic to scale - quickly. We recognise that the protocol’s tokenomics must be updated to support the protocol's future in the same way. 

Our tokenomics roadmap is designed to increase the utility of $MOZ, optimise incentives for long-term protocol growth, and ensure that our community is rewarded for their contributions. We plan to achieve this in the following way.

Mozaic’s tokenomics strategy is governed by our vision statement:

To build a sustainable, user-centric AiFi platform where $MOZ is a key driver of growth, innovation and ecosystem alignment.

Our objectives include:

• Aligning incentives - Mozaic is focused on aligning token incentives with the protocol’s key business metrics - revenue, TVL growth and retention. We seek to ensure that the protocol’s users and stakeholders are sustainably rewarded for their contributions to these goals; and for their loyalty.

• Ensuring sustainability - and finding a balance between short-term rewards and long-term protocol health to create a stable and resilient economic model. This includes managing token inflation, proactively, and driving stable returns for token holders through consistency and continuous innovation.

• Expanding utility - we aim to integrate $MOZ into as many facets of the protocol’s operations as possible, growing its utility and intrinsic value.

  Tokenomics Roadmap Components

  We have identified the following elements that are key to shaping the future of $MOZ:

  

  Utility enhancements: 

  • Expanding use cases for $MOZ within and outside of the protocol including access to premium features and integration with other DeFi platforms.

  • Strategic partnerships that help to embed $MOZ into a broader financial ecosystem.

  Incentive programs

  • Dynamic rewards programs such as Relics which reward long-term “sticky” TVL in Mozaic’s vault products. We plan to consistently monitor and adjust these programs to ensure that they remain competitive and align with protocol growth objectives. Relics will also be metricated to ensure that they achieve reasonable costs of acquisition (CAC) and customer retention against industry benchmarks.

  • Tiered rewards programs linked to Mozaic NFTs are being considered - we plan to survey our community to figure out what provides the most value.

  • Airdrops - social activities or programmatic incentives that ensure mutual value add for both Mozaic and airdrop hunters.

  Revenue distribution and treasury management

  • Scalable revenue sharing, directly linked to Mozaic’s financial performance ensuring that $MOZ staking rewards scale with the protocol’s success.

  • Diversifying the Treasury by reinvesting the protocol’s earnings to ensure that the protocol can ride out tough times and sustain long-term product innovation.

  Market mechanisms

  • Strategic buy-backs or burns which enable dynamic token supply management and support long-term price stability by managing token supply inflation and building deep $MOZ protocol-owned liquidity (POL).

  • Continuously iterating our tokenomics program to adjust for market conditions, to balance supply and demand and ensure sustainable growth.

Our tokenomics roadmap is divided into three clear phases as follows:

Mozaic aims to take a balanced approach to iterating on its incentive programs - ensuring they are aligned to revenues - while balancing out the need for sustainable inflation in the medium term.

This comparison highlights the proposed changes to ensure that Mozaic is well positioned for sustainable growth while sharing its success with its community. 

Here are some details of the DAO's proposal to execute these changes.

Mozaic is proposing to replace the current token burn mechanism with a strategic buy-back program. While burning tokens reduces circulating supply and can increase token value & FDV, it also has limitations. Token burns often concentrate ownership amongst a small group of holders, reducing accessibility for new participants and potentially stagnating the growth of the Mozaic ecosystem. 

A strategic buy-back program offers greater flexibility overall. Revenues derived from vault fees can be reinvested to purchase $MOZ tokens from the market, enabling token supply to be managed dynamically. This not only creates sustained demand but also maintains liquidity, ensuring that Mozaic can respond to changing market conditions and growth opportunities as they arise.

The protocol will combine the above $MOZ tokens with an equivalent amount of $ETH from its protocol revenues and both tokens will then be added to the POL. This approach will support Mozaic to build up deep liquidity for $MOZ and bolster protocol stability.  

The protocol may consider strategic opportunities to burn tokens should the need arise to bring token inflation under control.

Mozaic is dedicated to creating an AiFi platform that puts our community and innovation first. That’s why we’re introducing Relics incentives and revamping our Hoplite NFTs. 

Relics: We are rolling out the Relics product feature as a way to boost vault yields and reward users who stick with us for the long haul. The longer you keep your assets deposited into Mozaic’s vaults, and the more you deposit, the more $xMOZ incentives you’ll earn. It’s our way of rewarding your loyalty. 

The DAO proposes to issue incentives to Relics holders from the Incentives Pool which was allocated 15% of the initial token supply at TGE; tokens assigned to this pool have yet to be distributed. 

Mozaic recognises the importance of ensuring that the Relics feature achieves an outcome that balances protocol profitability, token inflation and achieving reasonable CAC and retention costs.

After the implementation of the Relics program, the DAO will create an analytics dashboard to track the impact of the Relics incentives on token issuance to better measure the inflationary impact on token supply. These trends will be used to develop future buy-back and/or token supply burn programs.

Want to learn more? Check out our recent blog post for details on how Relics work.

Hoplite NFT revamp: We launched Hoplite NFTs earlier this year with high hopes, and we realise they haven’t reached their full potential yet. We are committed to making them a valuable part of the Mozaic ecosystem, and we want your input! 

Keep an eye out for a survey in early September where you can share your ideas and feedback on how to make Mozaic NFTs truly exceptional. 

Airdrops : The DAO assigned a pool of 20,000,000 $MOZ (2% of supply) to strategic airdrops at TGE. The following distributions have been allocated thus far:

• Zealy participants - 637,500 $MOZ was distributed to participants in March 2024

• Tenset airdrop community - 2,500,000 $MOZ issued with a 12 month vesting period

The DAO is committed to utilising the Strategic Airdrops fund to continue to incentivise community members that interact with and add value to the protocol.

During September and October, Mozaic will launch incentive campaigns on Wonderverse & Layer3, presenting users with an opportunity to participate & earn $xMOZ rewards.

Stay tuned for further announcements on our social channels.

We’re revamping the Earn Terminal to offer a more aligned and impactful reward system for $xMOZ stakers. Instead of relying solely on external LP fees, Earn Terminal rewards will now be tied to the actual net profits generated by Mozaic’s vaults. This means that by staking your $xMOZ, your rewards will scale with the success of the protocol - so you’ll benefit as Mozaic grows! 

Earn Terminal yields may act as an effective rebate on vault fees and encourage $xMOZ rewards from Relics incentives to remain staked with the protocol. We believe that this model provides a fairer and more sustainable way to reward our community. 

We are committed to turning on real yield rewards for $MOZ token holders. The following measurable outcomes must be accomplished before we can move forward:

• Mozaic Vaults V2 must be launched, with healthy TVL and be generating net revenue for the DAO;

• Revenues and Relics incentive program costs need to achieve stability and predictability to enable accurate business planning and forecasting; and

• We must secure and support the protocol's development runway to ensure self-sustainability.

Which way, modern man? "Vox Populi, Vox Dei" or the way of Lord Maximus Farquaad.

Over the years, we've witnessed a sizeable number of experiments run within the decentralised governance space, where centralised planning and decision-making have on many occasions contributed to the benefit of a few people to the detriment of protocol health, innovation & research and community trust.

This has also earmarked a massive shift in market sentiment among participants, leading to a great deal of financial nihilism and general discontent towards crypto; whether due to unfair price discovery in private markets resulting from venture capital (VC) participation, a lack of trust in the integrity of the founders and reliability of their software development efforts or broader adoption.

The rise and fall of short-term attention span and high-reflexivity, zero/negative sum games (memes, socialFi..) likely present an opportune time for the Great DeFi Revival, delivering on the promise of open source and decentralised, permissionless finance, for everyone.

Since inception, the DAO has always been a community funded and managed protocol that has taken its collective voices into account. Mozaic is committed to ensuring continuous community engagement with the protocol’s tokenomics strategy as well. We plan to follow these principles:

• Have your say - Mozaic believes in empowering its community to discuss and influence key tokenomics decisions - from reward emissions to how we control inflation.

• Transparency - Mozaic will provide regular updates on tokenomics performance, including buy-backs, revenue share, the costs of incentive programs (like Relics) and token supply inflation. Analytics dashboards will be set up to provide live information feeds.

• Evolve with feedback - Mozaic aims to continuously iterate upon its tokenomics roadmap ensuring that it evolves in response to community feedback, protocol user needs and market trends.

Come and join in on the discussion in our Discord server. Check out the proposed changes, ask questions, and share your insights. Your feedback is essential to ensure that Mozaic’s tokenomics framework aligns with the needs and objectives of our community.

The tokenomics discussion will remain open for two weeks. After this, we will compile all community feedback into a proposal that will follow the DAO’s established approvals process. We urge everyone to voice their opinions and offer suggestions.

Let’s build the future of Mozaic together.