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At a high level, URAMAKI consists of its protocol-managed kitchen, protocol-owned liquidity, cooking mechanism, and staking rewards that are designed to control supply expansion.
Cooking generates profit for the protocol, and the kitchen uses the profit to mint $MAKI and distributes them to stakers. With LP recipe, the protocol is able to accumulate liquidity to ensure system stability.
- Staking (+2)
- Cooking (+1)
- Selling (-2)
Staking and Cooking are considered beneficial to the protocol, while selling is considered detrimental. Staking and selling will also cause a price move, while Cooking does not (we consider buying $MAKI from the market as a prerequisite of staking, thus causing a price move). If both actions are beneficial, the actor who moves price also gets half of the benefit (+1). If both actions are contradictory, the bad actor who moves price gets half of the benefit (+1), while the good actor who moves price gets half of the downside (-1). If both actions are detrimental, which implies both actors are selling, they both get half of the downside (-1).
Thus, given two actors, all scenarios of what they could do and the effect on the protocol are shown here:
- If we both Stake (🍣, 🍣), it is the best thing for both of us and the protocol (🍣+🍣=🍣🍣)
- If one of us stakes and the other one cooks, it is also great because staking takes $MAKI off the market and puts it into the protocol, while cooking provides liquidity and USDC for the treasury (3 + 1 = 4).
- When one of us sells, it diminishes effort of the other one who stakes or mints (1 - 1 = 0).
- When we both sell, it creates the worst outcome for both of us and the protocol (-3 - 3 = -6).
When you buy and stake $MAKI, you capture a percentage of the supply (market cap) which will remain close to a constant. This is because your staked $MAKI balance also increases along with the circulating supply. The implication is that if you buy $MAKI when the market cap is low, you would be capturing a larger percentage of the market cap.
Reward yield is the percentage by which your staked $MAKI balance increases on the next epoch. It is also known as rebase rate. You can find this number on the URAMAKI staking page.
APY stands for annual percentage yield. It measures the real rate of return on your principal by taking into account the effect of compounding interest. In the case of URAMAKI, your staked $MAKI represents your principal, and the compound interest is added periodically on every epoch (8 hours) thanks to the rebase mechanism.
One interesting fact about APY is that your balance will grow not linearly but exponentially over time! Assuming a daily compound interest of 2%, if you start with a balance of 1 $MAKI on day 1, after a year, your balance will grow to about 1377.
The APY is calculated from the reward yield (a.k.a rebase rate) using the following equation:
It raises to the power of 1095 because a rebase happens 3 times daily. Consider there are 365 days in a year, this would give a rebase frequency of 365 * 3 = 1095.
Reward yield is determined by the following equation:
The number of $MAKI distributed to the staking contract is calculated from $MAKI total supply using the following equation:
Note that the reward rate is subject to change by the protocol.
There is no clear answer for this, but the intrinsic value can be determined by the kitchen performance. For example, if the kitchen could guarantee to back every $MAKI with 100 USDC, the intrinsic value will be 100 USDC.
Rebase is a mechanism by which your staked $MAKI balance increases automatically. When new $MAKI are minted by the protocol, a large portion of it goes to the stakers. Because stakers only see staked $MAKI balance instead of $MAKI the protocol utilizes the rebase mechanism to increase the staked $MAKI balance so that 1 staked $MAKI (sMAKI) is always redeemable for 1 $MAKI.
No. Once you have staked $MAKI, your staked $MAKI (sMAKI) balance will auto-compound on every epoch. That increase in balance represents your rebase rewards.
You can track your rebase rewards by calculating the increase in your staked $MAKI balance.
- 1.Record down the Current Index value on the staking page when you first stake your $MAKI. Let's call this the Start Index.
- 2.After staking for some time, if you want to determine by how much your balance has increased, check the Current Index value again. Let's call this the End Index.
- 3.By dividing the End Index by Start Index, you would get the ratio by which your staked $MAKI balance has increased.