RECAP — Clearpool AMA with M11 Credit: CPOOL Staking & Clearpool Oracle
Missed the recent AMA? Not to worry, you can either listen to the Twitter Spaces recording (click here) or read the recap below.
Introductions
Robert Alcorn
It’s been about a month since our last Twitter spaces, and a lot has happened since then.
Clearpool had a wonderful month in September; here’s a quick high-level overview. Over September, the total liquidity provided by the protocol increased significantly. The 30% increase is, in my opinion, outstanding growth given the broader market dynamics. I’m sure many of you here are lending on the protocol. So, once again, thank you for your participation and support.
This is an excellent metric, and we are elated with the results, as total liquidity provided has more than doubled in the two or three months since we launched on Polygon. This is tremendous growth, and it shows that they were on the right track. At the same time, the number of lenders has skyrocketed. So has the number of unique wallet addresses, which has increased significantly over the same period, more than doubling in the last few months. This is also very positive to see the diversification of lenders entering the system.
As the market has begun to stabilize following the summer’s volatility, we’ve begun to ramp up the launch of new pools. So in September, we launched three new pools, one on the permissioned side, Alameda, with two different lenders, and it is still open to institutional lenders.
On the permissionless side, we launched Nibbio and Bastion trading pools. Those pools performed exceptionally well following the launch. So it just shows that there is still appetite from lenders out there. This is all helping to continue the metric’s growth across the board.
And then, finally, we launched the Oracle and staking mechanism. We continued to test this system internally and externally with a number of the early Genesis Oracles that were announced before launch. It was very encouraging to see their participation rates, and the test outcome of that voting was excellent. As a result, we used the parameters to set the curve before launching the Oracle network and staking mechanism.
We launched it on Monday 10th October, and the curve was updated with the vote that was completed on Friday 14th October. As you guys can see, you can now stake to the Oracle pools, and we’re going to go through that process in a bit more detail a little bit later.
We’ll come back to that later, but for now, I want to welcome our guests today. M11 Credit is participating in Clearpool as an Oracle, and they’ve got a lot of interesting things going on over there. So let me bring in the guys, Wojtek and Victor. Welcome to the AMA.
Introducing Wojtek Pawlowski & Victor van Eijk from M11 Credit
Victor van Eijk
Hello, everybody. My name is Victor van Eijk. I’m Dutch, and I joined Maven 11, which is the parent of M11. We’ll get to talk about it in a little bit. I joined last year with a long background in TradFi and capital markets to help build out the credit business. We built an underwriting business where we are active on several protocols, and now we also provide our input on Clearpool. We learned a lot over the year, and the learning curve was steep. I am not a crypto degen from the start, but I am intrigued by the transition from off-chain to on-chain, particularly in capital markets. So, super excited to be around.
Wojtek Pawlowski
I’m Wojtek Pawlowski. As the name and the surname suggests, I’m from Poland, but I have lived here in Amsterdam for the last eight years since I came here to study quantitative finance. I don’t have any TradFi experience, which complements each other well with Victor because he’s a TradFi boomer, and I’m more of a crypto-native guy in the company. I joined Maven 11 two years ago to be more on the company’s trading side, but then the team was still relatively small. We invested as a fund in Maple Finance and want to take a proactive approach and launch our first pool. So we bootstrapped the pool and started our journey in the DeFi undercollateralized market. The journey was so successful, and I wouldn’t like to abandon the ship from day one. Even though my heart is still on the trading side, I’m very much into what M11 credit does, and I’m managing the operations of our pools and maintaining relationships with borrowers and LPs.
Please introduce us a little bit more to M11 credit, how and when that started, and describe in a bit more detail exactly what it is that you guys do.
Victor van Eijk
Yeah, sure. We both work for Maven 11, an Amsterdam-based venture capital fund that has been around for a long time but in its current form as a venture structure since 2017. So we run two funds now, we’re raising the third at the end of the year, and we have north of US$ 250 million under management, purely blockchain technology focused. So DeFi is a very interesting and important pillar for us. So from that angle, we invested in the Maple protocol that some of you might be familiar with in one of their seed rounds in March 2021. And by trying to be proactive investors, we started as one of the first so-called pool delegates on there and scaled a 20 million initial bootstrap pool from July 2021 to north of US$400 million in TVL this April, basically before the market got a little bit choppy. So we’ve experienced stellar growth.
We had to improve processes and running standards. The teams now have five people within Maven 11 that work for our credit business, M11 credit. We’re working on underwriting the loans, monitoring the loans, talking to our LPs, finding new interesting borrowers, etc. So we built a nice in-house credit business, and this is how we got involved. We threw that investment from our VC arm, and we basically stumbled into the uncollateralised on-chain underwriting scene. But as I’m sure the audience will agree, it’s fascinating and ripe for a lot of disruption and growth going forward. So we’re super stoked to help build it and leverage our knowledge by being part of Clearpool and, hopefully, other protocols in the future. So that’s how we got involved, and we decided the time was right to rebrand from Maven 11 into our own little credit shop to see what else could be done in that space for us.
Was there any moment or any specific catalyst that you guys saw when you decided that you wanted to create M11 Credit as a separate unit under Maven 11, the parent VC? We’re interested to hear about the opportunities you see going forward for M11 Credit.
Victor van Eijk
Absolutely. I think it started somewhere over the summer, and everybody knows what went down. By then, we were running several pools on the Maple infrastructure. We figured now was the time, with some of the CeFi players in trouble, and now is the time to double down on the DeFi transparent narrative that we are all passionate about. So we thought this was the right time to establish ourselves as one of the few specialized underwriting houses in the blockchain.
So the idea was born in August of this year when we thought, let’s rebrand ourselves or take a little bit more distance from the venture side and try to establish ourselves as one of the leading underwriters in this space. We take great pride that we didn’t face a single credit event, not even a late payment. So we thought this was a great time to leverage that throughout the most volatile and challenging period that anybody can probably remember in the lending and borrowing space. Then we cut our teeth with Maple over the past 18–20 months. We did well, made mistakes, and learned from them. We now have a great team in place and the right network. So we felt that the end of the summer that it was the right time to establish ourselves as a stand-alone credit business. That was when it was born.
We’re now also functioning as an Oracle in Clearpool as the first step. Still, we see ourselves providing services and value on other DeFi protocols. The team, the data we’ve collected over the past 20 months, and the connections we’ve made, make us at the forefront of this whole movement. So we think we can be of value at multiple other protocols and even from some bespoke underwriting services for whoever might need it.
Wojtek Pawlowski
And I just wanted to add that the reason was also pretty straightforward. We have our Maven 11 Twitter account, and I think the amount of news coming from our underwriting activity was enormous. So we were diluting the whole VC news on the Maven 11 Twitter. So then we started thinking we should have a separate Twitter account for our underwriting stuff, so I think this was the initial idea. So from a Twitter account, moving to be a completely different entity, this is how it started.
In the ecosystem of the unsecured lending market, there are a lot of players. Some established players like Maple, TrueFi, and Clearpool, and then there are a couple of new players coming up as well, like Credora or maybe even taking the CeFi players like BlockFi and Genesis into account as well. Therefore, we just wanted to clarify again — where do you see M11 fitting into this ecosystem exactly?
Wojtek Pawlowski
So that’s a good question. We came up with this one short line: credit underwriting as a service. This is our motto. So we want to be seen as a party that you can trust, with an established network of LPs and borrowers, and understand them well. And if you need a second opinion about somebody to create a proper credit memo, you can come to us, which can be on-chain or off-chain. So obviously, setting up your own credit team and underwriting each loan is a lot of hassle, and it’s expensive. So if you don’t want to do that and you want to access more potential borrowers that we already know, you can come to us, we can connect you, and we can underwrite for you as a service.
On top of that, you mentioned all of these protocols. So obviously, on-chain is our priority because this is where we see the future heading. We always wanted to show that you can transparently do this business without being a black box and showing where the money is going and what the terms are. So basically, our main bet was and is Maple in their category because we invested in them, and they are the largest player on the market as well, so we support them very much. But we also thought that if somebody does something different there, you can use our services as well. So, for example, Clearpool, the Oracles, why not be there? We see the rates, and we are dictating the rates to some extent to our borrowers. So, who would be a better expert than us in that field? Why limit ourselves only to one particular activity? In general, we see ourselves in the future as a trusted party in the space that has well-established connections, and that can be used as a party to underwrite anybody for other services. So that’s our position.
Robert Alcorn
Fantastic. Thanks, guys. I think you’ve done a great job selling yourselves as an Oracle. So I’m sure you’ll probably get many more guys staking to your pool on the back of that. It’s clear that you guys have considerable visibility into the market, and that is what we want out of the Oracles. So it’s great to see that you guys are participating as one.
Clearpool’s Oracle & Staking Mechanism
Robert Alcorn
I think pretty much everyone is familiar with the concept of staking in crypto. However, staking in Clearpool is slightly different. So, as usual, we’ve taken the concepts and the technology and then innovated something unique, and the main part of that is this Oracle network. So let’s try to break down a little bit of what the Oracles are doing for everybody.
Anybody that’s used Clearpool as a lender will be very familiar with how the interest rates move in the pools. The interest rate that the borrower pays and the lenders receive is determined by the utilization rate or the amount of liquidity the borrower is currently utilizing from the pool. This will determine where they are on that curve and the corresponding interest rate paid. The curve has three main parameters that determine its shape and the rates paid along it. Those parameters are the interest rate at 0% utilization, the interest rate at 100% utilization, and then the lowest interest rate, which currently sits at 85% utilization. So these are the three parameters that the Oracles have to vote on during the two-week epoch.
Oracles can decide based on whatever subset of data they have on where they think those rates should be. So this can be based on what they see elsewhere in DeFi, macro factors, etc. It’s really up to the Oracles to decide where they think these rates are moving. Because we’ve got over a dozen Oracles, we’ll have a distribution when we get all of those parameters. We can then process that distribution to effectively get a weighted average and then use that final parameter to set each of the three parameters on the curve for the following epoch. So effectively, the curve is repriced or reshaped every two weeks, ensuring that the interest rates paid and received through the borrowing lending process in the permissionless pools are consistent with current market conditions.
This is very important because you want to lend at current rates. If the market has moved higher, you don’t want to be lending at outdated rates from three months ago. Likewise, the borrowers don’t want to pay higher rates if the market has moved lower. So this mechanism is really unique and designed to ensure that the rates move with the market and what we have then is the entire protocol being driven by the forces of the market. The pools are driven by supply and demand, and the interest rates should also be driven by the market forces through this Oracle network. So that briefly explains what the Oracles do.
How does staking work?
Robert Alcorn
Every Oracle has to stake at least 200,000 CPOOL to become an Oracle, and they can stake as much as they want above that. Then, CPOOL holders can also stake in that Oracle’s pool. By doing so, you’re lending them the voting power you have with your CPOOL tokens. So as you can see on the app now, a lot of CPOOL has been staked to all of the Oracles, and some have been delegated by more people than others. People can see that APR has been calculated based on the previous vote, and as you would expect, the Oracles with higher APR have attracted more stakers.
An important thing to mention here is that voting power is capped at 10% of the total amount of CPOOL that has been staked. If you continue staking to an Oracle that has already reached the 10% cap, you will be diluting the rewards. So if an Oracle is successful in the following epoch, and they’re already at 10%, then the rewards that they earn, minus the fees, will be distributed amongst more stakers, diluting the APR. So I think this is something that perhaps hasn’t been quite understood because we can see some of the Oracles are getting a significant amount of voting power above, above the 10% cap. So for everyone listening, please take a look at that. It is explained in the documentation, and we’re working on providing a more in-depth explanation on the UI. So when an Oracle reaches that 10% cap, it will be explained on the page. Once we’ve hit the end of the voting cycle, which is every two weeks, the rate is repriced, and all successful Oracles are rewarded with emissions. And those emissions are shared with all of the stakers minus the Oracle’s fee, which can also be seen on the page. So hopefully, that gives a good explanation of how the entire mechanism works.
By staking to an Oracle, you are helping to secure the pricing mechanism. We want to ensure that the Oracles provide accurate parameters representing current market conditions. If they don’t do that or even try to skew the rates, they will fall in the tails of the distribution and be removed from the final distribution, and not receive any rewards. Therefore anyone staking is going to move their stake to a more successful Oracle, and then that Oracle becomes less relevant. The amount they’ve staked themselves is also not earning any rewards. So hopefully, that explains how important it is that staking into an Oracle pool and selecting the right Oracle.
You guys have been participating in the testing, and it was super exciting to have you as an Oracle. Please tell us, how was that experience with the testing, and how has it all gone so far?
Wojtek Pawlowski
It was very positive. I think the whole launch was very smooth and well-advertised. When we were testing and voting, it was every week by then. The distribution of voting power was uniform, so everybody just had 150,000 CPOOL. Right now, the new voting mechanism will impact the curve positively because we have borrowers as one party whose game theory says that they want to pay as little as possible. Obviously, they want to be aligned with the market, but generally, they don’t want to pay as much as possible. So it’s good to have a proper balance, and I think the parties that you selected for being the Oracles of this industry are pretty well balanced. So we have parties like ourselves that see the rates across Maple, CeFi lenders, etc. Borrowers also see that, but again, they want to minimize their expenses with lending.
And so I think the actual impact on the curve we’re going to see with the next vote is where we can finally assign more weight, maybe to more parties between the borrowers and lenders. So they’re trying to find this equilibrium where the borrowers and lenders are happy. So, in general, good job, guys, because everything looks great, and I think the experience has been very positive so far. Victor, do you want to add something to it?
Victor van Eijk
When you guys launched back in the day, we first noticed and thought that this curve system was quite clever. It’s like, why didn’t we think of something like this? So we’ve always been quite impressed with how you guys solve these issues and the Oracle voting as well. I think what you guys came up with is pretty smart and exciting. It makes a lot of sense, and it will lead to great price discovery of where it should be. The folks you’ve managed to sign up as Oracles are a great crowd, and we’re pleased to be part of it, like Azure Tide, Sino, and other firms that we respect a lot. So I think the output will be very valuable. So, congrats on adding this new piece to Clearpool. It’s a great addition.
You talked a little bit about it already, but maybe drill down a bit more into what data you guys look at. What benchmarks do you look at when you’re looking to vote on these parameters? Is it mainly within the crypto markets, or do you also look at macro data as part of that analysis?
Wojtek Pawlowski
Yes. To be honest, to be between the 25th and 75th percentile and for the vote to be successful, sometimes you cannot go with the input you want because we see that the rates in general in undercollateralized lending should be much higher than they are right now. If we look at TradFi, the opportunities there right now are comparable to under-collateralized lending in crypto. For example, the average loan index is 8.12% versus 4.25% in March/April. The High Yield Corporate Bond Index, which is a pretty good representation, is at 9.14%. Why would you go to crypto as an institution and engage in all that to get the same yield as you can in TradFi? We think the rates should be much higher than they are right now, but if I’m gonna input a 12% interest rate at 85% utilization, I’m guaranteed to be unsuccessful, even though that’s what we think the market should be. But the saying says that you should never fight the market. So we need to find a balance between what we want to see and what can be done, so we closely look at the votes from the past period.
Currently, it will be every two weeks, and we try to put the trend that the rate is trending upwards. So we are trying to add increments to what was previously voted on to push them higher. If you guys delegate your votes to us, we will have more voting power to influence them. Because with a uniform distributed voting system, it was pretty much impossible. So we can generally focus mainly on this efficient 85% utilization because it’s pretty objective. On the contrary,I would say what the borrower should pay at 0% utilization and max utilization is pretty subjective. You don’t want to punish the borrower too much at max utilization because they cannot monitor their pool 24/7. For instance, Wintermute with the recent unfortunate exploit where they were paying that 25% for a couple of days, and that’s fine, but it shouldn’t be exaggerated. It shouldn’t be 50 or 75%, but if it’s going to be 25 or 23 or 21, that’s subjective. And the same goes for 0% utilization. I understand that nobody wants to have idle funds lying there, as it’s unfair for the lenders, so the borrower should constantly trend toward this 85% utilization. So these two metrics are a bit subjective. We mainly focus on efficient utilization, and then as I mentioned, we look at TradFi rates that are comparable to what we see in crypto for a similar product.
Obviously, we also look at other DeFi protocols, TrueFi, which, sorry to say, are always underpricing. Right now, it’s also hard for us to push our rates higher when we see that they still lend below 9% to almost anybody. I do not know how they see that as justifiable, but we also look at Clearpool; it’s a bit different type of loan. It’s an open tenor. So the price should be a bit lower than the fixed-term loan. And we also see our activity on Maple and not only ours but also other pool delegates we also take into account. The so-called risk-free rate, like in Aave, Compound, went down to 0.7% — so good luck attracting capital for that.
So to answer your question, sorry for making it so lengthy; we utilize both macro and DeFi data. On Maple, we are issuing a loan to a particular borrower, so the rate very much depends on actual financials, who they are, their reputation, their track record, and many other metrics. Here at Clearpool, we are choosing one curve, which I know will be developed further, and you can speak about it after I finish, but it’s a unified rate for all borrowers. For example, Amber Group is completely different from Wintermute. Then, in theory, they should pay different rates. So sorry to take such a long time, but it’s a pretty broad topic, so yeah.
Robert Alcorn
No, that’s great. A couple of things to add to the back of that. First of all, thank you for the level of detail in that answer. I think that should give our community a good insight into the job you guys are doing as an Oracle. It’s not just simply putting your finger in the air and typing three numbers; there’s a lot of work that goes into this. As we start to introduce more Oracles, those that are doing this properly and analyzing all data that you talked about are going to be the ones that have the highest success rate. So I think some of the points that you mentioned are important.
You also touched on different curves for different types of borrowers or different rated borrowers. This is coming in the next version of the curve we have already developed and are ready to deploy. We want to run a few epochs on the existing curve, to begin with, which has three parameters. The new curve will be like a 3D curve, and there will be a few more parameters added. I won’t go into too much detail, and we’ll release some more information on that soon. But one of those parameters will be credit spreads. So higher-rated borrowers will be on a lower curve as compared to lower-rated borrowers. That will add to the curve’s sophistication, another parameter that the Oracles will also be voting on.
On Clearpool, Maple, and TrueFi, all of the borrowers right now are very similar in nature. Although they’re different, they’re mostly market makers, high-frequency trading firms executing market risk-neutral strategies. What do you think is the next wave of borrowers in this space? Do you think we’re going to have more different types of borrowers on these platforms? What other borrower profiles are you currently either evaluating or having plans for M11 Credits to underwrite?
Wojtek Pawlowski
Maybe let’s start with the last part of your question. Our target group are market makers/trading shops. We understand them well, and they are great customers. It’s an easy selling point for LPs, as market neutrality generally sounds good. People associate crypto with shitcoins pumping up and down 50% in a day, so market neutrality provides them with comfort. They are recurring clients with very high volumes, so that’s another very important part for us. More volumes and more recurrent clients mean more fees for the lenders and us. It means that if we got 1 billion TVL in our pool, we would be able to do the same job as we are doing right now, while with other target groups, that’s not the case.
Because we were considering, for example, lending to DAOs, which makes sense, right? Like there was this SUSHI proposal a year ago, they wanted to raise new cash and sell tokens at 35% discounts. We even wrote the proposal to come to us, put a couple of hundred percent collateral in SUSHI, and we’re going to issue a loan to you at 10%, and they wouldn’t need to sell your tokens for a 35% discount. However, the actual amount would be relatively low from what we do because we usually issue loans, at least $5 million plus, and our largest one was $40 million, and we wouldn’t have all this hassle. So the question comes, why would you do it? Diversification is good, but for now, just adding one or two DAOs will not make it better because the actual volume would be much smaller.
We also considered fintech companies, but then again, they will come to you and take a 100K loan. Maybe the volume will be okay because I know a hundred companies will come, but how can you underwrite them? Like we are five people, we understand every market maker we have on board very well. We meet with them at least once a year, go to their office, and learn everything about their business. While with hundreds of small companies, we cannot achieve that, and it’s just not worth our time. One time, we also got a node operator that wanted to take a loan and put very large collateral in the native token of this node and buy an office. Okay, that’s nice, it was a one million loan, but for us, that’s not super attractive because we can have Wintermute coming to us with the request for a US$10 million loan tomorrow.
For now, we don’t see many opportunities with other types of players. Maple opened a mining pool, so let’s see how that will go. But our expertise is definitely market makers/trading shops where we feel comfortable. The diversity within them is already pretty high. You can have one shop that does only arbitrage and market making. The other shop will do some venture investments and market-making around that. And the other shop will also have a huge lending and borrowing business, directly connected to all other businesses. So, in theory, you also face the risk of this borrowing business. There is enough work to do within this niche, and we don’t really need to push for other types of borrowers at the moment. But Victor can also give his opinion about it.
Victor van Eijk
This is still such a very young movement that we’re all involved. In the end, everybody sees the future. Most of the credit creation will remain unchanged, and hopefully through protocols such as Clearpool or Maple or others, but that’s still a long way off. To add, we’ve just opened a new subset of market-making firms where we have onboarded, for example, more TradFi market-making firms that have also started their first moves into digital assets. However, given their current financing lines with their predominantly prime brokers and banks, they still find it very difficult to get their digital assets business financed. Without getting too technical, prime brokerage lending is more tied to positions, margins, etc. Whereas the loans we issue, for example, on Maple and Clearpool through its pools, are more unconstrained as long as they’re used for delta-neutral market-making activities. So we’ve, for example, issued a loan to Flow Traders; this is all visible on Maple. Clearpool has a permissioned pool with Jane Street, and this is a good example of that. We have DV trading on our books, a large Chicago TradFi firm, and we’re onboarding two very well-known other TradFi companies right now for the same purpose.
We all started with crypto native firms that had difficulties financing themselves through the likes of JP Morgan or Wells Fargo just because of crypto’s unregulated nature. We also see now firms that have connections and ties to providers of capital but have difficulties financing their digital asset activities efficiently. So I think we’ve opened up a new array of potential borrowers. Hopefully, when we do this more often, we will see more on-chain financing in the future, like Fintech or SaaS companies, etc. But it’s still early days, and we have our hands full growing this business. So that’s what we’ll keep doing, but everyone can see that other companies will use the infrastructure being built at some point.
In the future, do you think you would expand your team, for example, have a market maker team, then another team looking at another vertical, and so on? Or do you think that it will be more likely that other players will enter this space and have that niche focus on certain verticals?
Wojtek Pawlowski
Both options are possible. We cannot compromise on the underwriting quality because that’s what keeps us alive. We didn’t have any defaults, and obviously, we want to keep it that way. If it’s economically feasible to start looking at smaller businesses and lend to them, that’s fine. But we need to feel comfortable with it. I’m going to say that it might sound like a niche, but market makers are the best customers by far, the rates are right, and the number of these shops is growing daily in crypto. Other players are coming, as Victor said, so their demand is not 50, 100 million; it’s in billions. So the question is whether it is worth it for us to switch and maybe dilute our work a bit. Is it worth it for us to hire another team, train them, and train ourselves because we don’t know about lending to anybody else now?
But as I also mentioned, it’s different for every borrower. Each market maker does things differently, and the setup is different. The entity that borrows could be tricky, as it can be a parent or daughter company. There is still so much to explore that we don’t focus on other verticals right now, although we also lend to yield funds, for example. So that’s a bit different than market Maker and also market neutral. The rates are not great, so most of them stopped borrowing, but they will return when good times come again. So on the borrowing side, we are not crying about the current situation, and the moment the liquidity returns to the market, we are very much optimistic about how it will play out. But as you said, the firms that specialize in certain types of lending will come to do what they do best, and we, for now, understand market makers well.
Robert Alcorn
That makes sense, and I would agree as well. We also see this migration of more traditional financial institutions entering the space. You mentioned the Jane Street pool and Flow Traders, and we’re also speaking to many other guys from that same profile. That’s why we’re developing our permissioned pool product to a more sophisticated version that will hopefully come online later in the year. We’re seeing real demand from those profiles who can see the efficiencies DeFi rates bring to lending and borrowing. So, that all makes sense. Thank you very much for answering all those questions.
Wojtek Pawlowski: I saw in your timeline that you also plan version two permissioned pools. Can you share the alpha and tell us what it will be, or maybe it’s already known, and I’m just uninformed?
Robert Alcorn
So that’s what I was referring to. It will be called something else and won’t be called permissioned pools anymore. We will have a new name for that, and it will be almost slightly separated. I can’t share the name yet, that’s top secret, but it will be the next generation of the permissioned product. So currently, the pools are set up manually. Basically, it will become more automated, and we’ll have this ecosystem of borrowers and lenders that have all gone through the same KYC and KYB process and will then be able to transact within this permissioned environment. It will add more sophistication and a few USPs to what we already have. We’ve already got a bunch of guys signing up for that, so we’ll make an announcement later in the year, and also, at that time,
Community Questions
Q. Alpha seeker: How many Oracles do you guys might have on the platform in a year from now?
Robert Alcorn
Well, the more, the merrier. In the first phase of this, we want to ensure that we have good quality Oracles. That’s precisely why we have engaged with the team at M11 and all of the other guys you see on the list. That’s very important. But as we expand that and get beyond maybe 20 or 30 of those types of profiles, we can open it up and start to allow other members of the ecosystem and the community to be Oracle. So I think a year is a very long time in crypto, as you know. Maybe a year from now, we could already have over 100 Oracles. I’m not sure, but ultimately, the more Oracles we have, the better in most regards.
Q. Alpha seeker: After CPOOL emissions run out; will the yield for delegated staking just be from protocol revenue?
Robert Alcorn
Yes is the short answer. But we have a significant runway on the emissions schedule for staking rewards. This has been planned out very carefully. The runway is significant, and we also have the potential ability to stretch that out. That depends on various factors; the token price is one of them and various others. There’s also the possibility of migrating some of the LP rewards over to Oracle rewards. There are many factors to consider with this. We could probably have a separate AMA all on its own for that. But the short answer is that eventually, protocol revenue will be used to replenish the pool’s reward.
Q. Mathias: Is there a possibility of a more dynamic staking dashboard?
Robert Alcorn
Absolutely. It’s something that we’re working on. Obviously, we wanted to get the product out as soon as possible. So we have the MVP version, which has been launched, and we already have the team working on various enhancements to the UX for staking. So we’ll get those product announcements launched as soon as possible.
Q. Mathias: Do you still earn the same amount on staking when a pool exceeds 10% boring power, or do you get diluted from there on out?
Robert Alcorn
I think I explained it earlier, it is an important point. So we’ll touch on it again. As soon as the pool hits 10% voting power, if you continue to stake to the pool, that amount will get diluted as their rewards also capped at 10%. So if you see that, you could select a different Oracle.
Q. 0xBuli: Will the team adjust CPOOL rewards per epoch or is it always the same 850k CPOOL per each epoch?
Jakob Kronbichler
The short answer here is that we will evaluate the CPOOL distribution per epoch every two weeks. So each epoch, we will announce how many CPOOL we will distribute. That doesn’t mean that we’re going to change it every single epoch. But we will evaluate how many CPOOL have been staked out of their current total circulating supply. We then set ourselves a target and set the distribution per epoch according to that target. But we can say that we mapped this out over several years, and the rewards are going to be competitive. But obviously, we do also need to respect our internal emission guidelines together with targets and where we want to get towards with the amount of CPOOL being staked.
There are still many questions from the community, but we’re running out of time. Just one final question for you guys, where can people find out more about Maven 11?
Wojtek Pawlowski
Yes, so I already shared our new Twitter account, M11 Credit. So that’s the best way. We are commenting live on situations that we see on a daily, whether there is an exploit or if there is some question about the borrower; we are updating our people on Twitter. We are also publishing a Maple-related medium, but I guess it’s also applicable for Clearpool. We are publishing monthly reports on our pools, borrowers, and some aggregated numbers, debt to equity, debt to AUM, and how the leverage develops over time. Soon we’ll have a dedicated website because we want to rebrand fully from Maven 11 as a venture fund. So the website is coming soon, but I guess Twitter is the best, and the DM is always open. So don’t hesitate if you want to ask a specific question to Victor or me. We are always available to you at your service.
Jakob Kronbichler
I think this was really good and insightful. It’s great to have M11 credit on board. I think it really adds a lot to our overall assortment of Oracles. It’s actually great that there are new participants in Clearpool. So they come with an outside perspective and a lot of experience, having been there as the largest pool delegator on Maple. We’re very excited to have them on board, and as Victor said, we’re looking forward to a long-lasting collaboration.
Additional Community Questions
Q. ser Iluanor the Liz: is the yield higher if an oracle with 1% voting power is successful; vs another successful oracle with 20% of the votes (capped at 10%) would motivate to not all stake on the same
The rewards allocation will be higher for the Oracles with higher voting power, but it’s capped at 10%. For example, if you stake to an Oracle with 7% vs 2% voting power, you will get more rewards by staking to the first oracle with the higher voting power (assuming the same APR and commission). But it will be capped at 10%, so the rewards will be diluted if it gets beyond 10%
Q. ser Iluanor the Liz: If I unstake to stake to another oracle, then I won’t earn on that epoch? If I don’t get any reward from the epoch in which I unstaked, why would the beginning of a new epoch be a better moment than the middle of one?
When you unstake from an Oracle pool, you won’t receive any reward on that pool during that epoch. The benefit of staking earlier is that you will receive more rewards compared to when you staking later on. The longer you stake, the higher your rewards, as time also contributes to the reward calculation formula.
Q. qwertymug: For transparency, will we know how each staker voted for each cycle and whether they are successful so it’s easier to decide using their track record?
You will know when an Oracle votes outside the 25–75th percentile because their rewards for that epoch will be lower or zero. The distribution should reflect each Oracle’s own analysis and feel for the market, not based on what others are doing; therefore, actual vote levels will not be disclosed in the report.
In the next update, we will switch to the Interquartile range method, so the most accurate Oracles will receive the highest percentage of rewards. This will give you a better understanding of where they vote.
Q. wallesplace: are the interest parameters that the oracles are voting on USDC interest rates, or total APRs (i.e USDC + CPOOL LP credits)?
Oracles will vote on three parameters shaping the USDC interest rate curve. Those three parameters are the interest rate at 0% utilization — Y(0), at optimal utilization — Y(m), and at maximum utilization — Y(1). These parameters will be used to reprice the interest curve every epoch (2 weeks), ensuring the rates will always represent the current market condition.
Q. Carmik: will my staked coins will be unstaked automatically in the end of epoch?
No, your staked CPOOL will remain staked in the pool until you unstake it.
These are questions from the community that couldn’t be answered during the AMA because of limited time. If you still have any questions, don’t hesitate to contact our team on Telegram and Discord.
See you at our next ‘In the Deep End’🏊♂️!
