1. Title

LP Staking Rewards Buyback and Burn Mechanism

2. Type of MIP

Constitutional

3. Self-introduction of the Member

AQube is a specialized firm in blockchain economic research, DeFi strategy, and tokenomics optimization. The firm applies a structured, research-based methodology to token restructuring, liquidity planning, and incentive system design. Experience includes:

• $400M+ TVL supported across DeFi protocols
• $6M+ fundraising supported for blockchain projects
• Strategic liquidity and tokenomics models across multiple DeFi platforms
• Minswap General Report: produced a General Report on Minswap tokenomics, covering tokenomic dynamics, liquidity and treasury management, and a solutions framework that underpins the first DAO proposals on tokenomics restructuring
• MIN token burn proposal: designed and proposed the One-Time General MIN Token Burn for Minswap DAO, which passed on 2025-10-03 with 99.67% support and resulted in burning 500,000,000 MIN from the Yield Farming Reserve
• Fee Switch Buyback Mechanism: designed and proposed the Fee Switch Buyback Mechanism for Minswap DAO, which passed on 2025-12-10 with 58.4% support for Option C (Dynamic Split) and resulted in implementing a dynamic weekly MIN buyback and burn mechanism managed by the Emissions Committee

4. Scope of Change

Authorize Minswap Labs to convert a portion of the weekly ADA LP staking rewards into purchased MIN and to distribute that MIN to LP stakers in the same period, with weekly execution cadence. Under Option C and D, a portion of purchased MIN is burned.

Option A: 50% of the weekly ADA LP staking rewards buys MIN and is distributed to LPs as MIN. The other 50% is distributed as ADA.

Option B: 100% of the weekly ADA LP staking rewards buys MIN and is distributed to LPs as MIN.

Option C: 100% of the weekly ADA LP staking rewards buys MIN. 50% of that purchased MIN is distributed to LPs. 50% is burned immediately.

Option D: Dynamic Split Each week the Emissions Committee splits the ADA LP staking rewards across three buckets that sum to 100 percent: ADA paid as ADA, ADA converted to MIN and distributed, ADA converted to MIN and burned. Labs executes the split with weekly cadence. A weekly report discloses the chosen split and the rationale.

5. Motivation

Minswap operates in a mature, fee-anchored regime. The DAO has already retired 500M MIN from the Yield Farming Reserve, establishing supply discipline. The Fee Switch Buyback Mechanism routes fee switch value into recurring market demand for MIN. This proposal extends that path to LP staking rewards by converting ADA LP staking rewards into MIN buy pressure and by making rewards MIN-centric without adding emissions.

What this proposal aims to achieve

• Alignment: make MIN the primary unit of account for LP staking rewards, so staker incentives match protocol health.
• Demand creation: convert weekly ADA LP staking rewards into recurring MIN buy pressure sized by governance.
• Supply discipline (Option C and D): introduce deflationary pressure by burning a portion of purchased MIN, tightening circulating supply while emissions continue.
• Operational clarity: weekly cadence, disclosed multisig, standard public ledgers, no new issuance, no fee rate change.

How the four options map to the goal

Option A: Balanced introduction of MIN buy pressure. Builds steady MIN demand while preserving ADA payout continuity for user needs. Simple composition shift with minimal disruption.

Option B: Maximum alignment. All weekly ADA LP staking rewards buy MIN and all rewards are paid in purchased MIN. Maximizes fee-funded demand and keeps execution simple. No ADA distribution.

Option C: Assertive deflation. All ADA LP staking rewards buy MIN, half is distributed and half is burned immediately. Creates sustained buy pressure while actively reducing circulating supply. Accepts lower APR in exchange for supply discipline.

Option D: Dynamic Split Flexible alignment. Protects participation by keeping an ADA leg when needed, builds demand by converting a share to MIN for distribution, and enables targeted buyback-and-burn. APR varies based on the Emissions Committee’s weekly burn allocation.

6. Rationale

This section shows how LP staking rewards buybacks would have worked from 2024-09 to 2025-09 under the first three options. For each month we report ADA LP staking rewards, then potential buy pressure in MIN and in USD using a monthly VWAP.

Options A, B, and C show fixed conversion percentages over the historical period. Option D is excluded from the table as it would involve weekly Emissions Committee decisions rather than fixed percentages.

Cumulative potential buybacks from 2024-09 to 2025-09:

• Option A: 22,745,635.44 MIN (594,632.21 USD). ADA distributed (remaining 50%): 816,220.62 ADA.
• Option B: 45,491,270.88 MIN (1,189,264.42 USD).
• Option C: 45,491,270.88 MIN purchased, 22,745,635.44 MIN distributed, 22,745,635.44 MIN burned (594,632.21 USD burned), and 1,189,264.42 USD total buyback power.

Pricing:

• Monthly MIN price: volume weighted average of daily MINUSD across the calendar month, with each day weighted by that day’s MIN USD trading volume.
• Monthly ADA price: volume weighted average of daily ADAUSD across the calendar month, with each day weighted by that day’s ADA USD trading volume.
• Monthly MIN to ADA ratio: volume weighted average of the daily MINUSD to ADAUSD ratio across the calendar month, with weights based on MIN USD trading volume.

This proposal extends the DAO’s supply discipline by routing LP staking rewards into recurring MIN buy pressure. The four options let the DAO calibrate the balance between maintaining ADA payouts, maximizing MIN demand, introducing deflationary pressure, and enabling flexible weekly governance.

Supply discipline: Options C and D burn purchased MIN from circulating supply, tightening the float while emissions continue. This complements the prior 500M reserve burn and the Fee Switch Buyback Mechanism by applying increasing pressure.

Alignment: Making MIN the primary or sole unit of LP staking rewards ties staker incentives directly to protocol health and token performance.

Proportional choice: Four options let the DAO act at different intensity levels without forcing an all-or-nothing decision. Option A introduces MIN gradually, Option B maximizes alignment, Option C adds active deflation, Option D enables weekly calibration.

Net effect: the DAO creates recurring MIN demand from real activity, shifts reward composition toward the protocol token, and optionally tightens circulating supply, all without changing emissions governance or adding new issuance.

7. Key Terms

• LP staking rewards: the ADA fee stream paid to staked LPs.
• Purchased MIN: MIN acquired on the market using the converted ADA.
• Period: the reward and execution window for this mechanism, set to 1 week.
• Execution VWAP: size weighted average price of all fills in the reporting period.
• Execution window: the time block within the period when conversions are performed.
• Slippage limit: the maximum allowed price impact per order during conversion.
• Shortfall: any ADA not converted due to liquidity or limits, carried forward to the next period.
• Staging wallet: the address that temporarily holds purchased MIN before distribution.
• Conversion wallet: the address that executes ADA to MIN purchases.
• Reporting ledger: the public weekly post with ADA converted, MIN purchased and distributed, MIN burned (Option C only), prices, fees, shortfalls, wallets, and txids.
• Burn: permanent removal of MIN from circulation by sending it to an irrecoverable address.
• Burn address: the irrecoverable address where MIN is sent to be permanently removed from circulation.
• Emissions Committee: existing body responsible for emissions planning. Under this proposal it is additionally authorized, if Option D is selected, to set the weekly payout split.
• Payout split: the weekly three-way allocation decided by the Emissions Committee under Option D (percent ADA payout, percent to MIN distribution, percent to MIN burn).
• Txid: transaction identifier published for on chain verification.

8. Specifications

Platforms and components

• Chain and asset: Cardano L1. MIN is a native asset.
• Funding source: ADA LP staking rewards.
• Period: 1 week.
• Distribution asset: purchased MIN and ADA per the selected option.
• Custody: Labs multisig controls the ADA conversion wallet and a staging wallet for purchased MIN. Weekly reports publish addresses and txids.
• Governance and oversight: the Emissions Committee manages weekly split adjustments under Option D and publishes rationale in the weekly report.

Mechanism details

Common operating runbook

• Compile inputs: ADA LP staking rewards for the week, conversion percentage per selected option, payout split if Option D (percent ADA payout, percent to MIN distribution, percent to MIN burn), pricing window, slippage limit.
• Move funds: route ADA to the conversion wallet.
• Execute conversion: convert the specified percentage of ADA to MIN within the pricing window, respecting the slippage limit. Record execution price and fees. Move purchased MIN to the staging wallet.
• Execute burn (Option C and D only): send the burn allocation of purchased MIN to a burn address. Record burn txid.
• Distribute: send ADA (if any) to LPs and send purchased MIN from the staging wallet to LPs according to the week’s composition.
• Report: post the weekly ledger with ADA paid, ADA converted, MIN delivered, MIN burned (Option C and D only), execution VWAPs and fees, any ADA shortfall, the payout split if Option D, wallet addresses, and txids.

Option A: 50% Conversion

• How it works: convert 50% of the weekly ADA LP staking rewards to MIN bought on the market and distribute in the same week. Pay the remaining 50% in ADA.
• Reward composition and timing: 50% purchased MIN, 50% ADA.

Option B: Full Conversion

• How it works: convert 100% of the weekly ADA LP staking rewards to MIN bought on the market and distribute in the same week.
• Reward composition and timing: All rewards paid in purchased MIN.

Option C: Full Conversion with Burn

• How it works: convert 100% of the weekly ADA LP staking rewards to MIN. Distribute 50% of purchased MIN to LPs. Burn 50% of purchased MIN immediately in the same week.
• Reward composition and timing: 50% of purchased MIN distributed to LPs. 50% burned. No ADA paid.

Option D: Dynamic Split

• How it works: the Emissions Committee sets the weekly three-way split across ADA payout, buyback MIN to distribute, and buyback MIN to burn. Execute the burn leg first, then the distribution leg. All actions complete within the same week.
• Reward composition and timing: Mix of ADA and purchased MIN set by the split.

Execution window

• Weekly order: snapshot, pricing window, conversion, burn (Option C), distribution, public post.
• Execution timing within each week is at Minswap Labs’ discretion, within the defined pricing window.

Data and auditability

• Weekly post includes: ADA paid, ADA converted, MIN delivered, MIN burned (Option C and D only), execution VWAPs and fees, any ADA shortfall, the payout split if Option D, wallet addresses and txids.

9. Steps to Implement

Governance

• Temp Check: present the four options, the LP staking rewards buyback mechanism, execution authority (Minswap Labs), reporting cadence, and, for Option D, the Emissions Committee mandate to set and adjust the weekly split.
• On-chain vote: select one option and set the start week.
• Mandate: authorize Labs to execute on the approved cadence and publish the weekly report.

Execution

• Pre-checks and staging as specified. Disclose conversion and staging wallet addresses.
• Launch: in the first full week after passage, begin weekly operations.
• Publish: issue the weekly report as specified in the Common operating runbook.

10. Timeline

• Forum Discussion: 7 days.
• Temp Check: 7 days.
• On-chain vote: starts within 7 days after Temp Check passes, lasts 7 days.
• Pre-execution setup: up to 3 business days after vote passage.
• Go-live window: first full week after the vote.
• First reporting: within 3 business days after the first run closes.

11. Overall Cost

• External spend: $4,000 success-based consulting fee to AQube, payable only if this proposal passes and is implemented.
• Emissions Committee compensation (Option D only): +$50 per member per month stipend and +$50 per member per committee bonus vote for the added analytics and monitoring.
• Network fees: minimal, reported with actuals in weekly posts.
• Manpower: executed by Minswap Labs using multisig and standard operations. No third-party grants.
• Recurring costs: none, other than the conditional Option D committee compensation.

Voting Options (to be extracted for the on-chain vote)