FAQ
Why do we need Moob DAO in the first place?
We’ve all noticed that people are comfortable and confident with holding and transacting using Dollar-Pegged Stablecoins. It's believed that they hold the same amount of purchasing power today vs. yesterday and even tomorrow. This is simply false. Governments of the world create money, as the US government creates the U.S. Dollar which is managed by the Federal reserve. As a result, when depreciation occurs these Dollar Pegged Stablecoins will also depreciate.
Creating a free-floating reserve currency that is transparent in its operation is the aim of MoobDAO. The Moob Token will be backed by a variety of assets held in the Moob Treasury. The idea is to concentrate on supply growth instead of price appreciation, as a result we can maintain purchasing power in a volatile marketplace.
Is Moob a stable coin?
Moob is not a stable coin. Moob aims to become an algorithmic reserve currency backed by a variety of assets. These assets that are held in the Moob Treasury which allows Moob token users to have a free-floating value to rely on. Fractional treasury reserves also allows Moob to assume an intrinsic value.
Moob is backed, not pegged.
Each Moob Token is backed by 1 (one) BUSD , not pegged to it. Because the treasury backs every Moob with at least 1 BUSD, the protocol can reclaim or buy back and burn Moob when it trades below 1 BUSD. This has the effect of pushing Moob price back up to 1 BUSD. Moob could always trade above 1 BUSD because there is no upper limit imposed by the protocol. Think pegged = 1, while backed >= 1.
You might say that the Moob floor price or intrinsic value is 1 BUSD. We believe that the actual price will always be 1 BUSD + premium, but in the end that is up to the market to decide.
How does it work?
At a high level, MoobDAO consists of its protocol managed treasury, protocol owned liquidity (POL), bond mechanism, and staking rewards that are designed to control supply expansion.
Bond sales create profit for the protocol, and the treasury utilizes the profit to mint Moob and distribute them to stakers. As a result of liquidity bonds, the protocol is able to accumulate its own liquidity. Check out the entry below on the importance of POL.
What is the deal with (3,3) and (1,1)?
(3,3) is the idea that, if everyone cooperated in MoobDAO, it would generate the greatest gain for everyone (from a game theory standpoint). There are three actions a user can take:
Staking (+2)
Bonding (+1)
Selling (-2)
Staking and bonding are beneficial to the protocol, while selling is detrimental. Staking and selling will also cause price fluctuation, while bonding does not (buying MOOB from the market is 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 means 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 (3, 3), it is the best thing for both of us and the protocol (3 + 3 = 6).
If one of us stakes and the other one bonds, it is also great because staking takes Moob off the market and put it into the protocol, while bonding provides liquidity and BUSD for the treasury (3 + 1 = 4).
When one of us sells, it diminishes effort of the other one who stakes or bonds (1 - 1 = 0).
When we both sell, it causes the worst outcome for both of us and the protocol (-3 - 3 = -6).
Why is PCV important?
Protocol Controlled Value(PCV), is the amount of funds the treasury controls and owns. The more PCV the better for the protocol and its users. As the protocol controls the funds in its treasury, Moob tokens can only be minted or burned by the protocol. This also guarantees that the protocol can always back 1 Moob with 1 BUSD. You can easily define the risk of your investment because you can be confident that the protocol will indefinitely buy Moob below 1 BUSD with the treasury assets until no one is left to sell. You can trust the code, you can't trust the FED .
As the protocol accumulates more PCV, more runway is guaranteed for the stakers. This means the stakers can be confident that the current staking APY can be sustained for a longer term because more funds are in the treasury.
Why is POL important?
Moob owns most of its liquidity because of it's bond system. This has numerous benefits:
Moob guarantees the market that the liquidity is always there to facilitate
sell or buy transaction.
Moob does not pay out high farming rewards to incentivize liquidity
providers a.k.a renting liquidity.
As a result of being the largest LP (liquidity provider), it earns a majority of the LP fees which
represents another source of income to the treasury.
All POL can be used to back Moob . The LP tokens can be marked down to their risk-free
value for this purpose.
What will happen if there is a bank run on Moob?
Fractional reserve banking works because depositors don’t withdraw their funds all at once. A depositor’s faith in the banking system rests on regulations and agencies like Federal Deposit Insurance Corporation (FDIC).
Moob does not have FDIC insurance but it has an incentive structure that protects stakers. Let’s take a look at how it performs during a hypothetical bank run. In this scenario, we assume the majority of stakers would panic and unstake their tokens from Moob - the staking percentage which stands at 92% now quickly collapses to 3.3%, leaving only 55,000 Moob staked.
Next, we assume the Risk-Free Value (RFV) inflows to the treasury completely evaporate. For context, RFV in this example is growing at about $1 million every 2 days. However, during a bank run this growth will stop.
Our final assumption is that those last standing stakers bought in at a price of $500 per Moob. The initial investment of these stakers would be:
For this example let's say the total MOOB supply is 2,082,553 and the RFV is $47,041,833. Remember that 1 MOOB is backed by 1 BUSD (DAI or FRAX). By subtracting these two numbers, we know 44,959,280 MOOB will eventually get issued to the remaining stakers. In roughly a year, these stakers who are holding 55,000 MOOB will have:
55,000 + 44,959,280 = 45,014,280 MOOB
$27.5 million investment made by these stakers will turn into about $45 million based on cash flow alone if they stay staked (recall that 1 Moob is backed by 1 BUSD). In this bank run scenario, the stakers who stay staked not only get their money back, but also make a profit. Therefore, (3,3) isn’t just a popular meme, it is actually a great strategy.
The above scenario is unlikely to play out because when other people find out that extremely high rewards are being paid to the stakers, they will copyand use the strategy by buying and staking MOOB. This is also why the percentage of MOOB staked in MOOBDAO has a presumed consistently of over 90% .
Moob market price will be volatile?
It is important to understand how early in development the MoobDao protocol is. A large amount of discussion has focused around the expected price and expected a stable value moving forward. The reality is that these characteristics are not yet determined. The network is currently tuned for expansion of MOOB supply, which when paired with the staking, bonding, and yield processes of MoobDAO, may result in a fair amount of volatility.
MOOB could trade at a very high price because the market is ready to pay a hefty premium to capture a percentage of the current market capitalization. However, the price of MOOB could also drop to a large degree if the market sentiment turns bearish. We would expect significant price volatility during our growth phase so please do your own research whether this project suits your goals.
What is the point of buying it now when MOOB trades at a very high premium?
When you buy and stake Moob, you capture a percentage of the supply (market cap) which will remain close to a constant. This is because your staked MOOB balance also increases along with the circulating supply. The implication is that if you buy MOOB when the market cap is low, you would be capturing a larger percentage of the market cap.
What is a rebase?
Rebase is a process by which your staked Moob balance increases automatically. When new Moob Tokens are minted by the protocol, a large portion of it goes to the stakers. Because stakers only see staked Moob balance instead of Moob, the protocol utilizes the Rebase System to increase the staked Moob balance so that 1 staked Moob is always redeemable for 1 Moob
What is reward yield?
Reward yield is the percentage by which your staked Moob balance increases on the next epoch. It is also known as rebase rate. You can find this number on the Moob staking page.
What is APY?
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 MoobDAO, your staked Moob represents your principal, and the compound interest is added periodically on every epoch (2200 Binance blocks, or around 8 hours) thanks to the rebase mechanism.
One awesome fact about APY is that your balance will grow not linearly but exponentially over time! For example a daily compound interest of 2%, if you start with a balance of 1 Moob on day 1, after a year, your balance will grow to about 1377. That's incredible!
How is the APY calculated?
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:
rewardYield = MOOBdistrubeted/MOOB totalStaked
The number of Moob distributed to the staking contract is calculated from moob total supply using the below equation:
MOOBdistributed = MOOBtotalsupply X rewardRate
Note that the reward rate is subject to change by the protocol. For example, it can revised due to an approved proposal.
Why does the price of MOOB become irrelevant in long term?
As illustrated above, your MOOB balance will grow exponentially over time because of the power of compounding. Let's say you buy MOOB for $400 now and the market decides that in 1 year time, the intrinsic value of MOOB will be $2. Assuming a daily compound interest rate of 2%, your balance would grow to about 1377 MOOBs by the end of the year, which is worth around $2754. That is a nice $2354 profit! By now, you should understand that you are paying a premium for MOOB now in exchange for a long-term benefit. Thus, you should have a long time horizon to allow your MOOB balance to grow exponentially and make this a worthwhile investment.
What will be MOOB'S intrinsic value in the future?
There is no clear answer for this, but the intrinsic value can be determined by the treasury performance. For example, if the treasury could guarantee to back every MOOB with 100 BUSD, the intrinsic value will be 100 BUSD. It can also be decided by the DAO. For example, if the DAO decides to raise the price floor of MOOB, its intrinsic value will rise accordingly.
How does the protocol manage to maintain the high staking APY?
Let’s say the protocol targets an APY range of 1,000% to 10,000% , this would translate to a minimum reward yield of about 0.2105%, or a daily growth of about 0.6328%. Please refer to the equation above to learn how APY is calculated from the reward yield.
If there are 100,000 of MOOB staked right now, the protocol would need to mint an additional 632.8 Moob to achieve this daily growth. This is achievable if the protocol can bring in at least $632.80 of daily revenue from bond sales. Even if the protocol doesn't bring in that much revenue, it can still sustain 1,000% APY for a considerable amount of time due to the excess reserve in the treasury.
Do I have to unstake and stake MOOB on every epoch to get my rebase rewards?
No. Once you have staked MOOB with MOOBDAO , your staked MOOB balance will auto-compound on every epoch. That increase in balance represents your rebase rewards.
How do I track my rebase rewards?
You can track your rebase rewards by calculating the increase in your staked Moob balance.
1. Record down the Current Index value on the staking page when you first stake your Moob. 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 Moob balance has increased.
4. In this example, the MOOB balance has grown by 1.5 times.
Ratio = 13.2 / 8.8
= 1.5
Is Moob Registered with the SEC?
Moob LLC and Moob DAO are exempt as it relates to the SEC. The reason for this is we are operating under regulation “D” 504 of the securities act of 1933 . In simple terms this allows Moob to advertise and sell tokens in a STO (security token offer) . The limitation is that we are only allowed to sell to accredited investors in the USA. We are also exempt as a result of Regulation “S”. Regulation “S'' allows us to sell to any investor whether accredited or not that is not a U.S. citizen. In our opinion, we are not selling a security, as classified by the SEC. We have, in any case, chosen to secure ourselves and allow for investor confidence by only selling to accredited investors. “Is the business registered with the SEC?” The answer is NO. However, we will be filing a Form “D” which is a required notification to the SEC when operating under regulation “D” and “S” of the securities act. Please Note that this is only related to Moob DAO's Private Sale.
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