The purpose of this post is to provide insight into Moola’s 2022 anticipated areas of focus. DeFi moves quickly, finding product market fit often requires iteration and serendipity, and the only constant is change. We set intentions for directional outcomes because if we don’t know where we are going, then any road will get us there.
The areas of focus that we have set intentions for 2022 are; increasing protocol revenue, increasing resiliency, increasing MOO utility, and community building.
Moola’s protocol revenue is paid by borrowers at the expense of depositors. The specific amount of revenue collected is a governable parameter for each money market called the ‘Revenue Factor’. Currently, the revenue factor for all Moola markets is set to 10%, meaning that 10% of the interest paid by borrowers is sent to the Moola community treasury with the remaining 90% paid to depositors.
There are several ways to increase protocol revenue; increasing the revenue factor, increasing demand for borrowing, and/or launching new markets.
We do not currently have plans to increase the revenue factor on existing markets because we believe that Moola should remain minimally extractive.
To increase demand for borrowing, we are building features that we anticipate will make borrowing easier by reducing liquidation risk and increasing the use cases for borrowing.
To make borrowing easier, we are building tools for taking leveraged long or short positions in a single transaction. Each leverage loop increases the borrowers debt and collateral positions. To unwind a leveraged position, we anticipate enabling borrowers to repay debt from collateral in a single transaction. Currently, repaying debt from collateral increases the risk of liquidation because the borrower has to initiate three sequential transactions; withdraw, then swap, then repay.
To reduce risk of liquidation, we anticipate enabling borrowers to set a Health Factor minimum threshold and opt-in to a system that automatically repays some of their debt from collateral when their threshold is reached.
To increase use cases for borrowing, we anticipate releasing a user interface for credit delegation, a tool that lets depositors assign their borrowing capacity to other addresses. The recipient can be a smart contract, an individual, a business, a DAO, or another type of entity. They are able to borrow without depositing collateral because the delegator is supplying the collateral on their behalf and is on the hook if the borrower does not repay. We anticipate participating in Celo community proof-of-concepts which use credit delegation.
To increase the use cases for borrowing we also anticipate launching a referral tracking system to track sources of deposits and borrows (e.g. Ubeswap, Poof, GoodGhosting). Effective tracking of demand is the first step in establishing a process for aligning interests, by compensating revenue sources with a share of the protocol revenue. Sharing the pie, grows the pie.
It is important that Moola addresses the unique needs of the Celo ecosystem. This includes adding Moola markets for Celo stablecoins like cREAL, Celo native tokens like UBE, and bridged assets like Optics WETH. We also anticipate experimenting with NFT markets because NFTs can represent ownership of digital or real world assets.
But new markets introduce new risks to protocol solvency that need to be mitigated.
To mitigate risks, we anticipate increasing resiliency by establishing new processes for production deployments, publishing a formal bug bounty program, hardening moola.market, increasing the number of access points to the Moola protocol, and utilizing market risk simulation software.
We anticipate that increasing resiliency can also be achieved by increasing MOO utility. This includes deploying the MOO safety module and deploying a MOO owned governance process. The MOO safety module is anticipated to act as a MOO staking insurance pool. In exchange for staking value in the form of MOO, stakers are compensated with a portion of the protocol revenue and/or treasury supply of MOO. Stakers are taking on risk of protocol insolvency, an event which could lead to some quantity of their MOO being redistributed.
Moola is following a path of progressive decentralization. We are currently in the phase of sufficiently distributing MOO to active participants. It is anticipated that MOO owners will be transferred ownership of the community treasury and the smart contract actions currently owned by a multisig. We also anticipate working with Centralized Exchanges to get MOO pairs listed.
The most important focus for 2022 is Moola community building. The things we build only matter if people like to use them. Moola already has the best community in all of crypto and 2022 is the year we introduce Moola to all your friends, family, and coworkers!