There have been a lot of speculations going on in the community that we need to address and add further clarifications.

The Malda tokenomics DAO proposal was accepted by the community in a 2 week long public governance process (RFC + MIP), plus in advance of the RFC the core team has collected feedback from key community members. We answer questions and clear misunderstandings below.

Community-held MENDI is currently 83.4% of the circulating supply.

After migration community-held MENDI holders will hold an estimated 60-75% of $MALDA circ. supply

Actual Token Dilution: 1.1x-1.4x

There are claims of 7x dilution going around, which does not go beyond considering the two most obvious numbers; maximum circulating supply of Mendi and Malda. For $MALDA the tokenomics is designed for a much longer term, therefore maximum circulating supply will take years to reach.

It’s also important to calculate dilution to Total Supply, but that is also usually calculated incorrectly. The following figure shows what 1% of $MENDI Supply will be equal to % of $MALDA Supply:

This is not expected to change given the short time until migration. We will also freeze emissions of Mendi after launching Malda as part of the sunsetting process which will lock in the above number.

Core Team $MENDI will not Migrate, it will all be burned.

Will there be value dilution?

We expect there to be no dollar value dilution for holders, but appreciation in their holdings. This was a key advantage of the current tokenomics design compared to models where users would receive Malda-based on dollar value of their Mendi.

The main problem with those models was that fixing a value in advance for $MENDI would actually result in dilution. For this reason we proposed the current model for the DAO, which is based on free-market mechanisms.

We firmly believe that the valuation of the new protocol is going to place it among the top DeFi protocols, because of two main reasons:

• Solving the problem of fragmented liquidity for the Ethereum ecosystem on application-level (first ever solution)

• Infinite scalability by having a zkCoprocessor to do calculations off-chain and verify with a small proof on-chain. Current lending protocols work with a very basic math due to EVM constraints. We are exiting this paradigm and we are first-movers to the future.

Why do we need to migrate tokenomics?

Mendi’s tokenomics was designed for a native lending protocol, for the Linea ecosystem. To take the protocol to the next chapter, we need to:

• Attracting and maintaining liquidity on several L2s and Ethereum

• Allocating funds for audits and security toolings

• Expanding the core team, including ZK developers and account abstraction specialists.

  • This has already been in progress last year, current costs are financed by additional investment by the core team. Developers with this experience are very expensive and require multiple hundreds of thousand in total compensation per year.

• Onboarding strategic investors. The Governance Round was the first small round. A larger public round is on the horizon.

• Paying for ongoing infrastructure costs and off-chain components

• Expanding the community, new investors will be naturally more attracted to a new token

Some investors we talked with over the past year have suggested for us to launch the protocol independent of Mendi. We have decided against this, because it did not align with our community-focused vision, and chose to instead propose migrating to new tokenomics for the community.

Why is the tokenomics so complex?

The Malda tokenomics is currently being developed in partnership with TAU Labs, a top tokenomics design lab, whose founder also serves as a mentor in Internet Computer’s Incubator and has worked with multiple projects since its launch last March. Their mission is to grow the tokenomics space by creating model-based tokenomics designs for projects to succeed and sustain themselves in the long term.

The drawback of a science-based free-floating and free-market design approach is its complexity. We have been answering all of these questions since December, the figures above are clear in what to expect.

Migration Process

Expect the testnet and rebranding to Malda in the upcoming weeks.

Early Q1, Mainnet will launch and users can migrate their supply/borrow positions to Malda. At this point, there will be no further $MENDI emissions, however $MENDI holders can lock in their positions to earn $MALDA points prior to token launch.

In Q2, Token Migration will open alongside the $MALDA TGE, where there will be a UI provided to easily handle the process. Here, $MALDA lockers will be incentivized.