[Discussion] Dynamic esMET Revenue Share Framework

General
1

Summary

Update the current esMET buyback framework to remove the existing monthly buyback cap and replace it with a dynamic revenue-share model that scales alongside protocol growth while providing more predictable rewards for esMET holders.

Background

MIP-30 introduced Metronome’s buyback-and-distribute program for esMET holders.

Since implementation, the program has distributed over 1.7 million MET to esMET holders while increasing monthly buybacks from approximately $32,500 to $100,000. The program has successfully aligned protocol growth with tokenholder rewards and delivered consistent attractive yields to long-term participants.

However, the current framework was designed around Metronome’s revenue profile at the time and may no longer be appropriate as protocol revenue continues to expand.

Abstract

The current buyback framework contains an implicit ceiling on monthly buybacks through the $100,000 target established in MIP-30.

This proposal removes that ceiling and introduces a dynamic revenue-share model that allows buybacks to scale alongside protocol growth while providing greater consistency for esMET holders.

Revenue allocated toward MET buybacks will generally target 20% - 80% of monthly protocol net revenue, balancing long-term treasury growth with sustainable rewards for esMET holders. For the purposes of this proposal, net revenue refers to protocol revenue after incentive spend, bribes, and operating expenses.

Buyback distributions will target between 30 - 100% APR, with month-over-month APR fluctuations limited to approximately +/-10% pp where practical.

Revenue allocated toward buybacks that exceeds the amount required to maintain the target APR range will be retained within the buyback reserve. This reserve may be used to support future distributions during lower revenue periods and reduce volatility in rewards.

Additionally, several hundred thousand MET earned through profitable treasury operations, including the closure of ExtraFi positions, will be recognized as part of the buyback reserve.

Specification

  • Remove the existing $100,000 monthly buyback cap established by MIP-30.

  • Allocate 20% - 80% of monthly protocol net revenue toward MET buybacks, subject to protocol health and treasury management.

  • Target a 30 - 100% APR range for esMET holders.

  • Limit APR fluctuations to approximately +/-10% pp month-over-month where practical.

  • Prioritize buyback distributions as follows:

    • If available buyback capacity exceeds the amount required to maintain or modestly increase the previous month’s APR (up to the target APR range), retain the excess within the buyback reserve.

    • If available buyback capacity is sufficient to maintain the target APR range, distribute accordingly.

    • If available buyback capacity is insufficient to maintain the target APR range, utilize the buyback reserve where practical.

    • If both current net revenue and reserves are insufficient, distribute as much as protocol health reasonably allows without compromising long-term sustainability.

  • Create a buyback reserve funded through excess buyback capacity during strong revenue periods.

  • Recognize MET earned through ExtraFi position closures (~239,252 MET) as part of the buyback reserve.

  • Continue distributing MET proportionately to esMET holders through the existing buyback-and-distribute framework.

3

These are all amendment ideas I endorse from having Claude analyze the MIP as written:

1. Include MIP-31’s monthly decisions in the formalized reporting. The reporting framework covers outcomes well (revenue, spend, buybacks via DefiLlama/Octav). Since the monthly report is being formalized anyway, adding four items would let the community follow how the framework operates: net revenue with deductions itemized (incentives / bribes / opex), the allocation % selected within the 20–80% range with a one-line rationale, APR delivered that month, and the buyback reserve balance. Small addition, and it gives the flexible parts of the framework a clear paper trail.

2. Consider a dedicated address for the buyback reserve. As drafted, reserve MET (including the ~239k from ExtraFi) is earmarked for esMET distributions under MIP-31, while the treasury framework designates treasury-held MET as non-circulating. A tagged reserve address — used only for esMET distributions, with other uses going through governance — keeps the two policies cleanly separated and makes the reserve balance easy to track. Transferring the ExtraFi MET there would make the accounting unambiguous.

3. Extend wallet documentation to team/Bloq esMET positions. The framework covers major treasury wallets, but since Bloq’s wallets aren’t treasury wallets, they’d fall outside it — and those are the ones that tend to generate questions. Publishing which wallets are Bloq/team-affiliated and their share of esMET (updated in the monthly report) would let anyone decompose the DefiLlama holders-revenue figure themselves. Founder participation in the rev share is normal and worth being able to point to a number for.

4. Add a line to the treasury framework codifying the existing position on treasury MET and esMET. Something like: “Treasury-held MET will not be locked for esMET or receive revenue share.” This is already the stated practice — writing it into the framework gives everyone a permanent reference and closes the recurring question for good.

5. A short expectation-setting note in MIP-31’s summary. Something like: “APR adjustments are intentionally gradual; revenue beyond the target range accrues to the reserve, and in exceptionally strong months a larger share of net revenue will accrue to the treasury and reserve.” All of this is already in the specification — surfacing it in the summary means readers who only skim the headline come away with accurate expectations, which protects the program’s credibility as it gets more visibility.

4

I agree with the MIP. No notes.

1 Like
5

I support the MIP as written. I’d also be happy to add a line specifying that a separate wallet be used for the buyback reserve as @Mudokan suggested. Jeffthebaker has already committed to this, so don’t see it as a required addition to the text.

6

Fully supportive of this MIP.