M^0 Foundation MAP (Monetary Adaptation and Policy) Group, January 7, 2025

As we previewed in the minutes of the first MAP meeting, the M^0 Foundation Council meets on a monthly basis prior to each voting epoch in order to assess any change proposals it deems necessary to help steward the economics of the M^0 machine. Minutes will be published for meetings with material outcomes, and as such, our previous meeting did not require a post as there were no changes proposed as a result of it.

However, the M^0 Foundation Council recently convened for another monthly meeting, this time with material proposals. The MAP is proposing the following changes to the economic policies that govern the M^0 system, listed below.

The MAP is proposing to reduce both the Minter Rate and the Earner Rate from 4.80% to 4.15%. Given the changes we are observing in the U.S. Treasury markets, the MAP believes that the Minter Rate should be reduced to 4.15% to align more closely with current market yields. In addition, keeping the Earner Rate equal to the Minter Rate is, at the current stage of protocol development, a healthy practice that helps protect the protocol from triggering safety mechanisms, as mentioned in our first article.

The general intent is to recommend the transfer of as much of the underlying asset yield as possible to Earners in the M^0 system while stimulating the optimization of cost structures. Minters and other actors in the M^0 ecosystem are incentivized to keep their operating costs as low as possible to remain competitive. The protocol should aim to absorb as much yield as possible from Minters, redistributing to Earners what the MAP believes is a sustainable net yield.

As the market continues to develop, the MAP will persist in its work to ensure that the economics of the M^0 system remain as robust and balanced as possible.

About M^0 Foundation

The M^0 Foundation focuses on facilitating the protocol's governance and ecosystem development. M^0 Foundation is established and domiciled in Switzerland, and guided by the M^0 Foundation Council.