WELL 2.0 : Unification of WELL and MAMO with BuyBack Reserve Rewards

Ideation & Discussion
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This proposal seeks to fundamentally restructure Moonwell’s
token architecture and tokenomics. We propose the complete absorption of the
Mamo token back into the WELL token, establishing WELL as the sole,
hybrid governance and utility token for the Moonwell ecosystem.

Accompanying this unification, we propose a new tokenomics
model: the Buyback-Lockup-Reserve Rewards (BLLR) mechanism. This model
utilizes protocol revenue to execute WELL buybacks and acquire a diversified
Treasury Reserve of high-value assets (specifically Bitcoin (BTC) and
Ethereum (ETH)), which are then distributed as rewards to long-term WELL
lockers. This mechanism is explicitly designed to maximize long-term holder
alignment without introducing any token burn mechanics.

2. Motivation

The current dual-token structure (WELL/Mamo) introduces
unnecessary complexity in governance, liquidity management, and community
understanding. Consolidating the tokens simplifies the ecosystem, allowing for
focused liquidity and unified governance.

The BLLR tokenomics upgrade addresses three primary
challenges:

  1. Value
    Accrual:     Directly tying protocol revenue to the acquisition of highly
    sought-after, non-native assets (BTC/ETH) provides a more compelling value
    proposition for WELL holders than native token inflation or complex fee
    structures. The unified WELL token will now capture all fee
    revenue, including that previously allocated to Mamo.

  2. Supply
    Management:     The dynamic buyback mechanism provides consistent,
    structural demand for WELL, while the required lockup reduces the
    circulating supply, maximizing price stability, especially during market
    downturns.

  3. Sustainability:
    By rewarding commitment with diversified, hard crypto assets, we create an
    incentive structure resilient to market volatility and inflationary
    pressures. The BLLR mechanism is explicitly designed to offer superior
    incentives compared to models focused only on native token scarcity (e.g.,
    BNB, pump.fun) or simple native yield (e.g., Hyperliquid’s
    buyback-to-stake).

3. Proposal Components

Component 1: WELL/Mamo Token Unification

The Mamo token will be decommissioned and its functional
utility and market value will be absorbed into the enhanced WELL token.

A. New WELL Functionality (Hybrid Token):

  • Governance:
    The unified WELL token will serve as the sole governance token, required
    for submitting proposals and voting power.

  • Utility:
    WELL will be used for staking, earning protocol fee distribution,
    receiving liquidity mining incentives, and capturing revenue generated
    from integrated yield-optimization and liquidity pools (Mamo’s original
    function), allowing WELL holders to directly accrue all fee revenue
    streams.

B. Mamo Exchange Mechanism:

The absorption will be executed through a time-gated, smart contract-driven swap mechanism:

  • Conversion
    Rate Determination:     The mandatory conversion rate for Mamo to WELL
    will be established based on the 30-Day Time-Weighted Average Price
    (TWAP)     of both tokens immediately preceding the governance vote. This
    fair, consensus-driven methodology ensures the exchange reflects
    pre-merger market valuation.

  • Mandatory
    Exchange Period:     Mamo holders will be granted a 60-day mandatory
    exchange period     following the proposal’s implementation. During this
    time, Mamo must be deposited into the conversion smart contract to receive
    WELL.

  • Smart
    Contract Execution:     A secure, audited smart contract will handle the
    one-way swap, automatically exchanging Mamo for WELL based on the final
    determined ratio.

  • Mamo
    Liquidity Migration:     Existing Mamo liquidity pools will be dissolved.
    Assets used to back Mamo’s functionality will be migrated into the unified
    WELL Treasury, and the corresponding WELL tokens will be used to
    facilitate the swap.

  • Finality:
    Upon the conclusion of the 60-day window, the Mamo token contract will be
    fully decommissioned and paused. All remaining Mamo tokens outside the
    conversion contract will be rendered inert and permanently unusable,
    ensuring WELL is the sole token of the ecosystem.

Component 2: Tokenomics Upgrade: Buyback-Lockup-Reserve
Rewards (BLLR)

This mechanism replaces previous inflationary rewards or fee-sharing mechanisms with a self-sustaining, non-dilutive system.

A. Tiered Buyback & Reserve Acquisition (Dynamic
BLLR):

Protocol revenue allocation will shift from a fixed rate to
a dynamic, tiered structure determined by defined market conditions and
volatility indicators, maximizing structural demand for WELL when it is most
needed.

  • Tier
    1: Growth Mode (WELL Price > 30-Day Avg. Price + 10%):

    • Focus:
      Reserve Diversification. Protocol prioritizes accumulating BTC/ETH
      reserves over aggressive WELL buyback to maximize long-term backing
      value.

    • Allocation:
      30% of revenue goes to BLLR (e.g., 10% for WELL buyback, 20% for BTC/ETH
      acquisition).

  • Tier
    2: Standard Mode (WELL Price within 10% of 30-Day Avg. Price):

    • Focus:
      Balanced Support. Standard, consistent buy pressure and reserve growth.

    • Allocation:
      50% of revenue goes to BLLR (e.g., 25% for WELL buyback, 25% for BTC/ETH
      acquisition).

  • Tier
    3: Stress Mode (WELL Price < Predetermined Floor Price OR 24h Trading
    Volume > 200% of 7-Day Avg.):

    • Focus:
      Aggressive Price Support. Protocol maximizes buy pressure to stabilize
      the token price during periods of market stress (e.g., sudden drops or
      periods of high transactional selling pressure). This tier is designed
      to act as a deep market maker, absorbing excess selling that would
      overwhelm simple burn or native staking mechanisms.

    • Allocation:
      75% of revenue goes to BLLR (e.g., 60% for WELL buyback, 15% for BTC/ETH
      acquisition).

  • WELL
    Buyback:     Revenue allocated for WELL buyback will be used to
    continually market-buy WELL from the open market. This WELL is immediately
    locked and removed from circulating supply.

  • BTC/ETH
    Reserve:     The remaining allocated revenue will be used to purchase and
    accumulate Bitcoin (BTC) and Ethereum (ETH) into a dedicated,
    community-governed Treasury Reserve.

  • B. WELL Lockup and Reward Earning (Enhanced Incentive Model):

The incentive structure is designed to heavily favor long-term holders by offering rewards in appreciating, non-native assets, creating a superior value proposition over native token yields.

  • Lockup
    Requirement:     To earn BLLR rewards, users must lock their WELL tokens
    for a minimum period (1 month up to 4 years).

  • Time-Weighted
    Voting/Reward Power (    $\text{veWELL}$):

$$\text{veWELL} = \text{Locked WELL} \times
\text{Multiplier}$$

Lock Duration Multiplier

1 month (Min)

$1.0\times$

1 year

$2.0\times$

2 years

$3.0\times$

4 years (Max)

$4.5\times$

    • Tiered
      Lock Multiplier:       The multiplier is non-linear and tiered to grant
      increasingly generous rewards for longer-term commitment, maxing out at
      $4.5\times$ for the maximum lock. This amplified $\text{veWELL}$ value
      determines the user’s share of the reserve rewards and governance power,
      creating a powerful incentive to lock tokens for stability.

  • Reward
    Distribution (BTC/ETH):     Rewards are earned based on the user’s
    $\text{veWELL}$ balance relative to the total $\text{veWELL}$ supply.
    Rewards accrue as real BTC and ETH from the Reserve, providing a
    non-dilutive, diversified yield stream that is insulated from WELL price
    volatility.

C. Redemption Mechanism (User Choice):

  • Redeemable
    Assets:     The accrued rewards represent a claim on the BTC and ETH held
    in the Reserve.

  • User
    Choice Redemption:     When a user chooses to claim their rewards, the
    protocol will disburse the fiat-equivalent value of their accrued rewards
    in the cryptocurrency of their choice from the Reserve (BTC or
    ETH), or a stablecoin (e.g., USDC), allowing the user to immediately swap
    for their desired asset.

D. Exclusion of Burn Mechanism:

  • No Token Burning: This proposal explicitly avoids a native WELL token
    burning mechanism. The focus is exclusively on maximizing value for
    long-term lockers through external asset acquisition and permanent removal
    of buy-backed tokens from circulation via the lockup.

E. Value Maximization Addendums (Protocol Utility Sinks)

To further increase structural demand, reduce slippage, and
incentivize long-term commitment without introducing lending risks, we propose
two critical utility mechanisms:

1. Strategic Protocol-Owned Liquidity (POL) Integration:

A mandatory $10\%$ portion of the WELL tokens bought back
via the BLLR mechanism (before the final lockup) will be paired with
stablecoins (e.g., USDC) from the existing Moonwell Treasury or BLLR revenue
stream. This created LP token will be permanently held and managed by the
Protocol’s Treasury, achieving:

  • Deeper
    Market Depth:     Reduces price slippage for all market participants,
    making WELL more attractive to institutional investors and large traders.

  • Permanent
    Stability:     Creates a structural, non-mercenary floor of liquidity that
    cannot be withdrawn.

  • Secondary
    Revenue:     The POL itself earns trading fees, creating a perpetual
    secondary revenue stream that is recycled back into the Moonwell
    ecosystem.

    1. Governance-Boosted Fee Rebates:

$\text{veWELL}$ holders will receive a substantial and
tiered discount on protocol fees generated from Moonwell’s core money-market
activities (i.e., borrowing interest and liquidation penalties).

  • Mechanism:
    The fee rebate percentage is directly proportional to the user’s
    $\text{veWELL}$ lockup multiplier (Section 3.B). Longer lockups grant
    larger discounts. For example:

    • $1\times$**
      Multiplier:** 5% Fee Rebate.

    • $4.5\times$**
      Multiplier (Max Lock):** Up to 50% Fee Rebate.

  • Incentive:
    This mechanism creates a strong utility sink for the WELL token that
    directly lowers the operational cost of using the Moonwell platform,
    providing a tangible economic benefit to committed long-term users.

4. Implementation Steps (High-Level)

  1. Smart
    Contract Audit:     Develop and audit the BLLR and unification smart
    contracts (WELL 2.0).

  2. Governance
    Vote:     Execute a full on-chain vote to approve the token unification
    ratio and BLLR model.

  3. Token
    Swap:     Initiate the Mamo-to-WELL swap period.

  4. Mechanism
    Activation:     Activate the BLLR smart contract, initiating the automated
    buyback, BTC/ETH acquisition, and rewards accrual system.

5. Conclusion and Next Steps
The WELL 2.0 unification and BLLR tokenomics represent a
critical step toward maximizing long-term sustainability and optimizing the
token holder experience. By simplifying the token model and rewarding
commitment with hard crypto assets, we ensure Moonwell’s value proposition
remains highly competitive in the DeFi landscape.

We urge delegates to review this proposal and provide
feedback. The next step will be to define the exact Mamo/WELL conversion ratio
and the specific revenue allocation percentages before moving to an on-chain
vote.

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