$oMesh Mechanism
Sustainable Incentivization, Driving Engagement and Rewarding Participation
Last updated
Sustainable Incentivization, Driving Engagement and Rewarding Participation
Last updated
At the heart of Mesh Protocol's innovative approach to sustainability and growth is the $oMesh token, a pivotal component designed to incentivize and reward active participation within our ecosystem. Unlike traditional tokens, $oMesh operates as a unique mechanism that not only fosters engagement but also directly benefits its holders by offering them a stake in the protocol's growth and success.
It's quite common in decentralized finance (DeFi) for protocols to incentivize actions like liquidity provisioning in decentralized exchanges (DEXes) by inflating their token supply. While effective in the short term, this strategy is not sustainable and potentially harms token holders. Once the token incentives are reduced or terminated, users often churn, leaving the protocol and negatively impacting the token price. Clearly, this approach falls short of supporting long-term product growth.
With these challenges in mind, Mesh Protocol has engineered an innovative solution by introducing $oMesh as the primary incentive token. Our strategy is to incentivize liquidity providers (LPs) and traders using our protocol, as well as to host an airdrop round with $oMesh. This token allows holders to buy into the protocol ecosystem by converting their $oMesh into $Mesh and $indexMesh. These assets then enable stakeholders to stake and earn $SOL rewards, wield governance power to influence protocol mechanisms, and enjoy backing from Mesh's Index Fund.
Let's consider a practical example: assume $Mesh is traded at $1 on exchanges, and a user holds 100 $oMesh obtained through an airdrop or as farming/trading rewards. Suppose Mesh Protocol is currently offering a 50% discount on $oMesh conversions. The user can convert these 100 $oMesh tokens into $100 worth of $Mesh tokens (which can be traded on exchanges) plus $50 worth of $indexMesh tokens by providing $100 in $SOL as capital.
In this scenario, the user receives an amount of $Mesh equal to their initial capital and an additional 50% in $indexMesh tokens for free. Both assets can then be staked to earn $SOL rewards indefinitely. They can be used for governance or redeemed against their underlying assets from Mesh's Index Fund. $Mesh can also traded on external exchanges.
This mechanism allows $oMesh recipients to buy into the protocol at a discount, aiding Mesh Protocol's growth. Importantly, this discount does not disadvantage $Mesh holders since it is offered in $indexMesh tokens. Furthermore, the $SOL received from this process can be utilized for token buybacks, $Mesh liquidity provisioning, and strengthening Index Fund reserves, ensuring a balanced and sustainable approach to ecosystem incentivization.
