IV.III Earners
Earners are simply addresses approved by the TTG to earn the Earner Rate. It is expected that, throughout the cycle, the Earner Rate will remain comparable to the US Federal Funds rate as well in order to entice Earners to continue to hold M.
The Earner Rate can be used as an additional tool to encourage M price stability around $1. If the price of M is above $1, the TTG can lower the Earner Rate in order to discourage holding of M and to encourage selling of M for alternative sources of yield. If the price of M is below $1, the TTG can raise the Earner Rate in order to encourage the holding and purchase of M. It should be noted that the Earner Rate can be higher than the Minter Rate as long as the amount of M being paid out via the Earner Rate is less than the amount of total M generated from Minter Rate.
It is anticipated that Earners in the M^0 protocol will correspond to institutional holders of M off-chain, and to issuers and distributors that maintain M inventory. The ultimate function of Earners is as a source of demand for M, making it more likely that Minters can efficiently generate M. This is effectively to say that Earners align nicely with the ultimate distributors of M to the broader market.
Example
The TTG permissions a large cryptocurrency exchange to the Earners list. This exchange has millions of users and is regulated/licensed appropriately in the jurisdiction(s) it serves. Once permissioned, the exchange can use customer’s M to earn the Earner Rate. They can now pass a portion or all of the Earner Rate on to their customers.
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