IV.III Earners
What are Earners in the context of M^0?
Last updated
What are Earners in the context of M^0?
Last updated
Earners are simply addresses approved by the TTG to earn the . 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.
