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Distribution of Mars Token in Mars V2

In Mars V1 the Community Pool (CP) holds a large amount of MARS tokens that aren't actively used (i.e., 633.4 Million). This represents a significant portion of the total token supply locked away.

Mars V2 has reduced the CP by burning most of the excess tokens, leaving only 300M MARS for future protocol needs.

Fee Distribution Mechanism​

50% of protocol fees used to go to the Safety Fund as axlUSDC, while the other 50% was reserved for Mars Hub stakers as MARS tokens. Mars V2 changes it.

  • Safety Fund: A portion of fees will be used to buy nobleUSDC and add to the Safety Fund.
  • Buy and Burn: A portion of fees will be used to purchase MARS tokens from the market and burn them, reducing the circulating supply.
  • Buy and LP: A portion of fees will be used to create liquidity pairs (MARS with another token like OSMO, NTRN, or nobleUSDC) on decentralized exchanges like Osmosis or Neutron. This increases the token's liquidity and potentially reduces reliance on liquidity mining incentives.

Overall Goals​

  • Optimize token distribution: Ensure that MARS tokens are allocated efficiently and effectively.
  • Increase token utility: Enhance the use cases for MARS tokens beyond staking rewards.
  • Strengthen protocol finances: Build a more robust Safety Fund and reduce reliance on the Community Pool.
  • Promote token liquidity: Improve trading opportunities for MARS tokens.
  • Create deflationary pressure: Reduce the circulating supply of MARS tokens through burning.

These changes aim to make the MARS token more valuable and the Mars Protocol more sustainable by optimizing token distribution, increasing utility, and strengthening the protocol's financial position.