MELT underpins voting power in the Defrost governance. As a governance token, MELT is used by its holders to vote on changes to parameters inside of the Defrost Finance Protocol like collateral types, Stability Fees, the H2O savings rate, liquidity mining incentives, minimum collateral rate, and many others.
MELT is the final safety funds to the debts of the Defrost Finance protocols. MELT is bought back from the open market and burnt when Defrost Finance’s protocol reserves exceed a threshold. Inversely, when the Defrost Finance Protocol is suffering from a deficit and the system debt exceeds a threshold, MELT in the stabilizer system will be triggered and auctioned for H2O in order to recapitalize the system.
MELT stakers are eligible for the distribution of the protocol incomes. The protocol incomes are accumulated from the stability fee and liquidation penalty.
MELT will be mined as the incentives for providing liquidity into the Defrost Finance protocols. More utilities will be unlocked in the future, like mining boosters, higher liquidation tolerance rate, NFT privileges, discounts in protocol costs, etc.Read More