The true basis for DeFi 3: Sustainability

The Tavern
4 min readFeb 17, 2022


Sustainability is a word that is thrown a lot around here in DeFi. We’ve seen an onslaught of cool new projects that are cropping up around the place, but seldom are they able to keep up with the natural order of entropy.

This article will pick apart The Tavern protocol, and explain not just why — but how it solves this.


The main aspect for solving sustainability, that we feel needs a lot more attention, is liquidity. In fact, it isn’t just more attention — but education.

The liquidity of a token is crucial to its survival. The main question that long-term holders will be asking is “Will the value of my token be worth its grit a few months or a few years down the line?”, and no project can really answer this truthfully.

This is why we have implemented various techniques, that all combine together to make a perfectly harmonious protocol that offers exactly what the people need.

So without further ado, let us get into it!

The Mead Token

Selling MEAD will impose a 10% tax.

The first step that The Tavern protocol towards sustainability is a sell tax.

When people sell, they are directly drawing out of the liquidity reserves. This is okay, and people should be able to take profits — why else would we all be here right now? (well, other than to drink and sing songs!)

This can only be okay though if we have a system that can continue to add back to this liquidity. The sell tax is one of these ways.

In The Tavern protocol, the sell tax will skim some of the extra pressure that whales can impose so that there is less of a price impact. It also encourages holding and will stop bots from profiting on launch.

Taxed tokens are distributed 70/30 between the rewards pool and the treasury. The former is used to continue rewarding brewers — permanent passive income! The latter is for strengthening the token, and we’ll explain how the treasury will do this.

The Treasury

The treasury is at the heart of The Tavern, otherwise known as the Taverns Keep.

It collects a portion of the fees from The Tavern protocol and uses it to bolster MEAD. The three ways are:

  • Regular and strategic buybacks, surging price upwards
  • Adding to the liquidity pool to increase the price strength
  • Burning tokens to keep the scarcity

There is a 4th, more clever approach to this though:

When the treasury reserves start to deplete, it will offer a bonding mechanism that allows people to purchase MEAD directly from them at a discount.

The reason this works is that liquidity pools are a reserve of funds that aren’t being invested in — meaning that its value is stagnant.

In short, buying directly from the treasury instead of the open market lets the treasury use these funds to invest across DeFi and produce a return on this.

The treasury also uses these funds for growth (i.e. marketing & development)!

LP Staking Incentives

It doesn’t stop there yet!

A third function that we will implement is LP staking pools, letting people deposit liquidity and earn MEAD for doing so.

Essentially, a brewer can come along and buy some MEAD and then deposit their MEAD and USDC into the liquidity pool (called providing liquidity). By doing this, they can then earn the fees that are generated when people trade against this pool.

On top of this, they can deposit these LP tokens into our staking pools and earn MEAD on top of this — giving a reason for people to add liquidity and increase the strength of MEAD.

We have allocated 10% of the initial supply to brewers that stake their MEAD-USDC LP tokens.

These rewards will run as so:

  • 6% over the first 30 days (600 MEAD a day)
  • 3% over the next 60 days (300 MEAD a day)
  • 1% over the last 90 days (100 MEAD a day)

We may look at offering payout schemes to continue to incentivize liquidity providers.

The Main Method: LP discount

The feature that is unique to The Tavern protocol, is the ability to purchase your BREWERYs using MEAD-USDC LP tokens.

Depending on how big the liquidity is, you will be offered a discount using LP tokens as your payment method. The LP discount amount is dependent on a special value called the liquidity ratio.

The liquidity ratio is the ratio of USDC in the liquidity pool to the market cap of MEAD.

Say we have $1,000,000 USDC in our liquidity pool, and the market cap for MEAD is $20,000,000 then the liquidity ratio is 5%.

When observing projects, 20% is generally a good ratio to aim for which usually means a healthy and strong price that lasts through different market cycles.

Therefore, once the liquidity ratio drops below 20%, we offer an LP discount that linearly increases as the liquidity ratio decreases.


If a BREWERY costs $1,000 in MEAD, and the LP discount is set to 10%:

  1. You can buy $450 worth of MEAD and pair it with $450 USDC ($900 total value).
  2. Provide the MEAD and USDC to the liquidity pool to receive LP tokens.
  3. Using the Brewers dApp, you can purchase a BREWERY using these LP tokens — meaning the BREWERY only cost you $900!

Don’t worry if this is still a little bit complicated to wrap your head around at first, we also think it’s a bit complicated! This is the magic of The Tavern, and there will be a guide explaining this process in great detail on the docs closer to launch.

What does this mean?

As price increases, there is more incentive for people to purchase using LP tokens which in turn support the new price and increase the rewards that people receive in the long term.