This is a description of how the utility token for Enzyme (MLN) works within the system.
MLN as a utility token
MLN is a utility token which gives you access to the protocol. Users pay fees in MLN to access the platform. The number of MLN you need to access the network is equivalent to 25 basis points of the AUM linked to your usage of the protocol. Once collected, these tokens are automatically burned.
If users fail to pay fees in MLN, they will get penalised for this because the protocol will dilute their vault shares by 50bps.
The MLN collected by the protocol is highly unlikely to offer any value to the MLN token in the short term given that inflation is likely to exceed the amount burnt for many years to come (see next section).
MLN to fund protocol development & growth
Each year, up to 300,600 new MLN tokens can be minted by the minter contract. This MLN is to be used for current and future protocol development and growth. The Enzyme Council DAO can review grant applications and allocate those funds to projects, developers, maintainers and auditors who they believe can add value to the Enzyme ecosystem. Any MLN tokens not spent at the end of each year, are typically burnt.
Future planned MLN Utility
It has been planned for a while to evolve and add more utility to the MLN token. The details of this will be confirmed in the future and may involve things like locking up and staking an amount of MLN to make a governance proposal.