Can the Stablecoin Aggregation Protocol mStable Shake Curve's Status? Briefly describe its operating mechanism and token economy
Editor's Note: This article comes fromBlue Fox Notes (ID: lanhubiji), reprinted by Odaily with authorization.
Editor's Note: This article comes from
Blue Fox Notes (ID: lanhubiji)
Blue Fox Notes (ID: lanhubiji)
, reprinted by Odaily with authorization.
mAsset and bAsset in mStable
To understand what mStable is, you must first understand mAsset and bAsset. mAsset means minted assets, and bAsset means a basket of assets (Basket Asset). In the mStable protocol, bAsset refers to a series of underlying mortgage assets that support mAsset (such as mUSD, mBTC). These assets have certain weights Proportion. The composition and weight of the assets (basket of assets) in the bAsset pool will change in the future according to the governance vote of MTA token holders.
In other words, mAsset is an mToken generated using the mStable protocol. For example, mUSD, mBTC, mGLD, etc. can be minted through the mStable protocol. Therefore, mUSD, mBTC, and mGLD are all mAsset, that is, tokens minted through the mStable protocol.
So what is needed to support the casting of mAsset? Use bAsset (basket of assets with the same anchor). That is, to mint mAsset (such as mUSD) in mStable, you need to use other token assets with the same anchor as collateral, but the mortgage is different from Maker, which is a token pool model. The assets in these token pools become bAssets, the assets in the basket. At present, to mint mUSD, it can be generated through four tokens (USDT, USDC, TUSD, DAI).
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In order to mint mUSD, four tokens can be used to generate, SOURCE: mStable
In addition to mUSD, mStable can also mint mBTC, mGLD, etc. in the future. For example, mBTC can be generated through tokenized BTC (wBTC, sBTC, renBTC, tBTC, etc.), but currently mStable only supports mUSD.
From the above description, we can see that mStable is a protocol for minting mAsset. In order to mint mAsset, it needs the support of a basket of underlying assets. What's interesting is that these baskets of assets are all assets with the same anchor. For example, assets anchored to USD (such as DAI, USDT, USDC, TUSD) or assets anchored to BTC (such as wBTC, renBTC, tBTC, sBTC).
Since there is a basket of assets (bAsset) with the same anchor, the minted mAsset (such as mUSD, mBTC) is equivalent to a liquid share of the asset pool, so it can be used as a medium of exchange and pricing unit and store of value. In addition, in mStable, its casting and redemption are carried out according to 1:1, and there is arbitrage space here, but since the assets in each pool have the maximum weight, the arbitrage space is also limited.
There are already stablecoins, why mUSD?
What is the use of the mStable protocol to mint mAsset through asset pools with the same anchor? Many friends will ask: Since there are already stable coins such as USDT and DAI, why do we need mUSD? Is it superfluous? This involves some new properties and new use cases of mAsset. Blue Fox Notes uses mUSD as an example to explain the meaning of mAsset.
Integration of decentralized same-anchor tokens
At present, the stablecoins in the stablecoin market are very decentralized, from DAI, USDT, USDC, TUSD, BUSD, USDX, PAX, GUSD... what they have to do is to anchor the US dollar and realize the value of the US dollar. Tokenization, so many decentralized stablecoins will bring user experience troubles. mUSD tries to solve the problem of decentralization through the integration of stablecoins and bring better experience to users.
Simply put, when users use stablecoins in various scenarios, they don't have to worry about the stablecoins they use, no matter which stablecoins the user deposits (as long as it is one of the stablecoins in their basket), such as USDC . After the app integrates the mStable SDK, the user's storage will be automatically minted to generate mUSD. mUSD will not appear directly on the user interface, all users see is "USD" or some kind of stable currency. That is to say, if the merchant requires USDC payment, and the user only has DAI, the user can deposit DAI directly and pay at a ratio of 1:1. Users don't need to worry about the logic behind it and the underlying logic, and they don't need to convert DAI to USDC before making payment.
Zero-slippage swaps between stablecoins
The mAsset in mStable is a minted asset, which is supported by a basket of assets (bAsset) with the same anchor, and the assets in the basket are exchanged on a 1:1 basis. Well, there is no slippage in transactions between these stablecoins. This also leads to a large number of arbitrage opportunities. Once there is a price difference between these stablecoins, as long as the price difference exceeds the sum of gas fees and conversion fees, exchange arbitrage can be carried out.
Why can exchange with zero slippage be achieved? Generally speaking, the tokens in the token pool have the same anchor, and the deviation from the anchor is temporary in the long run. It may deviate slightly from the $1 anchor at some point in time, but in the long run it will fluctuate around $1.
The mStable protocol uses a constant bonding curve model: q(x)+q(y)=k
Constant bonding curve for mStable, SOURCE:mStable
earn income
That's why it's convertible 1:1, it's a constant bonding curve. Its slope is constant and its price does not depend on the supply of token X and token Y. That is, when exchanging between stablecoins (bAsset) in the pool, only a small transaction fee needs to be paid without slippage. In the mStable protocol, the stablecoins in the token pool supporting mUSD can be exchanged 1:1. It also allows the casting and redemption of any stablecoin (currently there are only four), but the premise is that one of its stablecoins has the largest Weights are not broken.
The maximum weight limits its arbitrage space. The maximum weight means that a certain asset in the pool cannot exceed a given maximum proportion, such as 35%. This is mainly because the assets in the exchange pool are exchanged 1:1, which will bring risks to the system. If an asset in the pool reaches its maximum weight, the rules of the system will change, whether it is minting mAsset assets, redeeming assets, or exchanging assets, these rules will change. Any exchange, minting or redemption above its maximum weight is suspended until it falls below the maximum weight. If the user is anxious to redeem at that time, the redemption will be carried out according to the proportion of the assets in the pool at that time.
If the token pool size in mUSD is large enough, will it stress Curve?
earn income
mUSD is equivalent to the liquidity share of USDT, USDC, DAI, and TUSD (the current token pool composition). Deposit mUSD to earn interest. mStable uses a basket of assets in the pool to obtain interest income through third-party lending agreements such as Compound or AAVE. In addition, it can also obtain part of the exchange fees on mStable.
Realize value protection for mUSD through protocol token MTA
If the bAsset in mUSD is unanchored, resulting in an under-mortgage state, it can re-mortgage mUSD by removing the unanchored stablecoin and MTA pockets to achieve full mortgage and ensure the value protection of mUSD . The value of MTA comes from the fact that a certain percentage of revenue can be captured from the mStable protocol. This will be further elaborated in the role of MTA tokens below.
Governance token MTA
MTA is mStable's protocol token. what's it for?
The primary function of MTA is to protect mStable.
If the asset pool (underlying collateral) fails (for example, the stable currency is out of anchor), MTA can re-mortgage the system to ensure that mUSD or other m assets remain anchored.
That is, rehypothecation occurs when the assets in the basket are undercollateralized. If a bAsset in the basket loses its peg, the loss of these unpayable parts is repaid by selling the MTA to buy the mAsset. The purchased mAsset will be destroyed to reduce the total amount of mAsset and realize repayment.
Say a stablecoin drops from $1 to $0.85, and by governance resolution, it can be removed from the mUSD basket. However, the system still incurred losses. At this time, mASSET needs to re-mortgage, sell MTA to buy mUSD, until the system resumes mortgage.
Once DAI reaches the maximum proportion, according to mStable's agreement, people's subsequent redemption is only allowed to be redeemed in proportion to the stable currency in the pool. At this point, the governance system can trigger a remortgage. If the resolution is passed, the DAI in the pool will be auctioned, exchanged for mUSD, and then destroyed. But even if the unanchored assets are removed from the basket and mUSD is destroyed, the value of mUSD has not yet returned to $1, and mUSD is still under-collateralized. At this time, part of the pledged MTA will be liquidated and sold, used to purchase mUSD, and then destroyed, and finally the full mortgage of mUSD will be realized. This is similar to how MKR in Maker works when it is undercollateralized.
The second role of MTA is to induce liquidity.
The mAssets on mStable are all generated from the assets (bAsset) in the asset pool. If there is no liquidity, the mStable system cannot operate. MTA is used as a token incentive in the early stage, which can motivate the community to use stable coins to generate mUSD and provide liquidity on Balancer. In this way, MTA can be allocated to users who contribute to the mStable ecosystem.
mStable has an open reward pool plan, in which 20% of MTA (20 million) is rewarded to ecological contributors. Rising for the first 15 months, then gradually decreasing until all payments are made.
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mStable Open Reward Program, SOURCE: mStable
Specifically, how to contribute to the ecology?
Users who lock mAsset (such as mUSD) in lending and trading agreements, such as providing liquidity for the mUSD pool in Balancer, providing deposits in lending agreements, etc.
Applications that integrate mStable SDK or mStable assets.
For example, if a user provides liquidity with 1000mUSD in the liquidity pool of lending, derivatives, and DEX, the corresponding MTA will be earned. Just as currently providing liquidity in the mUSD pool in Balancer earns MTA. But it also has a time window, such as based on a week, or based on 30 days.
Return = (t/Ta/A)R
Among them, t refers to the time when the user's mAsset is locked in a DeFi application; T refers to the calculation time of the total return (such as 1 month); R refers to the total MTA return during this period; a refers to the contribution to the ecological platform The number of users; A refers to the total amount of mAsset contributed by all users to DeFi applications during the reward calculation period.
The final role of MTA is as a governance token.
MTA is one of the keys towards decentralized governance. MTA stakers vote on all parameter settings of the system, including exchange fees, distribution of MTA rewards, composition of basket token pools (tokens are added or removed), maximum weight of tokens in token pools, etc.
MTA Token Distribution
According to the public information of mStable, its token allocation is composed as follows:
Ecological reward at startup 2.8%
Current investors: 12.8%
Future sales and ecological growth: 25%
Ecological reward: 36.9%
From the perspective of token circulation, 2.8% of the tokens (including the liquidity pool and initial unlocked ecological rewards) will be released on the first day, which is 2.8 million MTA tokens. Three months later, 11% will be released on October 15, 2020; six months later, on January 15, 2021, 18.2% will be released; 12 months later, on July 15, 2021, the total token The released amount reached 29.3%, equivalent to 29.3 million MTA.
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Rewards and Risks of MTA Staking
In order to participate in MTA governance, MTA holders must stake it. Staking earns staking rewards. Pledging also has certain risks, that is, part of its MTA may be liquidated or diluted in the event of under-collateralization (re-mortgaging). Of course, since you have assumed the risk and locked-in opportunity cost, you can also get rewards such as MTA, interest, and exchange fees.
The staking reward is floating, and it will be determined according to the amount of MTA staking, which is similar to the staking incentive model of ETH2.0. It is a dynamic balance model, according to the comparison between re-hypothecation risk, locking opportunity cost and benefit.
