The winner of the stablecoin is still in the balance,How does Mars become a market breaker?丨Chain node AMA
Stablecoins have always been the key for users to enter the blockchain world. However, with the explosion of the DeFi market, the use of this "key" has also been greatly increased. USDT, USDC, and BUSD occupy more than 90% of the current stablecoin market share, but these three stablecoins are backed by several different entity companies, and they are still centralized stablecoin products, which naturally have some disadvantages.
At present, there are a number of decentralized stablecoin projects in the market, such as DAI, Ampleforth, FEI Protocol, etc., but none of these stablecoin protocols can solve the "impossible triangle": high price stability and high degree of decentralization , High scalability. Just like the situation after the emergence of the "impossible triangle" of the public chain, people should start from the mechanism design to think and solve this problem.
On September 10, John—MarsEco, the founder and CEO of the decentralized stablecoin protocol Mars Ecosystem, was a guest chain node to conduct an online AMA and returned to the community to ask questions.
The following is the content of this AMA:
Q: Please introduce the Mars Ecosystem project, such as team background, core team members, project financing overview, and whether it has received investment from well-known venture capital institutions, etc.
John—MarsEco：
Founder and CEO of Mars Ecosystem. I have many years of experience in cross-border acquisitions and investments. Before entering the industry, I studied for a Ph.D. in finance at Stanford Business School, and I have rich experience in both theory and practice of finance.
Our team members have rich experience in the fields of finance, Internet, and blockchain. We have a number of technical developers with more than 15 years of experience in the industry and managers with rich entrepreneurial experience. Our marketing team also has extensive experience in DeFi projects.
Our entire team has a firm belief and a great vision for blockchain technology and DeFi. Our goal is to contribute a new model to the development of the decentralized stablecoin protocol and build a solid foundation for the prosperity of the DeFi world.
The Mars Ecosystem is a new decentralized stablecoin paradigm that integrates the creation and use of stablecoins into the same system.
The Mars Ecosystem consists of three parts: the Mars treasury, the Mars stablecoin, and the Mars DeFi protocol, which together form a positive feedback loop.
Mars stablecoin has the characteristics of stable price, high capital utilization rate, strong scalability and decentralization. These are precisely the prerequisites that stablecoins need to meet.
Mars Ecosystem has successfully raised $2 million in seed funding. Silicon Valley Crypto fund Continue Capital led the investment, and 10 institutions including Parallel Ventures, Kernel Ventures and YBB Foundation participated in the investment. Several investment institutions, including Continue Capital, have in-depth research and understanding of the field of decentralized stablecoins, and we are very pleased to have their trust and support.
Q: What is the difference between the Mars stablecoin and the decentralized stablecoin projects in the market, such as DAI and FEI? Is it a collateralized stablecoin or an algorithmic stablecoin?
John—MarsEco：
DAI is an over-collateralized stablecoin, and AMPL is an algorithmic stablecoin. Our design does not belong to these two categories, and can be classified as a part-collateralization and part-reserve stablecoin category. It can be understood that the backing assets behind the stable currency will not always be greater than the value of the stable currency, nor will it be 0.
https://docs.marsecosystem.com/v/zhong-wen/bai-pi-shu/yin-yan
In this part of our white paper, there is an analysis of the pros and cons of various stablecoin models.
Q: What are the application scenarios of Mars stablecoin? What is the target vision of the Mars Ecosystem? What are the unique innovations?
John—MarsEco：
Mars Ecosystem is a new paradigm of decentralized stablecoins. Its goal is to propose a stablecoin system that can solve positive externalities and integration problems, and has the characteristics of high price stability, high degree of decentralization, and high scalability.
The target application scenario of Mars Ecosystem is to build the central bank and reserve currency of the DeFi world.
Here are our unique innovations:
Multivariate grading mechanism for treasury assets
Casting Control Mechanism
Anti-"bank run" mechanism
Integrate DeFi protocols and stablecoins into the same system
Q: What is the current stablecoin track pattern? What pain points exist?
John—MarsEco：
In 2020, the market capitalization of decentralized stablecoins has increased by 20 times. The minting volume of the stablecoin DAI of Maker, a leading decentralized stablecoin protocol, has grown from 100 million to 4 billion within a year. Although the increase is huge, the current market share of decentralized stablecoins in stablecoins is less than 10%, and the growth rate in the future will be even more astonishing.
In order to be widely accepted and used by DeFi users, a decentralized stablecoin protocol needs to have at least the following properties:
High price stability: The price fluctuates around the anchor value of $1. If this property is not satisfied, the concept of stable currency does not hold.
High degree of decentralization: The operation of the protocol must rely as little as possible on centralized infrastructure, including centralized collateral, centralized protocol governance, etc. If this property is not satisfied, the concept of decentralization does not hold.
High scalability: The supply of stablecoins can grow with the growth of demand for stablecoins with low friction. If this property is not satisfied, it cannot be widely used by users.
Specifically, the current decentralized stablecoin protocols can be roughly divided into three categories. The following will analyze their advantages and disadvantages one by one.
The first category is overcollateralized stablecoins (DAI, sUSD, etc.). The advantage of this type of stable currency is that the price has a bottom support and will not fall below $1. The disadvantages are as follows:
Low utilization of capital. It is always necessary to overcollateralize more than $1 of assets to generate 1 stablecoin.
Scalability is low. Since the generation of stablecoins using the over-collateralization method will expose the collateral to liquidation risks, the user's willingness to generate stablecoins is at most equal to the user's loan demand, so that the supply of such stablecoins often cannot effectively expand with the growth of demand, making The price of this stablecoin will rise above $1.
The degree of decentralization is low. In order to solve the problem of low scalability, the Maker protocol has begun to accept real-world assets as collateral to generate DAI, which makes the Maker protocol more and more like a lending protocol rather than a decentralized stable currency protocol.
The second category is algorithmic stablecoins (ESD, BAC, etc.). Algorithmic stablecoins generally refer to stablecoin agreements that are purely algorithmically guaranteed for price stability without any collateral. All such agreements so far have failed to guarantee basic price stability and have fallen into a death spiral.
The third category is all other stablecoins except the above two categories of stablecoins. Common names include some algorithmic stablecoins and some mortgaged stablecoins, which actually refer to this type of stablecoins. Representatives of this type of stable currency include Frax, Fei, etc. The following focuses on analyzing the respective problems of these two protocols.
When the Frax protocol is attacked by short sellers, a "Bank Run" (Bank Run) will occur, resulting in a death spiral. The specific principle is as follows: short sellers short the stable currency FRAX and the governance currency FXS, and the price of FRAX falls below $1. Users redeem a large number of FRAX to get USDC and FXS, and users sell FXS, causing the price of FXS to continue to fall. Although the price of FRAX fell below $1, the system’s collateral rate increased, but since no users were willing to deposit USDC into the system at this time, users who redeemed FRAX earlier got more USDC, and users who redeemed FRAX later On the contrary, the less USDC they get, users will scramble to redeem FRAX and get FXS to sell, and the system falls into a death spiral.
The direct incentive mechanism of the Fei protocol has proven to be ineffective. The underlying reason for the failure of this mechanism is that punishing users who sell stablecoins when the price is below $1 is essentially artificially reducing the liquidity of stablecoins, which is actually an integral part of stability. The Fei protocol in Genesis has attracted a large number of short-term speculative users to mint FEI with ETH, which also limits the liquidity of FEI, making these short-term speculative users prefer to bear 10% or even 100% punishment to sell FEI, which makes the stable currency FEI low for a long time at $1.
At present, in addition to the trade-offs faced by various stablecoin protocols in terms of price stability, degree of decentralization, and scalability, there are two common fundamental problems: one is the problem of positive externalities, and the other is the problem of integration .
The positive externality problem of the stablecoin protocol means that the cost of the stablecoin protocol to produce stablecoins and maintain the price stability of the stablecoin is borne by the stablecoin protocol and the users of the stablecoin protocol (including minters, share token holders, bond token holders) However, the realization of the value of the stablecoin created by the stablecoin protocol occurs in other DeFi protocols and is captured by these DeFi protocols. The stablecoin protocol cannot capture the value created by it like other DeFi protocols, so The stablecoin protocol’s supply of stablecoins is always less than the cryptocurrency economy’s real demand for it.
The integration problem of the stablecoin protocol means that the demand for stablecoins created by the stablecoin protocol is highly dependent on the degree of integration of stablecoins by other DeFi protocols other than the stablecoin protocol. If the integration of stablecoins by other DeFi protocols is ignored, Then the growth and stability of stablecoins will be affected.
Q: How did the Mars team implement the anti-"bank run" mechanism?
John—MarsEco：
To put it simply, the reason for the "bank run" in the general stablecoin protocol is that the assets redeemed by users who go to the stablecoin protocol early to redeem are more valuable than those who go later, so users will rush to redeem.
The asymmetric design of the Mars Ecosystem breaks this bad equilibrium: although users who redeem stablecoins early can have better liquidity when selling than users who redeem stablecoins later, all users who are eager to sell XMS They must bear the slippage loss when trading on Mars Swap; since the Mars vault is the main provider of XMS liquidity, these slippage losses are captured by the Mars vault, and the amount of Mars vault reserve assets relative to the number of stable coins owned by users The support multiple will increase, so users who redeem later or even do not redeem can exchange their U stablecoins for greater value.
This design allows users who originally wanted to redeem the stablecoin to choose not to redeem it, so that the "bank run" event will not happen.
Q: What is the economic model of the Mars Ecosystem governance token XMS? what's the effect? How does it capture value in the Mars Ecosystem system?
John—MarsEco：
The value capture of Mars Ecosystem's governance currency XMS includes the following approaches:
Casting control mechanism. The casting control mechanism ensures that the market value of XMS is at least 2.5 times the amount of USDM minted. If the market demand for USDM is 100 million, then the market value of XMS will be at least 250 million US dollars, otherwise the USDM minting volume will not reach 100 million.
This type of value capture is highly efficient. At present, the amount of DAI minted by the Maker protocol in the market is 4.8 billion, and the market value of the governance currency MKR is 3.7 billion US dollars. If the Maker protocol also uses the foundry control mechanism created by the Mars Ecosystem, then the market value of MKR corresponding to 4.8 billion DAI will reach 120. 100 million U.S. dollars, more than three times that of 3.7 billion U.S. dollars.
Mars vault control value. XMS holders can control the Mars vault through protocol governance, which makes the market value of XMS at least twice the value of assets in the Mars vault to prevent common 51% attacks. If the minting amount of USDM in the market is 100 million, corresponding to the assets of 100 million US dollars in the vault, then the market value of XMS is at least 200 million US dollars, otherwise the Mars vault will face the risk of being attacked.
The transaction fee generated by the Mars DeFi protocol. When users trade on Mars DeFi protocols such as Mars Swap and Mars StableSwap, they will incur handling fees. Some of these handling fees are handed over to liquidity providers, and some are charged by the agreement. The agreement assigns value to XMS by repurchasing and destroying XMS for these handling fees.
Q: As a decentralized stablecoin system, Mars Ecosystem involves capital issues, and security is always the core issue. How does Mars ensure that its system is safe and reliable, and will not be hacked to steal assets? Has it passed the code audit of the security company? Have you considered cooperating with DeFi insurance to further improve security?
John—MarsEco：
We pay high attention to the possible attack vectors of our innovations, for which we conduct extensive testing.
We have passed the audit of SlowMist and CertiK, and you can view our audit report through the following link:
https://certik-public-assets.s3.amazonaws.com/REP-MarsEcosystem-2021-08-25.pdf
https://github.com/MarsEcosystem/mars-resource/blob/master/audit/SlowMist%20Audit%20Report%20-%20Mars%20Ecosystem%20-%20CN.pdf
We also cooperate with Immunefi, a well-known bug bounty organization, and we provide a bounty worth 60,000 US dollars to launch the Bug bounty program. At the same time, we also welcome technical experts in the security field to join us to jointly maintain the security of the Mars ecosystem.
casting
John—MarsEco：
casting
redemption
redemption
USDM is destroyed through the redemption mechanism. Users can get $1 worth of Mars Ecosystem governance currency (XMS) by handing 1 USDM to the Mars vault at any time.
Foundry Control
The maximum minting amount of USDM is determined by the market value of XMS.
Every 3 minutes, the system will calculate the average market value of XMS in the past 3 minutes, and divide this average market value by a parameter called the XMS support multiple, which is determined by the agreement through governance. The number thus obtained is defined as USDM supply upper limit. In the next 3 minutes, users can only mint USDM up to this USDM supply limit.
For example, assuming that the average market value of XMS in the past 3 minutes is 250 million US dollars, and the XMS support multiple is 2.5 times, then the upper limit of USDM supply is 100 million. In the next 3 minutes, the maximum amount of USDM minted can only reach 100 million , if the current minting amount of USDM is 50 million, then the user can only mint 50 million USDM at most, so that the USDM minting amount reaches the USDM supply limit of 100 million. After 3 minutes, if the average market value of XMS in the past 3 minutes is 275 million US dollars, then the upper limit of USDM supply becomes 110 million, and the maximum minting amount of USDM increases.
At the beginning of the agreement, the XMS support multiple is set to 2.5 times, and this multiple will gradually increase in the future.
Q: Recently, NFT has swept all major circles, and the mainstream media is also reporting. Does Mars Ecosystem have any plans for NFT? In addition to being unique, what is the real exciting point of NFT?
John—MarsEco：
In 2021, Mars Ecosystem will officially launch the Mars Genesis project. Selected users can become a member of space hitchhikers and establish a Mars autonomous community—MarsDAO. Their purpose is: to assist the survival mission of human beings, create a highly autonomous community on Mars, and establish and improve the interstellar financial system.
At that time, a certain number of users will be selected from the white list and those who have contributed to the community to airdrop the Boarding Pass NFT or Captain NFT of our first spacecraft, and those who get it will take the Genesis Spaceship 1 to fly to Mars Ecosystem for gold mining , and jointly create the MarsDao community to gain more rights and explore more ways to play.
As the first aborigine on Mars, Dr. Marvin is also the spokesperson of the Mars Ecosystem. His tasks include:
Produce new user-friendly instructions for using Mars Eco products.
Airdrop & sell more NFTs to users who follow the Mars Ecosystem, including Mars equipment, spaceships, oxygen cylinders, towels, speakers, skateboards, etc... and directly reward XMS.
In the future, Mars Ecosystem will also empower different levels of NFT, so stay tuned.
Q: How does the Mars Ecosystem empower the governance token XMS?
John—MarsEco：
In June of this year, Mars Ecosystem conducted IDO on BakerySwap, Helmet.insure and our own platform, with more than 2,000 users successfully participating. After IDO, we launched MarsSwap and Mars Staking modules.
On September 1st, we will release the Farms/Pools module. Our Farms/Pools have a high APR and sustainable design, ensuring that participants can maintain high returns for a long time. Our Farms/Pools will cooperate with multiple DeFi protocols within the BSC ecosystem.
After further gaining momentum for the project, we will release the stable currency module from the end of September to the beginning of October. When the stablecoin module is launched, we will hold a "Genesis Launch" creation event, and users can get a lot of rewards by minting our stablecoins.
Next, we will release a series of DeFi protocols for the Mars ecosystem through investment, incubation, and joint development to jointly empower the Mars ecosystem. In the fourth quarter of 2021, we plan to release the smart pool module and develop our Launchpad platform at the same time.
In the first quarter of 2022, we plan to implement the function of stablecoin minting on other public chains.
The above plans will empower our XMS governance token.
