mStable is a DeFi (Decentralized Finance) protocol built on the Ethereum blockchain that aims to unify stablecoins, lending, and liquidity into one robust standard. mStable's first mAsset is a fiat currency called (mUSD).
The team building the mStable protocol wants to address fragmentation between same-peg assets, lack of native yield with other stablecoins, and incurring an impermanent loss when leveraging with Automated Market Makers (AMMs) like Uniswap for liquidity.
The mStable protocol will support numerous mAssets. Each mAsset is pegged to a unique asset, such as fiat currency (US Dollar) or a cryptocurrency like Bitcoin. mAssets are backed by a basket of existing whitelisted tokenized assets of that same peg, and held by the user. They are non-custodial.
mAssets are minted/redeemed permissionlessly and on-chain via the mStable smart contracts.
mStable allows anyone to use one or a combination of the supported USD stablecoins including DAI, TUSD, USDT, and USDC, to mint the protocol’s stablecoin, mUSD, at a 1:1 ratio. Users can simply access the protocol with a Web 3 wallet (MetaMask)and specify the amount of mUSD they wish to mint.
In certain cases, users will only be allowed to multi mint with a basket of stablecoins instead of one specific asset, specifically when one asset hits its “max weight” or debt ceiling. The max weight is imposed as a safety limit to protect the system in case of any bugs and loopholes with the protocol. In the long-run, the mStable team plans to remove these limitations as well as allowing users to mint mUSD using other major crypto assets like ETH.
mStable’s “Save” mechanism allows anyone to earn a native Annual percentage yield by locking their mUSD into the mStable Savings Contract. The protocol leverages a combination of the interest accrued from lending the assets on Compound and Aave as well as swap fees generated on mStable. The combination of these two mechanisms should provide depositors with an above-average interest rate for mUSD savers.
The mStable protocol also lets users swap underlying stablecoins with zero slippage. mStable charges a 0.3% swap fee along with the normal Ethereum network transaction fees.
Similar to minting, there are certain temporary restrictions where swaps on mStable will be limited, which will occur when any attempted swap drives the underlying stablecoin past its “max weight”. If this happens, users will be required to wait for the system to change, or swap the stablecoins with another available pair.
- List of DeFi terms
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