mStable – Create Decentralized Stablecoin ecosystem with EPNS

Due to the extremely volatile nature of the crypto space, traditional investors are skeptical about investing in the crypto market. The crypto asset is often under scrutiny due to the extreme movements in its market but people tend to forget that all markets are volatile in nature and due to the crypto market still being in its nascent stage can be a tad bit more volatile than the traditional sector.

Owing to the popularity gained by cryptocurrencies people have started adopting them but still, a huge chunk of the population is hesitant and fearful of crypto due to its volatility. But active traders can benefit from the volatility present in the crypto market.

Stablecoins are viable solutions created to solve issues surrounding volatility and in return, it helps DeFi gain prominence.

What are Stablecoins?

Stablecoin is a class of cryptocurrencies that provide price stability and are backed by an underlying asset. They have gained momentum and popularity due to the instant processing and security or privacy of payments of cryptocurrencies, and the volatility-free stable valuations of fiat currencies.

The market value of stablecoins is pegged against some external reference. They could be pegged to a fiat currency like the US dollar or to a commodity’s price such as silver or gold. The price stability of stablecoins is achieved through collateralization i.e., the use of an asset to secure a loan against default or through algorithmic mechanisms of buying and selling the underlying assets that are used to peg the stablecoin against or its derivative.

Types of Stablecoins

Fiat-Collateralized Stablecoins

Fiat-Collateralized Stablecoins are backed by fiats like the US dollar or by commodities like gold, silver, etc. and stablecoins are issues against such fiat currency or commodity reserves. Even oil can be used to back stablecoins but the most used is the US dollar reserves.

Crypto-Collateralized Stablecoins

Crypto-Collateralized Stablecoins are backed by other cryptocurrencies in the crypto market. These stablecoins are over-collateralized as the cryptocurrency they are backed by may also be subject to high volatility. In an over-collateralization-a large number of cryptocurrencies, tokens are maintained as a reserve for issuing a lower number of stablecoin.

For example, Ether worth $1000 will be reserved for issuing $500 worth of Ether-backed stablecoins.

Non-Collateralized (Algorithmic) Stablecoins

Non-Collateralized (Algorithmic) Stablecoins use a working mechanism instead of using any kind of reserves. The working mechanism is like that of any central bank for maintaining a stable price.

Hence, the role of stablecoins has been pivotal in DeFi and has been proven to be an excellent store of value and a medium of exchange within the decentralized framework.

But in recent years the stablecoin ecosystem has fragmented and several new stablecoins have entered the stablecoin ecosystem when initially it was only DAI-centric. Due to this, the users have to constantly shift and juggle between DeFi opportunities available for different stablecoins on different platforms.

To overcome this issue the DeFi protocol mStable has created the concept of Meta-Assets that combine all the stablecoins available into a single stablecoin.

What is mStable?

mStable provides an autonomous and non-custodial infrastructure for stablecoins or pegged value crypto assets. mStable is a DeFi protocol that was created to combat three major issues. The issues are as follows:

A. Lack of protection – Presently, there is a lack of protection against permanent capital loss in pegged crypto assets.

B. Lack of yield- There is a lack of yield in fiat currencies and pegged crypto assets.

C. Significant fragmentation in same-peg crypto assets.

Through the creation of meta-assets, mStable sets in place a solution to overcome these three major problems. Meta-assets are fully backed by a diversified basket of existing tokenized same-base assets.

Characteristics of mStable

Stable

Meta-assets is a pegged-value crypto asset in their own right and it represents a share of liquidity in the underlying asset pool. The use cases of Meta-assets include the medium of exchange, store of value, and unit of account.

High-Yielding

When Meta-assets are deposited in mStable’s Save contracts an outsized native interest rate is earned. The rate of interest is derived through mStable contracts autonomously. The mStable contracts allow the swapping of underlying assets for a fee. The interest income and exchange income are automatically and programmatically sent to savers.

Non-custodial

mStable smart contracts are non-custodial in nature and Meta-assets are minted or redeemed on-chain through mStable smart contracts which disallows any third party to ever take custody of a user’s assets. The protocol pool lives in a non-custodial smart contract and thus makes mStable a peer-to-peer protocol.

At any time Meta-assets can be redeemed for the underlying assets.

Robust

Assets issued by mStable are designed as more secure than the sum of all their parts. mStable can offer protection against the peg-loss of an underlying asset through the use of the protocols native governance token to re-collateralize meta-assets.

Decentralized

Users that hold the native Governance token of mStable, MTA, govern the protocol. They vote on the proposed changes to the protocol.

Users can earn MTA either through staking or providing liquidity or by saving mUSD or mBTC through mStable’s Save contract.

List of Assets on the mStable protocol

A. mUSD – It is the first meta-asset brought in by the mStable protocol. It is backed by a basket of selected USD stablecoins.

On Ethereum, they are USDC, USDT, DAI, sUSD.

On Polygon POS-Chain they are USDC, USDT, DAI.

B. mBTC – It is a crypto asset that is pegged to the price of BTC, supported by a pool of tokenized BTC on the Ethereum network. They include renBTC, WBTC, sBTC.

C. MTA – It is the Governance token of the mStable protocol. It has a total supply of 100,000,000 tokens.

Collaboration between mStable and EPNS

EPNS protocol will play an integral part in the mStable ecosystem. A separate channel will be created for mStable on the EPNS protocol and users subscribing to that channel will receive direct real-time push notifications. This will streamline the communication process between the users of mStable and the mStable protocol from a centralized communication channel to a decentralized real-time push notifications communication channel.

Users will be constantly updated about the different stages of the governance process. It will send users notifications about:

A. New changes proposed for the protocol

B. Changes made to existing proposals

C. When the voting process will begin

D. Closing of the voting process

E. Results of the voting process for the proposed changes

F. Staking vault has been topped up with rewards

G. New meta-assets going live

This collaboration will help mStable bring with it revolutionary changes to the Stablecoin ecosystem and make users aware of the existence and use cases of the protocol.


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