TL;DR
- Save, despite its popularity, could not be easily scaled to achieve mStable’s growth ambitions
- An open and composable architecture is required to scale
- mStable will leverage the new ERC-4626 standard for fully composable vaults
- The Meta Vault architecture leverages the composable ERC-4626 standard to power the next product line of mStable
Abstract
As one of DeFi’s pioneering protocols, the origins of mStable date back to 2020 before DeFi summer kicked off with a concept to solve the fragmentation of same-pegged assets through a novel concept of meta assets (mAssets), which combines multiple same-pegged assets USDC, USDT, sUSD and DAI into one (mUSD).
mStable Save became the dominant case of the protocol across both Ethereum and Polygon as one of the most straightforward, stablecoin generic manner to earn an above-market rate of yield. Many of our CeDeFi partners like Gelt Finance, 2pi and Minke have used mStable Save as a yield foundation layer for thousands of their customers.
Save is also well-integrated across DeFi with aggregators like Idle Finance and DeFiSaver and continues to gain in popularity for its optimisation for both security and yield. At its peak, Save saw more than US$46m in deposits locked.
The generic savings vault for mUSD and mBTC in its existing format, despite its popularity, was unable to scale quickly in high quality across assets and across blockchains to meet demands.
Design space
We recognised that the existing product could not scale quickly as we did not build the architecture required to build similar savings products and scale at low cost or development overhead.
While working through constraints led to the initial rollout of new products, it created an increase in complexity necessary to maintain the product in high quality. Since launching the governance module to fully control MTA emissions over the next six years, the team began deep work on researching what the future of mStable could look like.
We are excited to share initial research on an open and composable architecture leveraging the ERC-4626 standard that could enable mStable to build several significant products at significantly reduced cost.
Next-generation Save Vaults
The fragmentation of yield, standards, protocols and blockchains has resulted in complicated scenarios where users are not fully aware of the risks they are undertaking and have to manage multiple allocations separately. We believe that this problem needs to be solved at the protocol level, and the introduction of the ERC-4626 standard is an opportunity for mStable to break new ground.
While leveraging the ERC-4626 standard, we can not only enable Save to transform into a fully composable lego in DeFi, we can also build generalised ERC-4626 architecture called Meta Vaults that are compatible with ERC-4626 — these are adaptable, diversifiable and fully composable with the rest of DeFi.
A proposal to upgrade the current Save contract to ERC-4626 is already being queued by the ProtocolDAO.
Meta Vaults concept
ERC-4626 standardises DeFi Vaults with standard functions like minting, depositing, withdrawing and balances, ensuring composability between the vault tokens of different protocols.
Extending the concept of 4626-compatible Save, we can build generalised Vaults that are fully compatible with other 4626 Vaults in DeFi, built by protocols like Rari Capital, Fei Protocol and Yearn Finance.
We believe that DeFi protocols will increasingly adopt the new standard and mStable has an opportunity to extend 4626-compatible Save into a yield architecture on its own. We currently call this initial concept Meta Vaults.
Meta Vaults will feature fully-composable vaults of different assets and strategies, and the next-generation Save will be utilised as the first of many other vaults leveraging the new ERC-4626 Yield Bearing Vault standard.
Meta Vaults will unlock fully composable yield strategies powered by mStable
Save adopting the ERC-4626 standard for greater composability across DeFi makes it highly composable with other strategies developed by other DeFi protocols.
The concept of a Meta Vault goes beyond Save, and it can combine, compose, and optimise multiple yield sources into standardised vaults and higher-order products that are interfaced by the user while remaining open and interoperable at every layer of the stack.
Meta Vaults will allow easy on-ramps and off-ramps using a single asset and offer strategy adaptability for new yield opportunities.
