Introducing mStable

We make digital money safe, stable and accessible

James Simpson
Feb 11 · 7 min read

Today we announce the mStable Standard — a protocol that unites the asset economy into one standard that is more secure and usable than the sum of its parts.

mStable will be going live in the coming months, if you’d like to stay informed, sign up to our newsletter.

Key Points

mStable is:

  • A permissionless protocol for unifying, securing and governing tokenised assets.
  • An SDK for DApps and exchanges to simplify and expand stablecoin user experience.
  • An open reward pool to bootstrap liquidity, utility and a decentralised community of governors.

Read our docs


Many assets have been tokenised on Ethereum, namely Gold and Fiat currencies.

Referred to as stablecoins, these tokenised assets are dramatically faster to send than wire transfers and composable with other decentralised finance (DeFi) protocols. But they are imperfect, for two main reasons:

  1. Fragmentation
  2. Concentrated counter-party risk

Stablecoin diversity has created a fractured environment in which exchanges and DApps must cater to a multitude of stablecoins, even if they represent the same asset.

DAI, USDT, USDC, TUSD, CUSD, USDx, PAX and GUSD all exist to do the same task: replicate the US dollar on-chain. Fragmentation offers choice, but it destroys liquidity and presents a confused user experience. Instead of just BTC/USD, Binance offers BTC/PAX, BTC/USDT, BTC/USDC, BTC/BUSD and BTC/USDC. Users are left with no choice but to deal with this convoluted and illiquid trading environment.

Add to this the fact that holding any one existing stablecoin exposes the user to potentially catastrophic downside risk. Would you hold all your wealth in DAI? What if the DAI credit system, experimental and young, fails and the value of your DAI evaporates? Imagine having your money in USDT, and it is revealed that it’s only 75% backed, or worse? Perhaps then you would choose a more regulated variety, like USDC. But then the US Government chooses to impose a regulatory decision that enforces mass blacklisting of USDC addresses. Your USDC suddenly becomes inaccessible for an unknown period while the legal system works itself out.

Even if unlikely, these counter-party risks are real. At the end of the day, what’s the point of a stablecoin that is at risk of becoming worthless overnight?

What if we could unify existing USD stablecoins into one asset per peg that is more usable, stable and secure than the sum of its parts, based on a sustainable and decentralised protocol?

mStable aims to thoroughly improve the efficiency of the entire stable-value market. In terms of Alvin Roth’s market design, it will:

  • Increase thickness by pooling participants from different asset markets together
  • Improve the safety by spreading the risk of different pegging mechanisms and introducing even more security of value
  • Reduce the congestion by inviting liquidity into the system with incentives

How does mStable work?

mStable assets

mStable is a smart contract system built on Ethereum. Whilst mStable is built to cater for a multitude of tokenised assets, this explanation will focus on our first asset, mUSD.

To mint an mStable asset you send any of the underlying assets to the smart contract of that asset. For the USD asset, the underlying stablecoins could be USDC, TUSD, USDT, USDC, GUSD, DAI, and so on.

For example, if you send 100 DAI to the mUSD contract, you will receive 100 redeemable mUSD back. Minting costs you nothing — in fact you will be rewarded for doing this (more detail on this later in the post).

Your mUSD is, in theory, more secure than your DAI as it’s backed by several other stablecoins as well as by the mStable system token Meta.

The process is the same for mGLD, mEUR, mBTC and so on.

Each mStable asset is able to rebalance. This means that if a great new stablecoin comes to market, it can be added in. It similarly means another can be removed, or their relative maximum weights changed.

If you redeem your mStable asset, you have to pay a fee in Meta. Overtime, this fee will be become very low to encourage use of the system.

mStable assets are 1:1 backed and completely on-chain

Aside from fragmentation, stablecoins have had difficulty scaling due to having collateral held off-chain or requiring sometimes extreme levels of over-collateralisation.

Fiat backed stablecoins are 1:1 backed but their assets are held off-chain, ironically requiring more trust than fiat. Virtually every DeFi product must be overcollateralised — for example, Synths backed by SNX currently require a minimum of 750% collateralisation.

mStable is able to be 1–1 backed while remaining secure since collateral is stable, diversified, exterior to the system and effectively over-collateralised through Meta.

Meta Governance

mStable will be controlled not by a single entity but by a global community of Meta Governors. Each system parameter will be determined by these users.

To participate in governance, users must stake Meta tokens and vote on proposals. By staking Meta and voting, you become a Meta Governor. The amount of Meta a user stakes is proportionate to their weighting in the vote (if they indeed vote).

For staking and governing, Meta Governors receive all mStable redemption fees, proportionate to their stake amount.


If an underlying asset loses its peg beyond a certain amount, mStable can purge that asset and recover lost value by selling Meta for the outstanding mStable asset. The purchased mStable asset is subsequently burned. This continues until there is an equal amount of outstanding mStable assets to the amount of collateral in the basket.

For example, if TUSD breaks its peg to 60 cents, it will be isolated and may then be auctioned for mUSD. The loss is made up by selling Meta for mUSD until which time the system returns to full collateralisation.

Where does the Meta come from?

A portion of staked Meta will be liquidated in the event of an underlying asset failing. Only after this liquidation, and only if required, will Meta be diluted, up to a point, in order to cover any remaining losses due to a peg break.

Critically, this means that participating and profiting as a Meta Governor is not risk-free: a portion of staked Meta is the first source of recollateralisation value.

Why is this important?

Meta Governors make all system decisions. If they make the wrong decisions, they should be the hardest hit. If they make good decisions, they should be rewarded the most.

These tight incentives direct Meta revenue directly to those who have the chosen to take the most responsibility and risk in the system.

Meta Governors have skin in the game.

Now for the exciting bit.

Earn Meta for contributing to mStable’s growth

By leveraging two reward mechanisms, we believe users can get the best available return available on their stablecoin holdings.

Early contributors to mStable’s liquidity and utility will be significantly rewarded.

20% of Meta has been allocated to an open reward pool for this purpose.

Rewards are split between Minting and Ecosystem incentives, are distributed in monthly tranches, increase over year 1, and then decline slowly until the pool is exhausted. Users are paid out their rewards after a 12 month lock up period.

This large amount of Meta will rapidly grow mStable liquidity as well as a more wide-spread base of Meta holders — two mission critical components of mStable’s success.

Minting Rewards

During the bootstrapping phase, anyone can swap their stablecoin for mStable assets and receive Meta rewards proportional to their mint volume that will vest after 12 months.

Ecosystem Rewards

Our ecosystem rewards aim to incentivise users to contribute mStable assets to the broader DeFi ecosystem.

Meta will also be paid to those that ‘lock-up’ mStable assets in utility generating services, namely liquidity (e.g. DEXs) and lending protocols.

Simply by swapping for an mStable asset of equal value, you will receive substantial Meta rewards, an interest rate, and/or transfer fees.

The reward pool is open to anyone. Whether you’re an individual crypto holder or one of our corporate liquidity partners, everyone has access to claim some of this reward pool on the same terms.


In addition to the above, mStable is a product that can be integrated into any application or exchange as an SDK. mStable unites tokenised assets for end users.

This is how it works:

  • User Deposits any whitelisted asset on the application
  • Deposit is Automatically Minted into an mStable asset. 0% slippage, 1:1 backed, 60k gas.
  • mStable asset appears in the user’s account as “USD” or “GLD” or “BTC” etc. (as mStable assets collapse tokenised vassets into one fungible representation of that asset)
  • Users can redeem their asset into any underlying asset or off-board with the mStable asset
  • Participating Application Receives Meta reward

For example, on a futures exchange there would one BTC/USD contract. The exchange would accept a multitude of USD stablecoins that flow into one contract, simplifying user experience and increasing market depth for the participating exchange. This would happen while increasing security and stability through mStable’s diversification of collateral and native re-collateralisation mechanism.

This is particularly powerful for DeFi apps that have been reticent to integrate USDT because of risk but still want to tap its substantial user base.

If you are an exchange/DApp that wants to radically simplify user experience by having one USD or GLD for all of your services, please get in touch through our Discord.


mStable assets are:

  • Safe — Collateral is diversified and ultimately backed by system token Meta (MTA)
  • Stable — mStable assets are low volatility assets
  • Accessible — mStable dramatically simplifies user experience by representing fragmented assets as one optimised token per peg
  • Decentralised — Meta embeds the incentives required to govern a decentralised system. Meta Governors are rewarded when mStable grows securely.
  • Yield Generating — 20% of Meta is emitted in an open reward pool.

Keep in the loop —


A protocol for unifying, securing and governing tokenised…

James Simpson

Written by

CEO & Co-Founder at



A protocol for unifying, securing and governing tokenised assets

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