Monthly AMA Series — mBTC Launch
New mStable asset launch and technicalities answered
mStable has released a new monthly AMA series. These AMAs are a chance for the team to chat with the community about new launches, or any burning questions you may have about the protocol, DAOs, or a topic for the month. For this first AMA session, the team focused on mBTC, the next mStable asset being released this Friday, February 12th 2021.
Below are the questions and answers imported from the live AMA which was held on mStable’s Discord in the #general channel:
Q’s were asked by our Discord Community.
R’s were given by James Simpson, Co-founder of mStable.
Q: Does the mBTC asset function just like mUSD?
A: The mBTC asset will be a meta-stablecoin just like mUSD. It will be risk minimised, with diversified backing and eventual MTA backing. It will also have a save rate that should be above average like mUSD. The only difference is that mBTC uses a new algorithm for swaps which we think will make the product much more useable and powerful!
Q: Isn’t mUSD getting upgraded to the same new AMM/Swapping algorithm?
A: There’ll be a proposal about that soon. I hope that it will pass and if it does we can do the migration in early-mid march
Q: Some of the highest APY days in early Jan were the days that corresponded with high swapping volumes and increased activity on the Ethereum blockchain (high gas prices). As of late I have noticed that even though we are in high activity times on the blockchain, they aren’t corresponding to high swapping volumes on mStable. Any thoughts on why?
A: We’ve had high swaps recently — check out these from 0x’s matcha just yesterday:
That’s corresponded to a 49% imUSD APY (These swaps are very large relative to TVL).
Q: The emission schedule hasn’t been great for $MTA, is there any talks or even proposals about inflation? Thanks!
A: The good thing is that even though the emission is relatively fast, over 1/3 of MTA are locked in staking, here at governance.mstable.org
This is a fantastic bedrock for our upcoming MTA recollateralization proposal — will ensure that mAssets are the most secure collateral in DeFi.
Also, the new MIP-7 has come awesome ideas about incentivising liquidity on mStable itself — expect to see a proposal about changing Earn to better align incentives in March, as well as a possible buy and make proposal.
Q: Sounds great! Is mBTC going to launch soon after the Mip6/7 vote ends Thursday?
A: That’s right! As soon as we Meta Governor approval to implement MIP-7, we launch. The dev team have done an incredible job preparing both so if MIP-7 is passed, there will be a Friday launch .
Q: Speaking of TVL, how will the addition of mBTC affect this value?
A: Hopefully by a lot…. Badger DAO have a TVL of over 1.5 bn. There’s a lot of Bitcoin addressable market we can get into mStable.
We’re talking to Badger about potential collaboration and Sushi have said they do an incentivised liquidity pool of mBTC/ETH with Sushi and MTA (proposal coming soon)
Q: Has there been any discussion about the risk of custodial assets in the mBaskets? Since there is already the infamous USDT in the mUSD basket, I was wondering if it’s really such a good idea to now also go with bBTC in the mBTC. Aren’t we staking the solvency of the entire protocol on external risk factors out of mstable’s control? So kind of the opposite of “trustless”?
A: Lots of people believe USDC to be a very safe stablecoin. The new feeder basket concept (see forum.mstable.org) allows mStable to scale while managing that risk.
It should also be noted that with max weights even a complete failure of a collateral asset won’t be catastrophic for the holder of that mAsset — with MTA recollateralistion coming, the holder may not even notice
Q: When is the recolleteralisation supposed to go live?
A: Recollateraliation will come with a proposal for staking and governance v2. This is big change for mStable. If passed, we expect it to be out later this year.
This’ll decentralise every aspect of mStable and really empower MTA holders.
Q: Has the team had any communication with Coinbase or Binance about listings?
A: We have a great relationship with both exchanges, and are working on listings as well as other collaboration opportunities. For example, Coinbase just added MTA to Custody:
We’ll keep the community updated on our progress there.
Q: What will be the max weighting of the various BTC representations in mBTC?
A: Good question, our developers will set the max weights evenly to begin with. We’ll have follow up votes to gauge it up or down.
Q: Could you give a quick synopsis of how the new AMM benefits mBTC vs the current 1:1 trading mechanism for mUSD? How does it compare to Curve for example?
A: The community have voiced concerns that the current AMM drain assets, and that reduces mStable’s swap utility and also the utility of holding the mAsset (don’t have guaranteed redemption into every underlying stablecoin). Second, we need to price BTC assets and Gold assets as well because they sometimes have fees associated with it (Ren can turn fees on- its part of their security mechanism).
The current MIP-7 proposes a modified 3 to 4 bAsset basket (with the pre-approved bAssets) that uses the mathematics of StableSwap’s trading algorithm to become a fully functional AMM, with the following mStable-specific properties:
* AMM produces one mStable meta-stablecoin per peg, as opposed to an LP token
* Interest and trading income are collected in mAsset terms and go to that mAsset’s Save contract (or the imAsset)
* Each bAsset has a maximum weight, capping the risk of permanent capital loss (without max weights, if one of bAsset significantly depegs, it will effectively mean that mAsset holders will be left holding only that asset. Max weights caps this risk for mAsset holders)
* All bAssets are automatically lent on decentralised lending markets such as Aave and Compound. Eventually this can be rebalanced according to the best available rate
* It will be proposed that the mAsset baskets are backed by MTA through a recollateralisation mechanism
In summary — this AMM will be the first meta-stablecoin producing AMM on the market. we think meta-stablecoins are a powerful primitive and we couldn’t be more excited about leading the way in manufacturing them.
Q: Any plans for Layer 2 integration you can discus at this time?
A: Definitely — the team is actively researching layer 2 as well as other chains (...and how to connect them efficiently and cheaply).
Q: Super-psyched to hear about all of the upcoming developments. Fucking fantastic job! What is the recollaterisation about? Anywhere I can read about this?
A: Currently there isn’t much publicly available information on recollateralisation. In sum, if an underlying asset loses its peg, mStable can purge that asset and recover lost value by selling Meta for the outstanding mStable assets. 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. After this, the loss is made up by selling Meta for mUSD in an open auction until which time the system returns to full collateralisation.
Also check out MIP-7, in addition to MTA recollateralisation, there is a proposal for an insurance pool — you can read about it here: https://forum.mstable.org/t/mip-7-masset-amm-with-feeders/344
Q: Is there a proposal coming up soon for the buy back and make?
A: I’m not involved in that proposal but I did hear it will come in the coming weeks.
This is a community driven project — remember anyone can suggest improvements in the #🗳governance channel and make a post in the forum for discussion.
A big thank you for the participation of the mStable community, this wouldn’t have been done without all of you!
See you in March for the next AMA…😎
