Introducing Munchies
Our Manifesto
We live in a financial simulation. We blindly trust the system everyday. We think we have freedom and control over our money, but the reality is different. We have no control at all.
We trust our hard-earned years of money and effort to companies, institutions, and governments that can disappear overnight. We’ve seen it several times over history. Those same institutions also charge us surreal fees and interests while they keep the reward.
Crypto and DeFi (Decentralized Finance) are the way. This is the future of finance. Everyone should be able to become their own bank and trust code and technology instead of legacy institutions. We need to cut intermediaries out.
We are very early on blockchain infrastructure, everything is still complex and hard to use. A few solid DeFi standards that exist today allow us to create financial tools with unprecedented quality, security, and development speed. And someone needs to work on bridging the DeFi complexity to the common daily usage. We need DeFi to be more efficient and integrated into our daily routine.
This is the beginning of Munchies.
We believe in decentralization.
That every person in the world should
own the custody of at least part of their money.Our purpose is to create usability bridges between DeFi and real life. We want DeFi to be as easy as using a social network or as useful as using a credit card on a POS machine.
Our ultimate mission is that every person on the planet enjoys all the benefits of this new financial world with a great user experience.
Munchies Protocol
To fix some of the mentioned problems, we are very glad to launch Munchies! The easiest and more efficient way to use crypto in real life.
The very first product we’re launching is a way to use your Crypto tokens as collateral for fiat money through PIX (Brazilian 24/7 fast fiat money payment). We believe DeFi can provide better infrastructure for many existing financial operations. One of them is “lending and borrowing”. On-chain collateralized lending allows people to have liquidity on top of their assets without exactly selling them.
Example: Let’s suppose Elon has some ETH or USDC coin in his Metamask wallet. As a Brazilian, Elon has only a few options to pay for his rent or a coffee using his crypto coins. Elon could sell his coins, spend a lot of fees and trust some 3 or 4 centralized institutions… however that’s not efficient.
With Munchies, users don’t need to sell Crypto to use PIX.
Why that’s very clever?
- It’s fee efficient (because it cuts intermediaries and expensive exchange fees)
- It’s tax efficient (no need to sell your crypto for capital gains)
- It’s yield efficient (could lock your coins in some yield-bearing vaults and leverage your BRL position by investing in Brazilian fixed income for example)
The interesting part is that very wealthy people already do that with traditional finance. Now we’re allowing every Brazilian to do that using crypto and DeFi infrastructure. And the best part: 0% borrow interest rate.
How it works
Loans & Collateral (CDP)
CDP stands for Collateralized Debt Position and is the core system of Munchies. Basically, it allows users to lock up cryptocurrency collateral into smart contracts in exchange for stablecoins. In the crypto world, we have great examples of that system. Dai (MakerDAO) and MAI (QiDAO) are good examples of USD CDP stables.
Our product is possible because we launched the first decentralized CDP of the Brazilian Real (BRL). Munchies Protocol allows users to provide ETH, USDC, and wBTC as collateral in exchange for Munchies CDP. (For practical purposes, we refer to it as BRLx. It can be used as a Stablecoin, with a 1:1 ratio to the Brazilian Real, BRL).
Protocol Core Components:
- Over Collateral: Due to loan-value ratio and liquidation mechanisms, BRLx is always pegged with users over collateral vaults. BRLx cannot exist without collateral.
- Vaults: Vaults are smart contracts where the assets are locked. They are yield-bearing as well. We use Yearn Finance for that yield.
- User Managed: Munchies protocol is fully managed by users. Only users can manage the collateral, vaults, and borrows.
Ramper (PIX)
Besides the CDP stablecoin, we helped create a very easy way to off-ramp BRLx to BRL (and vice versa) with PIX. We partnered with liquidity providers in Brazil that buy and sell BRLx for 1:1 to BRL fiat (zero fees). Everything is integrated into the same beautiful Munchies dApp interface. So the user can PIX in/out from/to BRLx directly from a self-custodial wallet.
Use Cases
Munchies protocol is fully self-custodial. Just connect your EVM wallet, and it’s ready to supply to vaults, mint BRLx or exchange from USDC.
- Spend ‘reais’ using PIX without selling your crypto with 0% interest rate borrows.
- Leverage your position. If you believe your position is going up, you could leverage up to 5x.
- Grow your yield with the Brazilian fixed income. Your borrowed PIX could be used to invest in the Brazilian high-yield fixed income.
- Hold a piece of an emerging market. Brazil is a leading world economy, and its currency can have many potential gains.
Munchies protocol is available for all. If you have a self-custodial wallet and internet connection, that should be enough to interact with the protocol.
Although, we see great value for:
- People in general
- Crypto institutions
- Fund managers
Risks
Our protocol is still in beta, and we are not audited yet. We don’t recommend interacting with the protocol if you have no idea what you are doing. We don’t recommend the protocol as an investment or financial advice.
Some potential risks:
- Protocol hacks
- CDP risks. Liquidations that could impact the collateral.
- On/off ramp liquidity.
- The price impact of decentralized public LP’s BRLx<>USDC
How to be part
Join our waiting list here
Join our community at Discord
Glossary
Munchies & BRLx
Munchies is a decentralized finance (DeFi) platform that issues the BRLx stablecoin, which is pegged to the value of the Brazilian Real. The Munchies system is built on the Ethereum blockchain and uses a set of smart contracts to collateralize and stabilize the value of the BRLx token.
The main feature of Munchies is its collateralized debt positions (CDPs). Users can lock up collateral in a CDP, such as Ether (ETH), USDC, and wBTC, then issue BRLx against this collateral. The value of the collateral must be greater than the value of the borrowed BRLx, the collateralization ratio determines the exact amount you can borrow.
The interest rate for borrowing BRLx is determined by the stability fee, which is set by Munchies. Today it is zero.
BRLx can be used in the same way as other cryptocurrencies, for example, to make purchases or as a form of payment, and because it is pegged to the Brazilian Real, its value remains stable. This makes it a useful tool for individuals and businesses to mitigate cryptocurrencies' volatility and use it in financial transactions.
PIX
PIX is a Brazilian instant payment system created by the Central Bank of Brazil. It allows instantaneous and 24/7 transactions for individuals and businesses in a secure way. The system enables near real-time electronic funds transfer, which means that the users can transfer money or make payments from one bank account to another in a matter of seconds. PIX is open to all financial institutions authorized to operate in Brazil, and also to individuals with a digital identity. PIX is designed to increase the efficiency and speed of transactions, as well as to improve the use of digital payments in the country. The payment can be done via bank accounts, mobile numbers, email, and QR code, providing flexibility and convenience to end users.
CDP (Collateralized Debt Position)
A Collateralized Debt Position (CDP) is a type of loan backed by collateral, and in the case of crypto trading, the collateral is typically a cryptocurrency. By using a CDP, users can borrow money to trade with while still holding onto their cryptocurrency assets. This allows them to potentially earn a larger return on their investment (leverage), as they can trade with more money than they would have been able to otherwise.
EVM (Ethereum Virtual Machine)
Ethereum Virtual Machine (EVM) is a virtual machine that executes smart contracts on the Ethereum blockchain. A smart contract is a computer program that can automatically execute the terms of a contract when certain conditions are met.
Think of the EVM as a big computer that lives on the internet and is shared by many people. This computer can run programs called smart contracts, which are instructions that tell it what to do. When a smart contract is run on the EVM, it can interact with the Ethereum blockchain, a way for people to make digital transactions with each other.
Yearn Vault
Yearn Vaults are smart contracts on the Ethereum blockchain that allow users to deposit their assets and earn a yield. They are a product of the Yearn Finance platform, a decentralized finance (DeFi) project that aims to provide an easy way for people to earn a return on their digital assets.
The vaults work by automatically depositing and lending out assets to earn the highest possible risk-adjust yield. They use an algorithm to determine the best interest rate for each asset and then automatically move the assets to the platform or protocol that offers the highest rate. The assets are also rebalanced periodically to maintain a target ratio of assets to ensure the best returns. The interest earned is paid back to the users in the same token that was deposited, so for example, if you deposit Ethereum, you will receive Ethereum as interest. Learn more here.
