mStable Telegram AMA Recap
By: Derek E. Silva
Tags: Governance, Ethereum, Defi, Bitcoin, Stable Coin

Here are the highlights of the responses provided by James, Alex and Onur in what turned out to be a lively session that covered everything from mStable’s origins to its long-term future as autonomous and non-custodial stablecoin infrastructure.

First, we asked Alex, Onur and James to quickly introduce themselves.

Alex: Hey there. I’m the lead protocol developer here at mStable. I have been an Ethereum developer since 2017 after seeing blockchain as a way to revolutionise financial tools and access. Before that I was primarily in web development. I like writing clean code.

Onur: Hi all! I’ve been working in crypto for almost 3 years now. In my previous life, I was doing scientific computing and applied math in academia.

I did R&D on validator economics with CasperLabs before I joined mStable this September. I’m super excited about DeFi and building financial applications.

James: Hi I’m James Simpson, co-founder and lead at mStable. After studying economics and politics at university in Australia and China, I worked as a management consultant in Melbourne, Australia and Shanghai. After that I moved to work as the investment analyst at a multi-strategy crypto hedge fund in Australia called Apollo Capital, then started mStable 😄

The Basics

Question: Can you describe what mStable is?

James: mStable is a non-custodial and autonomous stablecoin infrastructure protocol. mStable unites same peg assets within an AMM and generates optimised meta assets that unite the underlying, are designed to be risk minimised and also generate an outsized yield for savers.

We plan to build out mStable wherever there is stablecoin liquidity and bake in more and more use cases into the meta assets as time goes on. This is just the beginning. 💪💪

mUSD Price Stabilisation

Question: mUSD is backed to USDC, DAI, TUSD or USDT at a 1:1 ratio. Price stabilization is also a difficult problem to keep mUSD around 1$. So what happens when mUSD raises up or down away from 1$? What are the mStable’s solutions for mUSD stabilization?

Alex: mUSD deviates temporarily above and below the $ mark due to the underlying assets price deviations. At the moment the system is naturally priced just under the $1 mark because the cheaper assets fill up a larger portion of the basket. When price deviates up or down, natural arbitrage would happen on a secondary market to bring the price in line with the underlying collateral.

The AMM will produce a much more stable price once the AMM is upgraded to the ICSMM (MIP-6) due to the basket distribution being more even and thus less impermanent loss. In addition, the system will continue to cap risk of permanent loss through max weights etc.

Onur uploaded an annotated version of the AMM visualisation during the AMA.

Global Expansion

Question: What your plans in place for global expansion, are mStable focusing on any market at this time? Or focusing on building and developing or getting customers and users, or partnerships? Can you expand on this?

James: mStable is naturally global given that it is an open, non-custodial and decentralised protocol, so in theory it is currently global.

That said, we believe there are specific markets that would benefit from having mStable’s products available to them. For example, mStable sponsored ETHGlobal and the winner of the mStable prize was a Venezuelan team that built a dApp on SAVE. Apart from that, we will be releasing a multi-language version of the dApp, landing page and governance proposals.

In terms of partnerships, the core team is working on several within DeFi, CeFi and even with other chains.

COVID-19 Impacts

Question: COVID-19 has slowed many economies around the world, but as a crypto business has it affected you negatively or positively? Secondly, are you still on track to achieve your targets as the roadmap says?

James: Thanks for the question. Covid has impacted the global economy very negatively. Meanwhile DeFi and Bitcoin have grown from strength to strength. I can’t say I know the reasons for this, but as a team I feel we have navigated the inevitable challenges a pandemic presents.

We are working hard to deliver on the roadmap. A proposal to tokenise the SAVE contract came forward after the community responded really positively to that. We are also on track to deliver our new custom built AMM for mBTC and then later mUSD as well as significant gas improvements.

Keep an eye out for these protocol improvements and their proposals as we are super excited to show them to you all.

Here are some of the MIPS:

On Liquidity

Question: Liquidity is a major challenge for decentralized exchanges, how does mUSD solve this problem?

Onur: mUSD provides one of the highest USD yields in the world so there is a natural incentive here for users to add liquidity into the protocol. Our new AMM will make this liquidity provision process even better, allowing mStable to guarantee liquidity in all major stablecoins, target different basket weights, increase composability, usage and hence swap fees — increased swap fees lead to higher returns for SAVE users, leading to higher demand for mUSD, ultimately increasing liquidity.

We also incentivize liquidity providers with liquidity mining programs. You can see the current incentives in our EARN product. One of the purposes of MTA is to incentivize adding liquidity, as well as participating in governance.

Screenshot of the EARN interface

Community Driven Decision Making

Question: What is the role of the community in the governance of the your crypto ecosystem in order to be able to call it community driven? Which members of the community can participate in the decision making?

James: mStable is governed by MTA holders who have staked their tokens to participate in the community-based proposal system. Anyone can participate in the mStable governance process by joining discussions in either the Discord or public forum. Ideas are then formalised and proposed to the community for on-chain signalling by MTA holders.

Here are the current votes open (as of 15 December 2020): https://snapshot.page/#/mstable

Ultimately, mStable is an open protocol where users are empowered. Users earn all fees on the protocol (100% of income generated on mStable currently goes to savers), all users will be able to earn MTA and MTA will increasingly move to the centre of every decision and action on the mStable protocol. We are really excited to propose staking v2 which will significantly increase MTA power and utility within mStable.