This page describes the products that have been part of the first iteration of mStable. Namely there are mAssets, Save and Vaults.
mStable is an autonomous and non-custodial infrastructure for pegged-value crypto assets. The protocol was created to address three major problems:
- Significant fragmentation in same-peg crypto assets (there are currently at least 5 major USD pegged crypto assets on Ethereum, for example)
- Lack of yield in fiat currencies and pegged crypto assets
- Lack of protection against permanent capital loss in pegged crypto assets
mStable addresses these problems through the creation of meta-assets, which are fully backed by a diversified basket of existing tokenised same-base assets. Please note that the first iteration of mStable focused on protecting stablecoins. The focus has since shifted toward yield generation, with a reduced focus on stablecoin protection. Maximum weights for each asset in the underlying basket provide some protection in the event of an underlying stablecoin losing its peg, but MTA will not be used for recollateralisation in this scenario. Please read about risks here.
Meta-assets are minted or redeemed on-chain via the mStable smart contracts, which are non-custodial. This means that no third party ever takes custody of a user's assets. In other words, mStable is a "peer to pool" protocol, where the pool "lives" in a non-custodial smart contract.
All meta Assets are redeemable for the underlying assets at any time.
Each meta-asset represents a share of liquidity in the underlying asset pool and is a pegged-value crypto asset in its own right. A meta-asset can be used as a medium of exchange, unit of account and store of value.
This addresses fragmentation in same-peg crypto assets by providing an single meta Asset per peg which unifies any number of underlying same-base assets.
Each meta-asset is designed to produce a native interest rate when deposited in mStable's Save contracts. This rate is derived through the mStable contracts autonomously and programmatically lending underlying assets to third party lending protocols, generating interest income. The mStable contracts simultaneously allow for underlying assets to be exchanged or "swapped" for a fee. 90% of interest and exchange income is automatically and programmatically sent to savers.
Each meta-asset diversifies exposure between different asset issuers and stability mechanisms, and caps exposure to any one asset, currently at 50%. Whilst max weights reduce risk for users when compared to a standard AMM pool, they not eliminate it. Please read about the risks of using mStable here.
The mStable protocol is governed by holders of mStable's native Governance token, MTA, who vote on proposals to make important decisions about the protocol.
Every participant who interacts with mStable has the option to earn MTA either through staking, for providing liquidity (through Feeder Pools or third-party protocols) or by saving mUSD or mBTC through mStable's Save contract. MTA is emitted in this way to facilitate decentralised, collective and user-driven governance. MTA can be staked on mStable for participation in Governance and for rewards distribution.
- mUSD consisting of US dollar stablecoins (USDT, USDC, DAI, sUSD)
- mBTC consisting of tokenised bitcoins (renBTC, WBTC, sBTC)
On Polygon POS-Chain:
- mUSD consisting of US dollar stablecoins (USDT, USDC, DAI)
In the future, new meta Assets may be created. These could include possibilities such as:
- mstkETH (staked Ether)
- mGLD (Gold)
Aside from minting mUSD or mBTC to utilise in DeFi or generate yield with mStable's Save, there are a number of other important use cases for the mStable platform which each contribute to the ecosystem.
mStable's liquidity pools are used to facilitate efficient Swaps between pegged crypto assets, contributing swap fees to savers.
Arbitrageurs can take advantage of arbitrage opportunities within the mStable pools, generating swap fees and rebalancing the weights of assets in the pools in the process.
mUSD or mBTC can also be used to provide Liquidity in Feeder Pools to earn fees while supporting additional onramps to mStable assets from other same-base assets.
The next section provides details of each asset created by mStable.