Proposal to onboard mStable's imUSD to Abracadabra

Hello,

I’m Okilo, a community mod and a member of the mStable Treasury DAO multisig.

TLDR: This is a post to discuss implementing interest-bearing imUSD as collateral for MIM on Ethereum (and perhaps other chains in the future where applicable), which can also work as a degenbox strategy similar to UST.

Now the long read…

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 provides a solution to these three problems through the creation of meta-assets, which are fully backed by a diversified basket of existing tokenised same-base assets.

mStable has a 97% Defi Safety score: https://docs.defisafety.com/master/mstable. It is an OG defi project that had its governance token launch in July 2020.

On mStable’s end, simultaneously adding a MIM feeder pool can be mutually beneficial as well.

  • It will provide deeper liquidity for MIM via a mUSD-MIM fPool, helping to maintain peg and decrease slippage by increasing swap routes from aggregators.
  • Deposits into feeder pools help boost the Save rate of imUSD, further increasing potential gains of a degenbox strategy.

Thank you for your time and consideration!

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10 Likes

I think this is an excellent proposal, and would love to see this implemented. Abracadabra’s bread and butter is built on interest bearing assets. imUSD is an ibAsset in which it’s yield (generally 10-25% APY) is realized upon redemption of it’s underlying asset, mUSD (operationally similar to xSushi). imUSD is native to Ethereum, and is one of the few interest-bearing usd-pegged positions on the mainnet. I think a relationship between these two protocols can really foster in multiple ways:

  1. Collateralize imUSD to mint MIM, offering high LTV
  2. Open a secondary degenbox allowing for leveraged loops that’s mainnet native (some folks may not necessarily want exposure to the Terra ecosystem)
  3. Start an mUSD-MIM fpool on mStable, allowing MIM minters to increase MIM liquidity while simultaneously earning MTA rewards
  4. (and taking things a step further…) potentially incentivizing mimfpool depositors to vote-lock MTA to vote for more emissions to be sent to their gauge, even further increasing their rewards APY

All this to say, I think leveraged stable positions are an evolving primitive that hasn’t yet been fully explored or adopted. Abracadabra is certainly at the forefront of this idea, and given imUSD’s safety measures, history, and consistency with regards to performance in yield generation, I think it serves as a great option to consider in opening a second ib-stable cauldron.

4 Likes

Seems like a no brainer tbh.

2 Likes

I’m the founder of mStable and a MIM holder. I absolutely support this proposal by @okilo

I’m particuarly keen to be able to mint MIM with imUSD. We can do an fpool as well if that’s of interest and look to add a dial for it from our emissions controller.

Looking forward to seeing where this goes

4 Likes

mStable has an interesting use case that I read as a hedge in the event you wish to have exposure to centralized stables.

Happy to support this, seems to have reciprocal benefit as mStable create a mUSD-MIM pool.

3 Likes

Hello,

Théo from mStable here
I think it’s a fantastic idea that increases imUSD utility over Defi and unlocks borrowing features
As well, considering an mUSD / MIM feeder pool makes sense as mUSD is the bridge asset within the mStable Ecosystem greatly responsible for the imUSD yield level. A feeder pool would attract additional liquidity and inevitably increase Abracadabra TVL. Seems a positive-sum game to me.

Fully in support of this

3 Likes

I am a mStable user and I would love to use my iMusd as collateral to mint $MIM. It’s awesome and useful.

2 Likes

I think it is a very good idea also. Mstable is already a blue chip project(tbh a hidden one) and has a good track record with a good community. I would love to see a collaberation with the frogs :wink:

2 Likes

mUSD and MIM? Ooooo this sounds really good!

3 Likes

Fully agree with that… tbh we have common interests and we should explore this way

3 Likes

This provides trustworthy and stable collateral for MIM. Current ETH mainnet supply of MIM is around 500 Mil and the mUSD supply is around 100 Mil. I would expect a near doubling or greater of mUSD should this proposal pass and for MIM supply to increase 20%.

4 Likes

.Mstable does a good job on deposits and is very secure .I hope to see this implemented

3 Likes

I’m an mStable and MIM user and would love to see this happen.

As was mentioned previously, mStable is a an under the radar blue chip project and imUSD is an very secure ibasset backed by reputable stable coins. Integrating support for imUSD would help continue to grow MIM in a stable and secure manner.

1 Like

Fingers crossed!! Hope this proposal gets into a vote!!

1 Like

Long-time lurker on the MIM forums and finally got around to hook up with an account.

Definitely in favour of this happening. mStable has very interesting Curve-like incentive flavours built in in their own token rewards allocations, and a strategy like this could really kickstart usage of imUSD and subsequent strategies that follow mUSD on Convex etc…

Let’s do it! :))

3 Likes

I am a long time mStable user and staker and a MIM holder and I fully support this proposal. This would be a secure and mutually beneficial deployment.

1 Like

Thank you all for your comments.

It could be advantageous to have a hedge against UST. Last I saw there were under two months of reserves to fund Anchor at its current rate.

Additionally an unwind event could be troublesome if UST peg fluctuates.

Not to mention this avoids having to bridge, which intrinsically has added security vulnerabilities. We’d be able to stay on the same chain with this set up.

3 Likes

There’s a massive benefit for both Abracadabra and mStable here, and there’s obviously been an insatiable demand for leveraged stablecoin positions. Using the UST degenbox as a reference point: capacity was snapped up within a matter of hours after this strategy was announced. mStable’s imUSD provides comparable rates, and at time better rates, than Anchor Protocol offers users. Let’s get into why this benefits Abracadabra on the Ethereum and Polygon markets.

Ethereum Markets

Currently, there are three interest-bearing tokens where the underlying is composed of stablecoins: these products are in high demand, as users can easily leverage their position using Abracadabra.

cvx3pool

  • 300.98mm total MIM borrowed
  • 1.17mm MIMs left to borrow

UST Degenbox

  • 1111.01mm total MIM borrowed
  • 96.58 MIMs left to borrow

yvcrvIB

  • 28.93mm total MIM borrowed
  • 187.72 MIMs left to borrow

The interest-bearing stablecoins or stablecoin strategies are the most in-demand products Abracadabra offers to its users.

mStable’s imUSD would offer yield comparable to UST, but on Ethereum. Using imUSD as an interest-bearing token that can be deposited in Abracadabra’s borrow markets would be a sure fire way to attract more depositors and generate revenue for the protocol.

The SPELLcasters could vote for an imUSD market or create a degenbox strategy that allows users to deposit USDC, USDT, FEI, or any of the other assets available to deposit in mStable’s Save vault.

AND depending on how Abracadabra were to design such a strategy, the imUSD could be staked to earn MTA rewards, which could be used to boost returns or, a more attractive proposition, would be to farm MTA, which can be added to the Abracadabra treasury and used to boost yield on deposits so the protocol can deliver the best yields for mStable in DeFi. This is akin to the Curve wars but for stablecoin yields on Ethereum. MIM could be added to a feeder pool, which Abracadabra could use MTA to direct rewards to feeder pool deposits.

Polygon Markets

While Abracadabra is developing the Polygon markets, there isn’t an interest-bearing token on Polygon that I’m aware of that balances risk vs. reward as well as mStable’s Save vaults. This would be an obvious benefit to the Polygon market when it’s established.

For the same reasons listed above, imUSD or several of the underlying tokens that make up imUSD could be used to create a market or degenbox strategy on Polygon.

mStable’s value proposition to the Abracadabra protocol, community

imUSD would offer another high-yield, in-demand market within Abracadabra with the ability for Abracadabra to offer a degenbox strategy that allows users to deposit an array of supported stablecoins that can be deposited in mStable and reduce Abracadabra’s correlation risk to any one stablecoin asset.

Farming MTA and building up MTA reserves in the treasury would give Abracadabra the ability to boost yields for depositors in the long-run, while earning governance power in mStable. While everyone is focused on the Curve markets, SPELLcasters could build a reliable reserve of MTA to offer competitive yields to users and attract more deposits on both the Ethereum and Polygon markets.

This would add immense value for both protocols and, most importantly, add significant value for the protocol’s users.

Looking forward to Abracadabra casting a SPELL over mStable’s Save vault!

3 Likes

For sure is a great idea!

1 Like

I would love to see this implemented. I’ve had my imusd parked for too long.