Despite a significant increase, the present market share of decentralized stablecoins is significantly less than 10%. The long term growth potential will likely be even more significant.
Mars Ecosystem, a new project aiming to conquer the challenges of decentralized stablecoins, is very happy to confirm it has successfully raised $2 million in seed financing. The round drawn investment from several significant blockchain funds, such as Continue Capital, Parallel Ventures, Kernel Ventures, and YBB Foundation, amongst others. The group will now use the capital to help deliver the milestones on its challenging 2021 roadmap, such as an impending Genesis launch.
The fundamental problems of decentralized stablecoin protocols
At the moment, various stablecoin protocols face trade-offs concerning price stability, level of decentralization, and scalability. There are also two fundamental problems in common: one is the positive externality issue, and the other is the integration issue.
The positive externality issue of stablecoin protocols: The expenses of maintaining and producing stablecoins are incurred from the protocol and its users (minters, share holders, bond holders), but the majority of the value comes in the trade of stablecoins in other DeFi protocols and is captured by these DeFi protocols. The stablecoin protocol cannot capture the value created by it as with other DeFi protocols, so the source of stablecoins in the stablecoin protocol is always less than the real demand for it in the crypto economy.
The integration issue of stablecoin protocols: The demand for stablecoins created by the stablecoin protocol is highly dependent on the amount of integration of stablecoins with other DeFi protocols other than the stablecoin protocol. If the integration of stablecoins with other DeFi protocols is ignored, then the distribution increase and equilibrium of stablecoins will be impacted.
Mars Ecosystem’s answer to the fundamental problems
Mars Ecosystem is an innovative decentralized stablecoin version that simplifies the issues of positive externalities and integration. The ecosystem unites the production and usage of stablecoins within its own system through three goods: Mars Treasury, Mars Stablecoin, and the Mars DeFi protocol. What’s more, Mars Treasury has the capability to turn into the central bank of the DeFi world.
Mars Ecosystem has the following special innovations:
- Treasury assets classification mechanism
- Mintage control mechanism
- Anti-„bank run“ mechanism
- The integration of DeFi protocols and stablecoin into the Exact Same system
Treasury assets classification mechanism
When minting USDM, users need to put $1 worth of Mars Treasury whitelist assets into the Mars Treasury. The whitelisted assets approved by the Mars Treasury are split into the following amounts:
- A) Stablecoin
- b) Digital gold (BTC)
- c) Layer-1 leaders (ETH, BNB, etc.)
- d) DeFi Blue Chips (UNI, AAVE, etc.)
- e) Mars Ecosystem Token (XMS)
The volatility of assets from level 1 to level 5 gradually increases. Mars Treasury determines the maximum acceptable proportion of various assets from the treasury based on the volatility of multiple assets.
The design of the Treasury assets classification mechanics is a solution to the integration problem of the stablecoin protocol. By embracing mainstream DeFi protocol tokens into the treasury to mint Mars stablecoins, Mars treasury can collect mainstream DeFi protocol tokens. Maintaining mainstream DeFi protocol tokens, Mars Ecosystem aims to collaborate with mainstream DeFi protocols and participate in their own governance, particularly when it comes to a proposition that’s favorable to the integration of Mars stablecoins into these DeFi agreements.
Mintage control mechanism
The maximum circulating source of USDM is dependent on the market cap of XMS.
Every 3 minutes, the machine calculates the average market cap of XMS in the previous 3 minutes, and divides that this ordinary market cap with a parameter called XMS Support Ratio that’s determined by the protocol governance. The number thus obtained is described as USDM Supply Cap. In the next 3 minutes, users can only mint USDM up to this USDM Distribution Cap.
If the XMS support ratio is , then the market cap of XMS will likely be 3 times the USDM Supply Cap minted. This value catch version can capture the growing demand for stablecoin USDM like conventional seigniorage version or governance hive burn version. At the exact same time, when the demand for stablecoin decreases and also the users redeem stablecoins to governance tokens and sell governance tokens on the current market, the mintage control mechanism ensures that the market cap of governance tokens is enough to support the stablecoin price equilibrium. Intuitively, there’s a governance token of $3 backing each stablecoin in circulation.
The anti-„bank run“ mechanism is guaranteed by the asymmetry of minting and redeeming assets.
The asymmetry of minting and redeeming assets implies that users put the Mars Treasury whitelisted assets into the Mars Treasury when minting USDM, also receive XMS when redeeming USDM, therefore the assets filed to the Mars Treasury during minting and the assets got when redeeming are different.
The symmetric layout of Frax and other stablecoin protocols can cause“bank runs“, because from the perspective of game theory, redeeming stablecoins as soon as possible is the perfect strategy for many users.
The asymmetric design of Mars Ecosystem makes redeeming stablecoins as soon as you can no longer an optimal approach for many users: users that redeem USDM early can have better liquidity when selling XMS than users that redeem USDM later. However, all users that are happy to sell XMS should bear the slippage reduction when trading on Mars Swap; because Mars Treasury is the main supplier of XMS liquidity, these slippage losses are captured by Mars Treasury, and the ratio of the worth of Mars Treasury’s reserve assets to the amount of USDM owned by the users increases, so users that redeem later or not redeem can exchange their USDM for increased worth. This anti-„bank run“ mechanism prevents the protocol from falling even in the most extreme cases.
The integration of DeFi protocols and stablecoin into Precisely the Same system
In comparison with other stablecoin protocols, Mars Ecosystem includes a variety of DeFi protocols along with the stablecoin module. Transaction fees generated from the Mars stablecoin circulating on these Mars DeFi protocols can be captured from the Mars Ecosystem and provide valuable support for your Mars Ecosystem governance token.
As an Example, Mars Swap is an AMM DEX like Uniswap. Mars Swap supplies mining bonuses for LPs and transactions of Mars stablecoins, thereby incentivizing users to use Mars stablecoins on Mars Swap. This layout will incentivize ancient use cases to help alleviate the integration problem of the stablecoin protocol. On the flip side, users can stake Mars Ecosystem governance token in Mars Swap to obtain Mars Swap transaction fees. This layout is a solution to the externality issue of the stablecoin protocol.
Roadmap to Mars
On June 14, the project will launch IDOs on several significant BSC launchpads such as BakerySwap, Launchzone and Helmet.insure. There is also an IMO (First Mars Offering) chance on Mars Ecosystem site where small investors can appreciate better investment terms than VCs and institutions.
Mars Swap will also be launched on BSC on June 14, therefore all of the governance token holders can stake at Mars Swap to earn transaction fees.
A Genesis Launch event will probably be held in late June. The objective of the Genesis event would be to onboard the very first batch of users to mint stablecoins from Mars Ecosystem and to earn free rewards.
In Q3 2021, Mars Stableswap, that is an DEX for stablecoins, will be established. The machine will also be enlarged to Ethereum and Solana.
More information can be found in Twitter @MarsEcosystem.
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