Proposal: Make Venus the Destination to Deposit and Borrow $M by M^0

Proposals
1

Overview

We propose to add Wrapped $M (“wM”) as a new and featured asset in the Venus Core Pool on Ethereum Mainnet. We believe that $M’s robust design – with native and sustainable yield – combined with Venus Prime rewards, will drive significant deposits and ultimately the cheapest borrow rates for blue-chip collateral in DeFi. Therefore, we propose to divert current Prime Rewards from the USDC and USDT markets to the new wM market.

Motivation
Since launch on mainnet, the USDC and USDT markets in the Core Pool have failed to find meaningful deposits. As it stands, the Core Pool lacks differentiation and a driving force behind it. We propose to change that by making the $M market a marquee destination.

How? The M^0 Smart Yield Wrapper (see more below) will enable depositors to earn the t-bill rate at a minimum while still allowing for a significantly higher yield through borrowing demand. Combined with concentrated Prime emissions, this market will become a savings destination for depositors to find the highest risk-adjusted yields and the cheapest borrowing destination for leverage seekers. Furthermore, the wrapper provides the ability to redirect yield in an arbitrarily complex manner, allowing for an array of creative incentive solutions to drive desired behaviors inside the core pool (increasing deposit yields, subsidizing borrow costs, etc.). Most importantly, the yield is both highly scalable and sustainable.

Finally, we will support the pool by helping to bootstrap initial deposits with our own capital and by urging our investors and early holders of M to deposit.

Overview of M^0

  • M^0 is a decentralized infrastructure layer for the issuance of cryptodollar assets, empowering any permissioned institution to mint a decentralized, interoperable, and fungible cryptodollar
  • The M^0 protocol is an immutable protocol on Ethereum, as well as a corresponding set of off-chain standards and APIs, that allows holders of high-quality eligible collateral to participate in the issuance of a fungible cryptodollar named $M.
  • We have taken the utmost care to ensure protocol security, undergoing 8 smart contract audits

We aim for $M to combine the benefits and convenience of digital dollars with the risk profile of physical cash:

  • Backed by t-bills in insolvency-remote, orphaned SPVs
  • Overcollateralized with auditable reserves on a daily basis
  • Able to natively earn yield for protocols and partners without additional smart contract risk
    • The M “Earner Rate” is governance parameter today set to 5%
  • Immutable and permissionless
  • Decentralized, multi-issuer model
  • We will ensure deep secondary market liquidity for M/stablecoin pairs to ensure smooth borrowing, leveraging and liquidations if necessary.
    *** We believe that we have designed the superior cryptodollar and the most attractive asset for on-chain treasuries and DeFi applications.**
  • The $M Smart Yield Wrapper and wM
    • The Smart Yield Wrapper is a novel implementation, solving for rebasing asset compatibility while maintaining 1:1 fungibility with the underlying asset. As such, wM does not increase in price and will, therefore, serve as a desirable borrow asset in addition to collateral asset, setting it apart from other yielding instruments.

Proposal

  • Add wM as a collateral and borrow asset in the Core Pool with similar parameters to USDC and USDT
  • Divert current Prime Rewards for USDC and USDT to wM to solve liquidity fragmentation and drive significant deposits

Implementation

  • Parameters subject to risk analysis by Chaos Labs
  • Phase reward change from USDC/USDT markets over 45 days
  • Contingencies with M^0 Governance
    • In order for the wM deposited in the pool to benefit from the M Earner Rate, the pool must be added to the list of Approved Earners by M^0 Governors.
      • Furthermore, to divert yield as the protocol sees fit, a second contract must be whitelisted to claim and distribute the yield.

Contract Addresses:

3 Likes
2

I think M and M^0 are too risk when compare with usdc and usdt market

3

Interesting proposal! You should promote the usage of 30-90 day US Government T-Bill (yield) as ‘RWA’. Crypto, DeFi and Venus Community would really love it :slight_smile:

3 Likes
4

Can you elaborate on that?

M is designed to be safer and more transparent than both.

M is over collateralized by short duration tbills in segregated, insolvency remote entities. The collateral can never be touched except for the benefit of backing $M. Furthermore, the backing is attested to every single day on chain. USDC and USDT cannot compete with $M on this basis.

1 Like
5

M token has 0 on chain liquidity, is not posted on any platforms such as Coinmarketcap or Coingecko; Requesting USDT/USDC yield for a token with almost no presence and arguably no value as of now does not seem like the best course of action for the protocol at this stage

1 Like
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Thanks for engaging.

We have previewed with the Venus team that we will be brining siginificant on-chain liquidity for M in the coming weeks. This is a valid concern that we hope to clear up very quickly. Of course, we also expect this to be a part of the Chaos analysis - we dont expect to pass muster without sufficient liquidity.

We wanted to bring this proposal earlier than those pools to have Venus be the first venue to integrate our novel wrapper, giving it a leg up over competitors. To give a better picture of timing, M^0 governance is unique and works in month-long cycles. Our goal is to have a proposal up on M^0 governance by ~Sept 12 to approvel Venus as a venue for the smart wrapper yield so that we can launch the pool by end of September. From there, we would then start the proposed 45-day phase in, going through mid-november. All the while, we expect to build more and more liquidity to stengthen the market.

The CG and CMC listings will happen shortly. While this is less of a fundemental concern, we understand it gives people comfort.

7

Really love your stablecoin idea, it’s very simple, yet it will probably attract a lot of interest from the market since it’s innovative.

However my concerns is about the adaption of $M. we all know how difficult it is to penetrate the stablecoin market, could you share with us some alpha on what you plan to do in terms of future adaption? perhaps share your backers etc, Because as you can already see, our community is very protective of our Prime yield.

Also if we are going to shift our Prime yield from USDT/USDC into $M, then it would be reasonable to ask for liquidity mining rewards to kick off the pool as well.

TL’DR I support this proposal, but please share more details and think about providing some liquidity mining rewards.

8

At a baseline, the smart wrapper will allow depositors to earn the current earner rate - 5% inside of the pool. These will be sustainable incentives in excess of what USDC and USDT can offer. We can also do really interesting things with directing the yield to different places, like borrowers or even the Venus treasury. The wrapper really is a game changing tool for yielding assets in DeFi.

Beyond that, we will not be doing traditional mining incentives but are working very hard behind the scenes to recruit deposits to the pool to drive TVL early on.

9

I fully support this proposal, hopefully it will be supported and voten on by the community asap. :clap: