MIP-9: Feeder Pools

MIP-9: Feeder Pools

Posted by a representative of the mStable protocolDAO

Summary

Following the deployment of MIP-7, it’s possible to extend the mAssets by creating “Feeder pools” composed of 50% fAsset and 50% mAsset. These Feeder Pools (fPools) provide important benefits to mAssets by:

  • Free fAssetmAsset swaps (effectively allowing users to ‘mint’ mAssets with any fAsset)
  • Leveraging the mAsset SAVE rate by providing a source of demand for mAssets from within mStable (thus increasing mAsset SAVE APY)
  • Feed swap fees back into the mAsset by supporting trades between fAsset <-> mAsset bAssets

This MIP outlines the implementation details for fPools and proposes that mStable actively deploy these to stimulate growth and mAsset utility.

Abstract

fPools maintain the bulk of functionality from mAssets:

  • Same interface for Mint/Swap/Redeem
  • Protected through max weights
  • Ability to deploy fAsset/mAsset onto third party lending platforms to generate yield
  • Governed by vMTA holders
  • Ability to enable a governance fee, which extracts a % of total pool revenue

There are a number of core differences between fPools and mAsset pools

  1. fPools support mint/swap/redeem using assets within the mAsset basket in addition to it’s own basket
  2. fPools produce LP tokens that increase in value, rather than inflate supply
  3. Swaps into mAsset do not apply a fee
  4. fPools are always composed of 50/50 fAsset/mAsset, and use an invariant derived specifically for 2 assets
  5. fPools are not protected by MTA in the event of an underlying asset losing it’s peg

Incentivising liquidity on these pools will provide on/off ramps, generate swap volume and leverage mAssets SAVE utilisation rate - thus making them ideal options for MTA rewards. Additionally, it provides another place for projects to incentivise their own asset liquidity and benefit from MTA token emission.

Discussion

In addition to discussing whether or not this proposal should be deployed, the initial Feeder Pools for both mBTC and mUSD should be decided up too.

Candidates for mUSD include:

  • PAX
  • bUSD
  • TUSD
  • STABLEx
  • Terra (UST)
  • …?

Candidates for mBTC include:

  • tBTC
  • bBTC
  • hBTC
  • pBTC
  • bDIGG
  • …?

It is proposed that 2 initial Feeder Pools for each mAsset will be created.

Links

https://mips.mstable.org/MIPS/mip-9

If the choice is limited to 2 initial Feeder Pools for each mAsset I’d like to see:

mUSD》 BUSD and UST
mBTC》 tBTC and hBTC

DIGG has never been pegged to BTC, please don’t include it.

Sounds really cool.

I may be missing the point here, but would it not be prudent to make feeder pools for as many fAssets as possible - therefore increasing the utility of mUSD/mBTC and increasing exposure and TVL?

Or is it a case of which assets are we prioritising creating fPools for first?

@ben96 The feeder pools are more useful when they have sufficient liquidity as they provide more value back into the mAsset. We should probably focus on a few at the beginning and reach sufficient liq before branching out, but no reason we can’t create for as many as poss moving forward.

Also, there are 3 ideal properties to a good fAsset:

  • deep market depth (e.g. USDT)
  • lending market integrations
  • partnering token rewards (i.e. a project offers their gov token to incentivise liq)
1 Like

I think feeder pools are a game changer for mStable. I wholeheartedly support this proposal. Benefits:

  • create a whole new universe of composable yield tokens generated by mStable to be used across DeFi
  • leverage imAsset save rate
  • enable efficient onboarding from any pegged asset into mAssets (effectively making cheap and universal minting)
    -make mAssets bridge assets for the first time, connecting pegged asset liquidity, which I think can is a seed to a bigger, cross chain/layer idea for mAssets
  • enable more collaboration opportunities with third party projects (i.e. dual rewards in feeders)
  • place mAssets at the centre of the pegged asset solar system

Excited! Hopefully is voted through