[PROPOSAL] Make SAVE Composable

Summary

mStable’s SAVE remains one of the most accessible, reliable and high-yielding products in DeFi. Elements of it’s design however limit the ability for it to be integrated across the broader DeFi ecosystem.

We propose it be reconfigured to enhance the capital efficiency it offers to SAVE depositors and enable it to more easily be integrated into other DeFi, and CeFi, platforms.

Background

Currently depositors in SAVE have their deposit, and accrued interest, assigned against their specific Ether address – unlike liquidity providers to AMMs (eg. Uniswap) and lending platforms (eg Aave) they do not receive a token representing their assets.

What difference does this make?

The provision of a token representing a liquidity provider or lender’s capital makes that capital composable. The token can be used as proof of the deposit and therefore as collateral on other platforms increasing the potential returns earned by that capital. This would increase the efficiency of capital allocated to SAVE and, all else being equal, should increase demand for the product. Composability allows collateral on one DeFi platform to be used on another which also enhances the original platforms integration across the DeFi ecosystem.

Proposal

We propose adding composability to mStable’s SAVE product to enhance its functionality, improve the potential capital efficiency for depositers in SAVE and increase SAVE’s potential integration across the DeFi ecosystem. Given the yield that SAVE offers, we believe a SAVE LP token would be an attractive form of collateral on CeFi and DeFi trading platforms as well as opening up a number of novel, yield producing strategies that could potentially see SAVE used in trading strategy platforms such as Yearn Vaults and Harvest.

Considerations

Note the implementation of this change would require the existing SAVE contract be closed – current SAVErs would have to migrate their deposits to the new SAVE contract over time.

8 Likes

If it is possible to implement, I strongly agree with this opinion. :smiley:

2 Likes

This is the first thing I thought about when I discovered mStable. A big YES !

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I write a very stupid idea without considering the implementation possibilities.
Couldn’t we merge the mUSD and LP tokens so that the mUSD increases directly?

The behavior is similar to an AMPL rebase.

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I have also considered that and its definitely not a stupid idea - I think it has benefit but it is outweighed by the negatives. imo the simplicity of having 1 mUSD = ~$1 outweighs the benefit of having it interest-bearing. Unless there is a mechnism I am unaware of, as soon as it becomes an income bearing instrument it moves away from $1 and you lose the ability for it to be a simple trading pair with other stable coins (for example), and a number of other use cases. Whilst it adds some complexity to the system, imo it is beneficial overall to have the two seperate tokens - mUSD which is simple and always ~$1 and mSAVE which is an interest-bearing token - as it keeps mStable’s platform relevant to the broadest set of use cases.

5 Likes

If it’s technically feasible to do so without too much additional risk or expose the system to even more exploits, I am very supportive of this idea too. Seems like a savings vault with ownership of the vault being transferable/tradable.

4 Likes

Thx for your reply🙂

Perhaps we can maintain mAsset pegs in the following ways

  1. Lend to Comp.
  2. Receive the interest and comp.
  3. Selling comp
  4. Add the earned Stablecoins to the mAsset pool.
  5. Rebase the mAsset for the amount of the increased pool.

as pointed out, the point where behavior becomes complicated is undeniable.

This is a thought experiment…
However, a stable coin that increases on its own and maintains its peg sounds appealing.

1 Like

I agree that composability across mStable in general is a current issue, and that by making SAVE more composable, we increase value accrual to the mStable ecosystem by integrations into other DeFi and perhaps even more importantly CeFi platforms.

I’m for investigating this. I do remember @james.simpson discussing a change to SAVE which created a yield token that started with zero value and accrued interest over time. This token would be transferrable but upon transfer would pay out the holder accrued interest, so that the new recipient would start at zero again. Is this the same concept here or a different idea?

I’m not promoting one or the other, mainly more curious to figure out if we have multiple options to consider. Assuming we can do the lifting on the contract side, improved composability with this proposal for SAVE and with the AMM for mUSD itself would be a great combination. Looking forward to seeing where this goes.

4 Likes

I agree that tokenising save will be great. We had considered that for mBTC SAVE.

Cons:
There will need to be a token migration (i.e. everyone in SAVE will need to withdraw and then deposit into the new contract)

Pros:
Not only could we tokenise SAVE but we could also take the opportunity to add in some additional features… for example allowing FLASH loans of the mUSD in SAVE (this has no additional risk for savers). If a proposal is passed to incentivise SAVE with MTA, then we could also bundle this into the change

re: @ScarceJim comments about separating the tokens. This has more knock on affects to the core mUSD minting/redemption and IMO has a number of challenging kinks still to be worked out.

What i’m saying is that we should be cautious of the need to move funds from v1 to v2, and possibly try to bundle a few of the exciting features together into a release to mitigate the need for multiple fund migrations. Other than that, i’m all for this idea :+1:

7 Likes

I’m strongly in favour of making SAVE composable. In my view mStable is missing a unique and defensive composable token and this could be just that.

mUSD and mBTC SAVE could become extremely compelling choices for collateral throughout DeFi, and especially in the fast emerging onchain derivative space.

@ScarceJim The simplest way to implement imo would be to keep the depositing dynamic whereby users must deposit mUSD into the savings contract to receive its yield. This would mean that the rate would still be leveraged, and that it could be used like CUSDC is as collateral (as it is representative of the capital component - mUSD - and its forward income on a perpetual basis).

With the new AMM, gas improvements and recollateralisation, mUSD and mBTC SAVE would be superior collateral because:

  • outsized yield
  • onboard and offboard into any major stablecoins (guaranteed liquidity)
  • risk minimised

Questions: How does this affect mUSD’s value proposition? What could we do with the deposited SAVE collateral? Lend a % out?

2 Likes

I’m so happy to finally see this proposal.

I don’t use mStable at all and yet I’ve followed it from day 1. Simple reason, the lack of a SAVE token (similar to cDAI) has meant the tax penalty of using this product is too great (income vs capital gains).

Really looking forward to this proposal potentially being implemented, thereby allowing for me to finally become a user.

4 Likes

What do we think of allowing 50% of mUSD in SAVE to be sent to Curve’s mUSD Meta pool? We could then use our liquidator to sell CRV and fees earned, while potentially distributing farmed MTA to savers?

2 Likes

Good idea, and maybe to add on, perhaps the idea of savings vaults with different risk/return profiles.

mSAVE
mSAVE Curve
mSAVE Discretionary

I think we’re falling into the same trap again that we fell in before, which is to tackle multiple options in one single decision/vote/topic.

First of all, we should establish a solid baseline to make SAVE composable. After we have all agreed on making it composable in the next round of votes (which I think most of us are, and makes a lot of sense), we should consider the way to make it composable.

I personally totally love the idea of @derc and @james.simpson and going into the direction of an overall vault, but one that can be or is split into different risk profiles. I don’t think we just want to replicate a Yearn or Akropolis vault, but want to bring something fresh and original to the table for the crypto enthusiasts, but also the newbies that just wanna be part of the revolution with a simple click or two.

Thinking along the way of how mStable is a simple and easy way to save and swap crypto, why wouldn’t we do the thinking part, instead of letting the customer decide on the vault or complex decisions? We just have the SAVE vault, and we split the vault into different risks, similar to what PieDAO is doing with their Pies, but instead for people just interested in saving?

This would mean that we simply need to upgrade from SAVE to SAVEv2 and then have governable parameters to adjust the vault in terms of risk, based on a structure of how risky the MTA holders want the SAVE engine to run for the savers.

We could start very conservative with around 10% in risky strategies, 25% in medium-risk strategies, and 65% in safe strategies.

Let me know what you guys think about this, as the input always makes it possible to see different avenues and risk parameters in the decisions and ideas, and wishing you a great weekend ahead :innocent:

3 Likes

This is sound advice - thank you very much for your input. From what I can tell there appears to be universal support for composability… I agree we should quickly move to then implement a simple upgrade to SAVE as a priority. I personally think [two] versions of SAVE is a great idea so one with a higher risk/reward profile that potentially has strategies controlled by the community, say SAVE HIGH YIELD can be constructed/launched over time. The only downside is we are splitting liquidity between two products but I think the benefits of choice, one simple, one higher risk, probably outweigh this. We would support a framework like this so the team can get on with launching a composable SAVE as soon as practicable and the community can look to develop a higher-yielding SVE HIGH YIELD product over time.

Hi @shubidoobi thanks for the really good imput. I largely agree with you.

Really like this idea. Given the overwhelmingly positive response to save composability, it is the number one priority, and the core team believe a simplified deliverable is best which includes:

  • tokenised mUSDy (yielding mUSD)
  • MTA rewards being streamed to holders - specifics on how much and potential lockups still TBC
  • “yield farming with a portion of the capital” - can put say 20% on curve and put onto aave once musd is on there to be determined by gov.

I think a separate question is the multiple saves. I like it conceptually but needs some thought, as it would fractionalise liquidity for example.

The core team is aiming to have a MIP on this up in the coming week.

2 Likes