Prisma Finance’s MKUSD: The New Star of the Stablecoin Universe

MKUSD by Prisma Finance is making waves by showcasing a staggering surge and promising innovation in the decentralized finance landscape.

Introduction to MKUSD Stablecoin

The stablecoin economy has seen a decline in 2023 due to multiple redemptions. Despite this, new stablecoin projects like Aave’s GHO, First Digital’s FDUSD, and Paypal’s PYUSD have come up. Prisma Finance introduced a new stablecoin protocol on September 1, allowing users to deposit liquid staking derivative tokens for MKUSD. Since its launch, it has locked in a value of $55 million.

Prisma Finance Gains $30M with LST-Backed mkUSD Stablecoin
DeFi enthusiasts rush to Prisma Finance following its new lending protocol that introduces a stablecoin solely backed by liquid staking tokens (LSTs). Within a mere two hours, Prisma achieved its increased debt ceiling of… pic.twitter.com/W1BGzUQ8bO

— zimagetsfox.eth (@zimagetsfox) September 22, 2023

MKUSD’s Entry into the Stablecoin Market

MKUSD, a new stablecoin, has joined the fiat-pegged crypto economy, now worth $123 billion. Originating from Prisma Finance, a decentralized finance protocol, MKUSD is a decentralized Ethereum liquid-staking-token-backed stablecoin. Users deposit specific liquid staking tokens in a vault to get MKUSD. If the collateral ratio falls below 120%, the vault can be liquidated. A stability pool manages the liquidated debt, distributing collateral to providers. The minted MKUSD can be used on other defi platforms or exchanged back for liquid-staking tokens.

Popularity of Liquid-Staking Tokens

Liquid-staking tokens (LSTs) have gained immense popularity recently, with 11.96 million ether locked in LST platforms. Prisma’s total value locked is currently $55.16 million. Etherscan data reveals MKUSD has a circulating supply of 29.99 million tokens, with a stability pool holding 71.39% of the total supply. This pool ensures the stablecoin supply is always backed. Compared to major stablecoins like USDT and USDC, MKUSD is smaller but surpasses GHO’s supply.

Prisma Finance’s Growth with LST-backed MKUSD

DeFi traders are showing interest in Prisma Finance, which offers a stablecoin backed solely by LSTs. Prisma had a guarded launch, gradually increasing its borrowing limit. By September 15, it had secured $30 million. The main attraction is the “stability pool,” which has over $21 million worth of MKUSD. This pool settles debts that need liquidation, receiving the liquidated users’ collateral in return.

Liquid Staking’s Rise

Prisma is tapping into the growing trend of liquid staking tokens, assets representing staked Ether. This sector has grown since Ethereum allowed staked ETH withdrawals. Another trend is the rise of stablecoins, with major players like Aave and Curve launching their versions.

PRISMA Tokenomics

Prisma is introducing “veTokenomics” to its PRISMA token, a model inspired by Curve. With this, users lock the protocol’s token in exchange for voting rights. PRISMA will function similarly, allowing holders to direct rewards to various activities. The PRISMA token is yet to be launched.

Community’s Role in Prisma

Prisma’s co-founder mentioned Liquity, another debt protocol, as an inspiration. Despite its initial success, Prisma is new and faces competition. Users can already use other platforms like Maker and Aave to mint or borrow stablecoins against LSTs.

Summary

Prisma Finance’s MKUSD emerges as a game-changer on the stablecoin market. Despite the overall decline in the stablecoin market, MKUSD has successfully locked in a value of $55 million since its September launch. As a decentralized Ethereum liquid-staking-token-backed stablecoin, it offers users a unique opportunity to deposit liquid staking tokens and benefit from its growing popularity. With its strategic growth mechanisms and the backing of a robust stability pool, MKUSD is poised to become a significant player in the DeFi sector.