What a year. As we’re about to close the first quarter of 2022, I think it’s time I give all of you a nice round of updates.
The protocol’s direction is now more apparent to people outside the company, but we still face many questions about what we want to build and why we’re doing things the way we do.
- Trust in the brand, the protocol, and the stablecoin.
- Liquidity of our stablecoins.
- Expansion of the crypto market via the protocol and some connectivity with the non-crypto world.
In this order, these are the three pillars we’re using to prioritize our decisions every day. For every feature we build, every collateral we list, every partnership we publicize, and every marketing action we take. I am very conscious that some of these choices could impede our short-term growth for a bit, but we’re building critical financial infrastructure for the coming decades, and this comes at a cost.
Before discussing where we’re going in 2022, let’s briefly recapitulate where we currently stand.
We had over 30,000 transactions on PAR, with a daily volume of $300k+ in the last few months. We’ve had one incident, PAR trades on four mid-size exchanges, and it is the only Euro stablecoin that can leverage centralized and decentralized infrastructure for going through Fantom, Polygon, and Ethereum mainnet.
There was no significant project for any decentralized euro stablecoin when we started, but quite a few of them have appeared since then. We believe this is significant in our assessment of the market. These serious projects and their growth show us that the demand for Euro stablecoins is growing and that we are right in our bet.
Like we do, most minting platforms seem to believe that the future is likely to be multi-chain and are building their platforms so that they’re not closing doors on EVM-based L1s and L2s. Some are partially deploying their infrastructure everywhere like we do, while some others are only bridging their tokens to other chains, ensuring some form of availability on every network. Each strategy has its reasons, and we picked ours to allow a maximum of value to be provided to the respective communities of each chain, therefore ensuring significant protocol revenue and providing better native yield for our stablecoin staking programs.
Why are we trying to provide yield this way? We are increasing PAR’s use and liquidity to grow the market by delivering pools with reliable yield.
Going consumer: The protocol perspective
You might have heard me mention that we want our stablecoins to be consumer-grade. What does this mean, and why do we want this?
We have built Mimo to be a critical piece of open and decentralized financial infrastructure, and we want to prove it works by using it ourselves in a consumer product. A consumer stablecoin needs to keep a price consumers can trust and be reliably tradable and available in various environments for cheap.
In traditional consumer finance, consumers develop trust in brands by seeing them in many places over large amounts of time and assume that large size and large budgets are a decent proxy for safety and stability in the presence of a reliable regulatory framework. In DeFi, transparency and verifiable security replace brand trust. Following this logic, DeFi builders aren’t building magically high-yielding accounts as some fancy fintech startups do; we create protocols that allow users to extract value based on usage. Mimo fits this definition and provides control of the protocol to its users via the distribution of its governance token: MIMO.
Building a trusted infrastructure in a minting platform like Mimo also means keeping a conservative stance regarding what backs the stablecoins: collateral. Even though each Vault is individual and Mimo does not commingle debt, each can mint the same type of stablecoin as long as they are over-collateralized. So if Alice mints PAR using a bluechip token and Bob mints PAR using an exotic derivative, PAR as a whole ends up being backed by a potentially unreliable basket of assets. The Mimo governance does not want the protocol to issue PAR against illiquid assets; it wants PAR to be trusted and reliable. Therefore, the conservative stance favors liquid assets as collateral to ensure smooth liquidations.
Thankfully, the presence of a safety reserve and many per-collateral parameters allow for granular risk management, enabling us to open the gates of minting PAR a bit wider (read: more collaterals are coming). In addition, we’re building two features: SuperVaults and Inception Vaults, to broaden the risk appetite tolerance of the platform, so the users are less restricted. We will describe these features in more detail in another post, but SuperVaults are simply smart contracts that use the protocol on your behalf.
We wanted to allow users to leverage their positions, rebalance the collateral composition of their debt to the protocol, or even close their positions and get back their positive balance without needing to bring the PAR to repay their debt. The best way to do so without changing the protocol was to use flash loans (a type of loan where you borrow and have to repay in a single transaction, allowing you not to need collateral for it). A smart contract must own the user’s debt to borrow and repay in a single transaction for a flash loan to work; we have called this smart contract a SuperVault. Therefore, we’re enabling leveraged trading of volatile and stable assets while allowing their use to borrow stable coins. Lending platforms do it, but stablecoin minting platforms aren’t there yet, and Mimo brings what matters for a consumer product: flexibility. Mimo allows you to do more with your assets.
Our consumer approach also focuses on stable yield. Hence, a significant portion of PAR minting fees goes directly to the PAR Miner, which can now fund liquidations on the protocol. That increases the platform’s safety and allows it to pay better yield (liquidations are profitable for stakers). More efficient liquidation can also enable lower MCR values, enabling more capital efficiency.
Going consumer does not mean that we’re leaving the DeFi world aside, but quite the opposite. We’ve started to work with up and coming protocols to enable more use and liquidity for PAR on Fantom and Polygon. You can expect PAR to be available for flash loans and more.
The discussions we’ve had with other protocols made us realize that we could make things a bit more fun for our community. We decided to provide some MIMO tokens to the protocol to expand the reach of the protocol, enabling community members to decide what to do with these tokens. Discussions about these tokens and other proposals will now occur on our Discord server.
Going consumer: The product and company perspective.
Mimo wants to match the CeFi experience using non-custodial DeFi services. Our focus on DeFi and non-custodial has a simple reason: Crypto is private and non-discriminatory by nature, which is impossible to achieve with regulated custody. Mimo will therefore focus on helping custodians provide great tools while building non-custodial tools on our end.
PAR must be a tool people use every day, and we’re going to reach this goal via horizontal *and* vertical integration in 2022.
In our apps, it means having great user interfaces, and for the apps of our partners, it means having outstanding APIs to consume and a reliably stable price.
This post isn’t here to drop names. Still, most community users know which company will be the first consumer-grade platform to accept PAR and integrate it into its ecosystem (hint: they’ve already integrated Mimo).
Technology isn’t everything, and we also need a solid regulatory infrastructure for users and partners, from legal opinions to regulatory agreements in key markets. We’ll talk more about these in a subsequent post, but we’ve covered all these bases for a solid consumer acquisition plan.
Your crypto life must be simple, no matter the chain, no matter what you’re HODLing, no matter where you are, and we’re here to help.
So now, where does that leave us? Where will Mimo be in 2022? Mimo will be on other EVM chains, on non-EVM chains (hint: we love Rust), in your pocket, and your wallet.
Misc:
A bit of fun!
Mimotaurs NFTs are on the way! We want the community to have better ways to connect, and we believe users of our platform and our ecosystem must get more than just governance token rewards. More on this in a future article!
Thank you for reading to anyone who made it that far. Please stay tuned for more cool stuff in 2022!
- klodio.
