Inspiration

to the early DeFi development. Protocols such as MakerDAO built the groundwork for many other DeFi applications, at the time when other DeFi infrastructures such as Chainlink Price Feed weren’t available.

While the team at Mint Protocol recognizes the immense contributions of the legacy DeFi applications, we believe the next-generation lending protocol can better utilize the established DeFi infrastructure. When designing our next-generation lending platform, Mint Protocol, the team has considered technical best-practices improvements that can address concerns and complexities in the existing lending protocols.

One of the issues with the existing lending protocol is the use of a self-provided oracle for updating liquidation price feeds. Not only has the community voiced concerns on whether a centralized oracle will accurately report price data, but also, the community has voiced concerns about the potential for actors to gain access to the oracle privately before any public actor, hence gaining an edge in the liquidation process.

Instead of building our own oracle for reporting price feed data, Mint Protocol will integrate with industry-leading decentralized oracle networks (DON) such as Chainlink. Using an external, decentralized price feed can ensure that the price reporting is always accurate and reliable, with minimal downtime.

Another improvement that we aim to implement is to revolutionalize current liquidation processes. Currently, many lending protocols utilize a permissionless liquidation model, where anyone can initiate a liquidation process as long as the loan has fallen below its collateral requirement. To incentivize people to initiate the liquidation process, liquidation participants are also able to acquire the collateral at a discount. However, this mechanism gives unfair advantages to actors with direct access to miners or mining pools. In addition, the permissionless liquidation model does not return the financial gains from the liquidation discount back to the protocol.

Mint Protocol will implement an auto-deleveraging system in its phase two release. The auto-deleveraging system will be integrated with keeper providers such as Chainlink Keeper or KP3R. The Keeper provider allows smart contracts to self-initiate transactions when the condition is met, hence Mint Protocol can initiate the liquidation process autonomously while returning all the financial incentives from the liquidation process back to the protocol itself.

What it does

Mint Protocol is a zero-interest, over-collateralized lending protocol that offers a novel, decentralized stablecoin on the Oasis ecosystem. Mint Protocol is based on Liquity Protocol.

Users can deposit supported collateral assets (i.e. $ROSE, $WBTC, $gOHM, $wxBTRFLY, and more to come) to Mint Protocol and mint $rUSD, Mint Protocol’s native stablecoin.

Some key features of Mint Protocol include zero-interest borrowing, high capital efficiency, a native stability pool, diversified assets, and decentralized operator. $rUSD will become one the most decentralized, most used, and most liquid stablecoin on the Oasis ecosystem.

The code of Mint Protocol is built based on Liquity Protocol’s tried and true implementation. Mint Protocol is also engaging major smart contract security firms to conduct smart contract auditing.

How we built it

$rUSD $rUSD is the stablecoin that users could mint with Mint Protocol. Users can deposit supported collateral and borrow $rUSD from Mint Protocol, with zero interest.

$rUSD could be used on decentralized exchanges for trading assets on the Oasis ecosystem. In addition, Mint Protocol is partnering with yield farms, secondary lending markets, and NFT marketplaces for added utility and volume of $rUSD.

Capital efficiency Mint Protocol is extremely capital efficient, as $rUSD can be minted at a minimum of 110% collateralization ratio. This low collateralization ratio can help users to fully utilize their collateral and optimistically adjust their leverage.

Zero-interest Borrow positions on Mint Protocol do not accrue interest. Instead, Mint Protocol charges a one-time fee at the borrowing and redeeming events. Hence Mint Protocol users do not have to manage interest rate risk.

Stability pool Mint Protocol has will have stability pools at launch, where users could stake $rUSD to participate in the automated liquidation process. In addition to acquiring collateral at a discount, the user will also receive $mintr governance token reward for providing $rUSD into stability pools. Mint Protocol will collaborate with B.Protocol to offer an automated stability pool compounding feature.

Diversified backing Mint Protocol will greatly benefit from accepting a diversified collateral base. At launch, Mint Protocol will accept $ROSE as collateral. As the bridge on Oasis grows, Mint Protocol will start accepting major reserve currencies ($gOHM) and meta-governance tokens ($wxBTRFLY) as collateral.

Decentralized operator Mint Protocol will support decentralization by providing SDK toolkit for anyone to launch the front-end for Mint Protocol. Front-end operators could be eligible to charge a % fee on the volume.

Challenges we ran into

We spent a lot of time designing the multi-tier stablecoin system, as we wish to find a balance between maximal capital efficiency (having the protocol supporting as many collaterals as possible) and stablecoin solvency (only accept select, high-quality assets as collateral)

Accomplishments that we're proud of

Integration $rUSD can be integrated into secondary lending markets. A truly decentralized stablecoin is an essential part of DeFi infrastructure. Mint Protocol will be integrated with major AMM DEX, stable asset DEX, secondary market lending protocols, leveraged trading platforms, and NFT marketplaces in the Oasis ecosystem.

Multi-collateral support $rUSD will support a multitude of collaterals. At launch, Mint Protocol will be supporting $ROSE as its collateral. Mint Protocol will then support major reserve currencies bridged from other chains. Such reserve currencies might include $gOHM, $wxBTRFLY, $renBTC. As the Oasis DeFi ecosystem grows, Mint Protocol will also add support for Emerald-native reserve assets.

Cross-chain governance Mint Protocol will deploy the collateral to actively participate in other DeFi protocol’s governance and receive voting incentives from the governance participation.

As some of the collaterals are meta-governance tokens such as $wxBTRFLY, thus holding $mintr also passes through the voting power and economic benefit from the meta-governance tokens to the holders of $mintr.

What we learned

We have discussed with other DeFi projects on the Oasis Network, and we realized that for Mint Protocol to become successful, we have to collaborate with other DeFi projects and increase the integration.

What's next for Mint Protocol

The team at Mint Protocol wishes to build on Oasis because of its superior private computing features. At the initial stage, Mint Protocol will be launched on the non-private EVM paratime. When Mint Protocol launches on the private paratime of Oasis, the team can fully utilize the private computing feature of Oasis Protocol and bring many unique value-added features to the lending protocol field.

One of the most obvious advantages offered by private computing is the ability to hide the liquidation level for individual loans, such that it becomes impossible for actors to perform targeted liquidations. While collateral with enough liquidity (mainstream assets such as BTC) might be immune to targeted liquidation, Mint Protocol believes it is very important to protect users from targeted liquidation tactics as our protocol supports more and more exotic collateral.

In addition, building on Oasis private computing paratime would make the liquidation process fairer. Front-running is not only an issue that affects the fairness of decentralized exchanges, but it also affects the fairness of lending protocols. Unfortunately, liquidators with direct access to mining pools have an advantage in securing the right to liquidation (and the discount on collateral).

The team at Mint Protocol recognizes how Miner Extractable Value (MEV) negatively affects the fairness of the DeFi ecosystem. Built on a “code is the law” ethos, DeFi market does not have the privilege to regulate market participant behaviors via written laws and rules, compared to how TradFi market regulates market participant behaviors via regulations. Therefore, the DeFi market has to rely on new technology and algorithms to enforce fairness in the market. The team at Mint Protocol wishes to work with Oasis Network to differentiate our offering with private computing while bringing fairness to the DeFi ecosystem with designs such as private transactions, protocol-controlled liquidation market, and decentralized oracle network.

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