The Mars Ecosystem is now accustomed to dominating the headlines on the BSC network. With some of the highest APRs in the DeFi space and a constantly growing TVL, the team recently earned a Monthly Star in the Binance Smart Chain “Most Valuable Builders” program and is working to reinvent the utility of Stablecoins. BSC’s support for Mars’ products and technology adds credibility to the constantly evolving Mars ecosystem. In this article, we’ll go over stablecoins and what the Mars Ecosystem means for the future of DeFi and crypto.
Stablecoins were first introduced as a hybrid of fiat currency stability and cryptocurrency mobility. They are typically backed by underlying assets or algorithms. Stablecoins ensure that money is borderless and available to everyone, eliminating the need for a bank or a central authority.
Simply put, if Bitcoin is a form of decentralized gold, stablecoins are a form of decentralized currency.
However, specific characteristics of stablecoins have turned them into the antithesis of decentralization over time and usage. They have also sparked the genesis of the Mars Ecosystem and its vision to reinvent stablecoin while retaining decentralization and scalability.
The Current State of Stablecoins
Tether (USDT) accounts for more than half of the market cap of all stablecoins, with a market cap of nearly $128 billion. Despite the lack of a single decentralized stablecoin that meets the basic requirements, the stablecoin market benefits greatly from DeFi. Every decentralized stablecoin protocol must have three characteristics: 1. price stability, 2. overall decentralization, and 3. scalability.
Most stablecoins are currently overcollateralized, which has a direct impact on their scalability. Furthermore, many stablecoins are tied to assets held in centralized systems, which goes against the ethos of blockchain technology and DeFi. Although algorithm-based stablecoins eliminate the need for collateral, their price stability is a major concern.
Stablecoins’ Major Concerns
In terms of the three properties, each stablecoin protocol currently has its own set of tradeoffs. All of the issues, however, boil down to two major concerns. The first is the positive externality problem, and the second is the integration problem.
The issue of positive externality reflects an imbalance in the effort-to-reward ratio for stablecoin protocols. The protocol and its users bear the cost of creating and maintaining stablecoins. However, the value of stablecoin is generated by DeFi applications. The financial incentive for the stablecoin protocol is minimal, resulting in a scarcity of supply.
The integration issue is very similar to the previous concern about how the value of stablecoins is solely determined by DeFi apps. The ease with which stablecoins can be integrated with various DeFi protocols has an impact on their value. If a stablecoin cannot be easily integrated with a specific DeFi protocol, its stability suffers.
To address these issues, Mars Ecosystem stands out as a decentralized stablecoin paradigm with an all-inclusive system to capture stablecoins’ true utility.
101 Mars Ecosystem
Mars Ecosystem presents a three-part system as a potential solution to the positive externality and integration concerns. Their efforts are focused on creating a stablecoin ecosystem with high price stability, decentralization potential, and scalability.
These efforts have been recognized by Binance Smart Chain’s Most Valuable Builder (MVB), an initiative to support innovative projects. The Mars Ecosystem was one of the MVBIII – September Monthly Stars winners. In addition, the Mars Ecosystem will receive critical support from BSC, which will not be limited to monetary contributions. Mentoring and technical assistance may be game changers for the Mars Ecosystem.
The three pillars of the Mars Ecosystem are as follows:
The Mars Treasury
This is the bedrock upon which the Mars Ecosystem rests and grows. Its components are $USDM or USD-Mars (Mars Ecosystem stablecoin) and $XMS (Mars Ecosystem Token) (Mars Ecosystem governance token). Their treasury is designed to support a wide range of cryptos, from BTC to DeFi blue chips.
The team has minting and redemption mechanisms in place for the circulation of $USDM. Users can deposit their assets into the Mars Treasury to mint $USDM at a 1:1 ratio, and vice versa. The circulation of $USDM fuels the value of $XMS, which can be used to participate in protocol governance.
The $USDM stablecoin can be minted with any of the Mars Treasury white-listed assets worth $1. The maximum supply of the $USDM is proportional to the market capitalization of the $XMS. This supply cap is part of their mintage control mechanism, which takes into account user behavior to ensure the price of $USDM remains stable at all times.
In addition, an anti-bank run mechanism has been activated to protect the $USDM from mass shorting and a possible collapse. This is accomplished by incentivizing the token’s holding time. Malicious actors attempting to profit from the difference in the collateral ratios of $USDM and $XMS are thwarted because quick sales are burdened with slippage losses. This makes bank runs impossible in the Mars Ecosystem.
Protocols for Mars DeFi
This is a set of features being added to the Mars Ecosystem to help with transactions, increase liquidity, and improve the utility of $USDM as a medium of exchange and store of value. Mars Swap, which is an automated market maker-powered DEX similar to Uniswap, is the first in the series of DeFi protocols.
This DEX is intended to provide 24-hour liquidity for $USDM and other DeFi protocols that use $USDM as a trading token. Furthermore, the transaction fees generated by Mars Swap are redirected to the Mars Treasury, where liquidity providers, $XMS holders, and stakers are compensated.
The positive externality issue is resolved because $USDM users earn without leaving the ecosystem. Furthermore, the value created here encourages the holding of $XMS, which in turn stabilizes $USDM, as the latter’s supply is based on the former’s market cap.
Provision for Staking and Liquidity
Mars Ecosystem liquidity farms and pools were launched in September. The total locked value has now surpassed $250 million, with an average APR of more than 1000 percent. Eight pools have already been established for users to stake their $XMS and earn BNB, ETH, CAKE, or more XMS as desired. In addition, more than ten yield farms have been established for liquidity provision. On Mars Swap, 0.25 percent of transaction fees go directly to liquidity pools.
In addition, the team is launching a slew of liquidity pools and farms in tandem with other projects in the BSC network. Some of the projects with which they have collaborated in the creation of liquidity pools and farms include the Venus Protocol, Kalata Protocol, ForTube, and Helmet Insure.
Aside from that, they have used a linear vesting period to combine sustainability with the expansion of farms and pools. Simply put, the $XMS token allocated to investors (8%) and the team (10%) will be gradually released. This means that, based on the total supply of $XMS, 180 million $XMS will be released over the course of 18 (investors) and 36 (team) months. The vesting period will begin with our genesis launch, which will take place in a month.
Mars Ecosystem’s Future
The Mars Ecosystem team is approaching the future with a community-first mindset. Special emphasis will be placed on the direction that their community wishes to take, in accordance with their roadmap, which includes the launch of additional DeFi protocols and the incubation of new projects.
Everyone who owns $XMS tokens can participate in MarsDAO and help shape the Mars Ecosystem. In addition, they will make their NFT collection available for purchase to the community, as well as a few airdrops for lucky winners. The Boarding Pass NFT and Captain NFT were created to recognize those who contributed to the early MarsDAO community.
They believe that ‘to Mars’ will become the new ‘to the Moon’ in the crypto and DeFi communities. But, instead of volatility, we’ll see if the stablecoin $USDM can become the DeFi world’s reserve currency.