Use Treasury funds to create Minswap POL for stablecoins

Temp Check Discussion
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Objective: Make Minswap the dominant Cardano DEX for stablecoins

The Cardano stablecoin era has arrived. To further make Cardano appealing to the masses, I introduce this proposal to utilize Minswap DAO treasury funds to create Protocol Owned Liquidity (POL) for the ADA/MyUSD pair for the benefit of MIN holders.

MyUSD is a stablecoin designed to provide a stable, scalable, and fully redeemable option within the Cardano ecosystem available to everyone irrespective of borders. It is pegged to the US dollar, ensuring that its value remains consistent and non-volatile. MyUSD serves as a foundational element in Mynth’s broader mission to create a seamless and integrated DeFi experience, ensuring anyone can easily transfer, exchange, and manage their digital assets across various blockchain platforms while utilizing Cardano’s inherit security.

MyUSD is directly and fully collateralized by USDT and USDC, two of the most established stablecoins, ensuring stability and reliability. This allows MyUSD to maintain its peg to the US dollar by leveraging the battle-tested stability of these assets across different networks, offering a secure and dependable option for Cardano users.

Being the third largest Cardano stablecoin, MyUSD has proven to have the most stable peg of all available Cardano stablecoins. The majority of MyUSD’s liquidity is hosted by Minswap and locked within the Mynth DAO. When Minswap v2 is launched, it should be proposed to the Mynth DAO to transition the Minswap LP tokens to Minswap v2.

To further help Cardano establish dominance and attract more users, my proposal is to utilize some of the funds within Minswap DAO Treasury to create Minswap POL. The Mynth team can also commit to depositing MNT, Mynth’s utility token, into the Minswap DAO Treasury to immediately boost Minswap’s TVL. There are several advantages to this:

  • Provides immediate boost of TVL to Minswap
  • Further establishes Minswap as the dominant DEX for stablecoins
  • Further allows Cardano to be accessible to other blockchain users
  • Provides MIN holders opportunity to profit from trading fees

The implementation will be simple without requiring trust outside of the Minswap community. Each day ADA can be used to zap into the MyUSD/ADA Minswap pool. The generated LP tokens can be sent directly to the Minswap DAO. This can be overseen by a Minswap team member, or alternatively another agreed upon third party. By zapping ADA into the pool, it’ll cause MyUSD to automatically be minted to stabilize the peg without any extra effort.

This proposal is about ensuring Minswap remains the dominant DEX. By creating deep liquidity pools, it ensures more users can utilize Minswap for stablecoin trading. More trading means more fees collected for MIN holders. The more liquidity available, the harder it will be for other DEXs to compete. This proposal is a win-win.

The Mynth team has taken a strategic approach to stress-test MyUSD in a variety of real-world market conditions, including in low-trust and low-usage environments, to establish a FUD-resistant stablecoin. Mynth team has encouraged the community to attempt to depeg MyUSD, and several attempts have been made to do this. Due to MyUSD’s resiliency, MyUSD’s peg remains strong. Our goal is to make Cardano competitive within the broader crypto ecosystem. Cardano deserves a secure and stable stablecoin that consistently maintains its peg. By injecting more liquidity into Minswap’s liquidity pool, it will further strengthen the Cardano ecosystem and simultaneously benefit MIN holders.

While there are known limitations to MyUSD’s current design, with the biggest risk factor being centralization, these limitations have a clear pathway to be fixed in the future. The Mynth team hasn’t received any VC funding and has relied exclusively on the community. With the community’s consensus, we’d like to continue this approach to be grassroots driven for the long-term success of both Cardano and Minswap.

Should we continue with this proposal to further establish Minswap as the dominant DEX for stablecoins?

  • Yes
  • No
0 voters
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Can you describe in a bit more detail what u mean by " depositing MNT into the Minswap DAO Treasury"? Are you saying Mynth will donate some MNT to the Minswap DAO if the DAO uses some POA ADA to mint and then LP ADA/MyUSD?

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To be clear, this proposal is specifically about creating POL for Minswap. No need to mint MyUSD directly, just zap ADA into the pool and that’s all. If the Minswap community agrees then we can provide some MNT as additional incentive. I see purchasing POL is a better use of funds than renting via emissions.

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Yep I fully understand that sentiment. And is there a reason you prefer zapping into the pool versus the DAO minting MyUSD directly?

And do you have a specific range in mind for POL and what amount of MNT would be used as an incentive?

Thanks for answering the questions.

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Zapping is easier and requires less trust. If minting is required, then somebody has to be appointed to do the minting. Zaps could either be overseen by a human, or could be authorized by a simple smart contract.

The Minswap Treasury has over $8M in funds for the purposes of growing Minswap. Already there is $150k of POL in the pool. I’m interested to hear what numbers the community proposes. We can reciprocate generosity. First it would be good to get a general sentiment check to see if this is something the Minswap community thinks is a good idea, and then we can ideate specific numbers.

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I am a firm believer of the DAO owning POL, I actually think in the long run (talking about years here) for the DEX to be sustainable POL is the only way to go, and I mean like significant amounts of POL (I would use the fee switch to just keep on accumulating). And some questiosn arise from the proposal that I would be willing to get more into.

I however feel like that since we are currently probably deploying treasury funds on USDM, and given the talk of CEX listings (for which I am not the biggest fan but the community seems keen to push it) is not the time to push for a third expense on the treasury. I think the proposal has some merits and could be revisited in the future, but maybe after this other deployments of treasury have been resolved (either as accepted or rejected), and also see how fees and POL is affected with V2.

To summarize: I feel the DAO needs to resolve other possible treasury deployments before it can effectively focus on this proposal, and also take the opportunity to see how V2 affects all of this. I would feel more comfortable addressing the details of how this would work, and all this zapping daily business after.

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I appreciate your feedback @calles. I still think it’s good for us to at least have this discussion now. We don’t have to pause this just because the DAO a few other discussions are taking place. Stablecoin liquidity is important not only for Minswap but also for Cardano. The sooner liquidity is added, the better. The Cardano community has been waiting over two years for the stablecoin era to arrive, so doing more waiting isn’t a great option.

Let’s at least continue discussions and push forward, even if ultimately it’s decided not to fund the proposal at this time. The community can raise their concerns and questions; if the proposal isn’t passed now, then we can learn from the feedback and create a stronger proposal for the future.

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Then I would suggest the proposal is improved, as it stands right now I feel that if that went on-chain you would lose 10K MIN in the slashing.

Not very familiar with MyUSD, but this post does not help. Were are the reserves you mentioned held, in what chain? All this migrating the liquidity to me is out of the scope of the proposal. Don’t try to sell the fact that TVL will be boosted since the ADA will come from the DAO itself, so it depends on the definition of TVL being used, as far as I know there is a lot of debate among most cryptocurrencies ecosystems of that definition. Seems like something to avoid in a proposal, talk about increasing POL, and depth of a pool, and the posible volume it may bring, not an increase in TVL. Since the ONLY pool of MyUSD is on minswap it does not do anything regarding dominance, so I wouldn’t mention it either. I dont get all the zapping and how it could help with stabilization, maybe explain more for people that are not familiar with Myusd.

But however I repeat since this is a temp check and I wouldn’t want you to lose the MIN as of now I would vote no.

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I’m a bit confused what you mean by this. Can you elaborate? Literally TVL will increase for Minswap if this proposal is passed. Sure, it then becomes subject to impermanent loss and market fluctuations, but at the very moment it’s passed, TVL is increased. Why would we not want to highlight this fact?

This is fair but is 100% speculation, not really any good basis to make a rational decision on.

If POL is with Minswap, then it creates dominance. If Minswap doesn’t create POL, then liquidity moves elsewhere that’s more favorable. If Minswap community wants Minswap to be the dominant stablecoin DEX, then this is the way. Everyone here should acknowledge that markets and sentiment moves very quick. Just because Minswap is popular today doesn’t mean it’s guaranteed to be popular tomorrow. There is a lot of competition in this space. Creating POL is a good way to establish dominance. This is the main factor that will allow Minswap to stand out, because it’s something that cannot be copied.

Understood. Thanks for the feedback. I don’t think any of the reasons provided so far are good reasons to discontinue moving forward though.

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