mStable operates a noncustodial smart contract that functions as a stablecoin liquidity pool, accepting deposits of whitelisted stablecoins.
The SWAP feature tackles liquidity fragmentation among various stablecoins and assets. Users can redeem MUSD tokens for any underlying asset at a 1:1 ratio, irrespective of price fluctuations. This mechanism ensures zero slippage and employs a straight-line bonding curve, which drives significant swap volume from users arbitraging price discrepancies.
SAVE addresses yield generation by providing a high annual percentage yield (APY). By holding MUSD, users gain access to a high savings rate derived from interest earned through the automatic lending of underlying assets to Save and Compound.
MINT enables the creation of MUSD, a process essential for supporting mStable’s high APY. Currently, 14 million stablecoins serve as collateral, having generated 40 million MUSD that backs the circulating supply.
EARN encourages users to enhance MUSD liquidity within DeFi, aiming to boost the token’s utility and liquidity. To achieve this efficiently, mStable distributes MTA tokens.
By aggregating participants from diverse asset markets, mStable enhances liquidity, improves safety by diversifying pegging mechanism risks, and alleviates congestion by incentivizing liquidity entry into the system.