Summary:
USDC is primarily promoted by Coinbase and supported by the CENTRE consortium. Together with DAI, it has been the most used stablecoin in the DeFi ecosystem following a strong push from Coinbase who provides liquidity to projects.
Context:
Until now, Mimo has been conservative in its management of collaterals and minimum collateral ratios (MCR). This has made Mimo inefficient and uncompetitive compared to other protocols. We believe that by having active risk management we can increase the efficiency of the protocol and become more competitive.
Rationale:
We propose to adjust the USDC minimum collateral ratio on Ethereum, Polygon and Fantom. To do this, we conducted a risk assessment of the USDC on each blockchain independently. We have based our risk assessments on the Aave’s and Euler’s risk framework with their methodology:
Below are the results of risk assessments on each chain:
- Ethereum:
- Smart contract risk: A
USDC has only been active since September 2018. USDC has generated more than 38.1M transactions.
USDCcontract: 0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48
- Counterparty risk: A
As it’s backed by real US dollars as well as other high quality reserve assets (since recently, USDC is centralised. The technology to mint new USDC and hold the backing USD value is based on a legal framework. It is currently maintained by the CENTRE consortium which is a trusted entity in the ecosystem and audited monthly by Grant Thornton. Furthermore, USDC is the first regulated cryptocurrency bringing a lot of legitimacy to the space. Still, the infrastructure is based on the Ethereum blockchain where regulators have little power. There are currently 1.4M USDC holders on Polygon.
- Market Risk: B+
USDC on Polygon has a $44.3B market cap, one of the highest market cap and trading volume of erc-20 tokens. Furthermore the price is pegged to USD. For this reason we consider the risks of USDC mitigate by USD.
- Polygon:
- Smart contract risk: A-
USDC is the native currency of Ethereum blockchain. USDC on Polygon is the bridged version of WBTC on Ethereum. The bridge used is the official Polygon bridge. USDC has generated more than 131M transactions.
USDC contract: 0x2791bca1f2de4661ed88a30c99a7a9449aa84174
- Counterparty risk: A
The process to bridge USDC use the official polygon bridge who is controlled by a ⅖ multisig. The multisig doesn’t have the possibility to deposit/withdraw funds from contracts. There are currently 773K USDC holders on Polygon.
- Market Risk: B+
USDC on Polygon has a $1.4B market cap, one of the highest market cap and trading volume of mrc-20 tokens. Furthermore the price is pegged to USD. For this reason we consider the risks of USDC mitigate by USD.
- Fantom:
- Smart contract risk: B+
USDC is the native currency of Ethereum blockchain. USDC on Fantom is the bridged version of USDC on Ethereum. The bridge used is the Multichain bridge. WETH has generated more than 23.3M transactions.
USDC contract: 0x04068da6c83afcfa0e13ba15a6696662335d5b75
- Counterparty risk: A
The process to bridge USDC uses the Multichain bridge which is controlled by a threshold distributed signature algorithm based on secure multi-party computation (SMPC). This algorithm enables the generation of a set of private keys on independently run nodes and then a corresponding public key will be produced through distributed computation. The application of the algorithm in the cross-chain interconnection of digital assets is a decentralized way to handle digital assets safely and effectively. There are currently 101k USDC holders on Fantom.
- Market Risk: B.
USDC on Fantom has a $603M market cap, one of the highest market cap and trading volume of frc-20 tokens on Fantom. Furthermore the price is pegged to USD. For this reason we consider the risks of USDC mitigated by USD.
Following results of these risk assessments we propose to adjust minimum collateral ratio (MCR):
- Ethereum: 108%
- Polygon: 104%
- Fantom: 105%
Means:
- Human resources: If the proposal is approved, this will need transactions to update minimum collateral ratios.
- Treasury resources: There is no treasury cost.
Technical implementation:
- Update contract which manages USDC minimum collateral ratio on each chain.
Voting Options:
- Accept the adjustment of USDC MCR’s
- Abstain
- Refuse the adjustment of USDC MCR’s
- Accept the adjustment of USDC MCR’s
- Abstain
- Refuse the adjustment of USDC MCR’s
0 voters
