DeFi Platform Mavryk Finance: ‘The Next Generation Of DAO-Based Community DeFi’

Mavryk Finance

Mavryk Finance is a Decentralized Finance (DeFi) platform that allows users to take control of their finances by digitally cooperating together to operate a DeFi banking ecosystem.

Mavryk is incubated by Tezos Israel, which are known to be long-time ecosystem builders, advocates, and participants of the Tezos ecosystem.

Mavryk is a non-custodial platform that allows users to take out their own loans by depositing collateral in multi-asset-backed vaults! The collateral can be XTZ or other Tezos-based tokens such as wWBTC & wWETH.

Mavryk has an innovative approach to governance and is launching as a DAO with an on-chain treasury and an integrated decentralized oracle system.

Utilizing a governance model similar to Tezos with nodes & delegations, Mavryk features nodes called Satellites that vote on governance updates, sign price feeds for the oracle, control Mavryk’s on-chain Treasury, and receive delegations from stakeholders.

Mavryks’ first product will be a multi-asset-backed stablecoin named zUSD, which is soft-pegged to the value of USD. If you deposit XTZ as collateral, you can also delegate that XTZ to Mavryk’s soon-to-be-launched Baker, or any Baker of your choice. 

zUSD can be used to buy more XTZ or other tokens on Tezos-based DEXs (This is obviously a risky strategy but a popular one nonetheless.) Another very interesting use for zUSD, is to earn passive income with a zUSD savings farm.

Users can stake their zUSD to earn yield, which is a great way to increase returns.  This way you earn interest on your zUSD in both zUSD and vMVK. (More about vMVK later).

Also soon to be launched, Mavryk will also enable peer-to-peer lending and a stablecoin DEX, all governed by Mavryk’s core governance & Satellites. 

Governance

The governance token of the Mavryk platform is the MVK token. Mavryk will start as a fully decentralized platform. So from the start community governance is a vital part of the platform, and for this, incentives are put in place.

Voting will be done by Satellites (electoral delegates). By utilizing a model inspired by Tezos’ governance, Mavryk allows stakeholders to delegate their tokens voting power to the Satellites.

While similar to Tezos’ model, there is an important difference. To use an MVK to actually vote, a user must first stake their MVK via the doorman module, which burns MVK and mints an equal amount of a non-transferable token called vMVK (virtual MVK).

vMVK is the representation of MVK inside the Mavryk ecosystem. Then, as an incentive for vMVK holders to actively participate in governance & securing the ecosystem, Satellites receive zUSD for voting on governance and vMVK for signing Oracle price feeds.

A portion of the Satellite rewards are passed on to delegates, just like with Bakers.

If users want to redeem their vMVK back to MVK, they can do so at any time, but they will need to pay an exit fee. This is another incentive for users to take part in the governance model and to continue to participate: the exit fee is redistributed to all vMVK holders that remain in the vMVK ecosystem.

The exit fees begin below 5% and are variable depending on the total ratio of vMVK vs. circulating MVK tokens that are liquid. The more vMVK that is staked, the lower the exit fees.

Of course, though, the exit fees are adjustable via the DAO’s governance structure.

Examples of things that can be decided through the governance model are:

– General upgrades to the protocol:

New multi-asset vaults

Provide incentives to move to newer versions of vaults

Different auction types

– Minting of vMVK to fund: 

Farms

Satellites

Mavryk Council

– Change of parameters

Oracles

Satelites have a second function. They also function as a decentralized price oracle. The Mavryk system relies on Satellites to provide accurate and reliable pricing information for the collateral assets in the vaults.

Satellites are required to stake vMVK in order to participate in governance, and thus are exposed to price volatility. Having this “skin in the game,” Satellites are incentivized to provide correct data.

Since anyone can become a satellite as long as they provide enough vMVK, the distributed structure of oracles will provide a reliable,  decentralized data feed.

Collateral ratio

To take out a loan, you deposit XTZ (or other tokens) as collateral, after which you can mint a certain amount of zUSD. You need to deposit at least 200% in USD value in collateral to be able to mint zUSD, so the liquidation ratio is when the collateral falls below 200%.

This means that if you want to mint 100 zUSD, you will have to deposit at least $200 worth of assets as collateral.

It’s important to understand that the 200% is a minimum collateral ratio. If the value of your collateral drops below that 200% (and in crypto that can happen fast since crypto is a volatile asset), your loan can get liquidated.

Which means that you will lose part of your collateral. That is obviously a risk you need to take seriously. It is therefore recommended to start and keep your collateral ratio at a healthy level and act when prices drop.

More down the range of 300% – 400% possibly. Remember though, you can collateralize your loan with more than just XTZ.

Before you decide to mint any zUSD, make sure you read and understand the official documentation that is provided by the Mavryk platform. https://mavryk.finance/litepaper/#zUSD-A-Multi-Collateral-Soft-Pegged-Stablecoin 

Stability fee

When you take out a loan, you pay interest. In this case, that interest rate is a stability fee. This is a tool that can be adjusted and improve the stability of the USD value. 

Initially, the stability fee is set at 2%. This is the interest rate that you pay over the amount of zUSD that you have minted. (Let it be clear that you only pay this stability fee if you minted zUSD so if you took the zUSD as a loan, not if you bought zUSD on a DEX). 

Depending on the value movements of zUSD, the stability fee can be increased or decreased to maintain it’s $1 peg. Price is the result of ask and demand, and the stability fee is an incentive to mint or burn zUSD, which influences token flows, circulating supply and with that value.

Changes in the height of the stability fee are decided through the governance process.

Savings account

You can use your zUSD to earn interest in your savings account. This is part of the design of Mavryk to add an extra incentive for people to mint zUSD, and also for others to purchase zUSD on DEXs in order to earn yield.

This helps to offset the sell pressure on the stablecoin. More zUSD is healthy because of the fact that a big circulating supply and utilization increases price stability. 

The Mavryk savings account is called the Dynamic Savings Account Rate (DSR). 

As an incentive for users to lock their zUSD in the DSR, account holders receive a share in the rewards from stability fees. Initially, the DSR will be paying users with vMVK tokens, and later as stability fees flow in, it will pay zUSD.

Anyone holding zUSD can lock zUSD in a DSR account, including zUSD holders that have bought their zUSD on a DEX instead of minting their own. So simply by holding zUSD, you can utilize that to earn yield. 

MVK tokens public sale

Mavryk will also be conducting a Balancer-styled public token sale, not yet seen before on Tezos. There will be no fixed price, and it will operate to allow price discovery during the token sale itself. 

2% of the MVK supply will be sold through public sale. The purpose of this sale is not to raise funds for operations, but to provide liquidity for the DEX listing of MVK/XTZ. The funds will be in complete control of the community via the DAO’s on-chain treasury.

As the contribution of funds is not to raise capital for a company but rather DEX liquidity for a community DAO, anyone is able to participate in the token sale. More details about the token sale will be released soon.

Tokenomics

MVK Max Supply (100%): 1,000,000,000 MVK tokens

From which:

– 40% Public Incentives (38% Yield Farming and 2% Initial Liquidity Pool)

– 18% Ecosystem (8% DAO Treasury (on-chain community vote for use of funds) and 10% Council Treasury (vested over 5 years))

– 18% Contributors (16% Private Contributors and 2% Public Liquidity Sale)

– 24% Team & Advisors (19% Founders + dev team and 5% Advisors)

The team and advisor tokens have a 6 months cliff with a 24 months vesting schedule at genesis. During the first 6 months, the team and advisor tokens are not transferable, but can be used for voting.

Private contributor tokens follow a 16-24 month vesting schedule from genesis.

Make sure to read the full documentation provided by Mavryk before using the platform.

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