From DeFi’s primordial cosmic soup, a new primitive emerges: the Rover. Engineered to operate in the cosmos’ harshest environments, rovers give their pilots DeFi superpowers to navigate new, uncharted worlds. With the right integrations and approval by governance, you could launch a rover to engage in virtually every activity you might on a centralized exchange: spot trading, margin trading, lending and borrowing — all in a single decentralized credit account represented by a transferable NFT.
Rovers are powered by whitelisted smart contract “credit lines,” which are pre-approved by the Martian Council to borrow from Mars’ Red Bank. That means when you mint a rover and make a deposit, you can immediately leverage your favorite DeFi activities on any fully supported Cosmos chain.
Mars v2 creates a framework that could enable you to long assets, short them, borrow, yield farm, or lend, all with a single liquidation point. It’s DeFi rebundled. And it represents the next evolution in capital efficiency and user experience (UX) for traders and yield farmers throughout the cosmos.
Today, Mission Control is excited to detail the basic rover design, the new Mars Hub blockchain and more in the Mars v2 whitepaper. Access it now in Github, or read on for a summary from Mission Control.
Github Mars Whitepaper: https://github.com/mars-protocol/whitepaper/blob/main/README.md
The current landscape
DeFi remains fragmented and complex. Something as simple as moving tokens from one chain to another might require multiple wallets and an understanding of addresses, bridges and security. Meanwhile, trading, accessing leverage and yield farming typically requires interactions with multiple standalone dapps.
Centralized exchanges often bundle these services via subaccounts, which aren’t yet common in DeFi. Mars v2 changes that with “DeFi subaccounts.” By enabling integrations with new and existing DeFi primitives, these subaccounts should allow greater functionality than subaccounts on centralised exchanges. To understand how we get there, we must look at Mars v1’s innovations.
Mars v1 and the birth of C2C Lending
Mars v1 launched on Terra with a novel credit primitive dubbed Contract-To-Contract (C2C) Lending. C2C lending gave whitelisted smart contracts the ability to borrow from Mars lending pools exclusively for pre-defined purposes without first depositing collateral in the Red Bank.
In the neon day-glo Fields of Mars, for example, fearless yield farmers could easily tap leverage to boost their crops as shown below.
While this provided a powerful generalized credit primitive, users could not cross-margin between different C2C strategies. This resulted in a sub-optimal borrower experience since users needed to post separate collateral and manage liquidation levels for each individual strategy.
After disruptions in the Terra network, satellites were deployed throughout the cosmos and tasked with finding a new home for Mars’ Red Bank and the experimental applications launched in the Fields of Mars. With new data in hand, a grander vision centering around the Cosmos ecosystem emerged.
This new vision is powered by a suite of Cosmos interchain services including Inter-Blockchain Communication (IBC) protocol, which gives independent Cosmos chains the ability to communicate with one another and seamlessly send tokens across chains. As the universe of Cosmos chains expands, so too does the need for foundational services on those chains. AMMs and credit protocols, for example, are critical to the success of virtually any blockchain.
A new architecture could allow Mars to serve a multitude of the chains simultaneously. And in the process, it could expand Mars’ core credit primitive. Instead of posting separate collateral for each strategy, what if a user’s positions and strategies could be combined into a single vehicle with a single liquidation point on any supported chain? Enter rovers.
Introducing Mars rovers
- Isolated credit accounts where users can aggregate DeFi activities into one spot with a single liquidation LTV
- Bundles of on-chain transactions, which are represented by transferable NFTs that can potentially be sold and/or fractionalized
It’s a new primitive that enables:
- The ability to hold multiple rovers in a single wallet, providing a “sub-account”-like experience on centralized exchanges in a decentralized setting
- Cross-collateralization between different C2C strategies (use your spot longs as collateral to leverage yield farm, for example)
- Integrations with other DeFi primitives
By enabling the full spectrum of DeFi activities in a single rover credit account, users have more control and capabilities than they might on centralized exchanges. The image below details a hypothetical user journey within a rover credit account.
The rise of Mars Hub
To achieve this vision, Mars will operate on its own Cosmos-SDK appchain, Mars Hub. As its name implies, Mars Hub will be the central or organizing “hub” in a “hub and spoke” design. Other L1 chains that Mars Hub interacts with operate as “spokes.” Each spoke will be home to an outpost consisting of the Red Bank and rover credit account contracts.
The Hub itself does not hold liquidity for outposts, but rather administers activity that occurs on its outposts. Specifically, it governs all outpost smart contracts, receives fees from outposts and distributes them to participants in Mars’ governance.
In this way, Mars Hub acts like a fast food franchiser: establishing standards, but leaving interaction with customers to individual franchise restaurants. Similarly, traders and yield seekers who aren’t interested in governance will be unlikely to interact with the Hub. Instead, the Hub serves as a coordination mechanism in the background, while traders interact directly with the liquidity aggregated on each of the Mars outposts.
This model takes advantage of a suite of Cosmos interchain features including Inter-Blockchain Communication Protocol (IBC), and ensures Mars can operate wherever there’s borrowing and lending demand. It allows Mars to be omnipresent rather than selecting a single platform and wedding its fate to it.
Rovers as NFTs
As a bundle of on-chain transactions, each rover is represented as a credit account. This unlocks an exciting world of possibilities including:
- Identity: Credit accounts could expose on-chain net worth, health factor, and P&L, giving them the potential to contribute to on-chain identity and enabling social features such as leaderboards, ‘whale-watching’, copy-trading, etc.
- Transfer/Sale: Users could sell or transfer their credit account to another user, including all positions within it.
- Fractionalization: Users could fractionalise their credit account into fungible pieces and sell or distribute them. Provided appropriate governance controls are put in place, this could allow other users to effectively own a share of a given user’s trading activity and a secondary marketplace could be created for these fractionalized shares.
- Collect: Credit accounts representing legendary trades/traders could emerge as on-chain artifacts owned by collectors.
- On-chain behavior and competence: Could be tracked for credit scoring.
The evolving role of MARS tokens
The role of MARS tokens is fundamentally different in Mars v2. Originally, MARS stakers were responsible for governing the protocol and backstopping it in the event of a shortfall event. Staked tokens were represented by xMARS, a transferable liquid staking token.
Within Mars’ new architecture, MARS stakers secure the Mars Hub network, govern outpost features and risk parameters and, in return for doing so, they earn protocol fees. Staked MARS will not be represented by a transferable liquid staking token or used to backstop the protocol (more on the Safety Fund appears below).
The token’s utility will mainly materialize via delegation. Specifically, MARS holders will be able to stake (or delegate) their tokens to a number of validators within the network in order to:
- Secure the chain: All else being equal, the more tokens staked within the network, the more secure the chain as it becomes more expensive to attack. As a result, by delegating MARS tokens to a validator, users will help secure the chain.
- Access governance: When staking tokens with a particular validator, users are delegating the voting power of their tokens to that validator. In this sense, delegation allows users to participate in governance by staking their tokens with (and thereby increasing the voting power of) validators who align with their views. A user can passively allow a validator to vote on their behalf or they can actively participate in votes themselves.
- Receive fees: In return for securing the chain, a share of protocol fees will flow to validators and their delegators.
At launch, 80% of all “interest” payments will flow to Red Bank lenders (depositors), and the remaining 20% will be split equally between the Safety Fund, which can potentially be tapped in the event of a shortfall, and Mars Hub stakers (less a commission to validators, if applicable). All interest payments sent to the Safety Fund are first swapped to Axelar USDC (axlUSDC) by a rewards collector contract and transferred to Mars Hub. Interest payments for Mars Hub validators are swapped to MARS and sent to the Mars Hub distribution module, which splits it between validators and delegators per the validator’s commission rates.
Helping coordinate and align incentives of the different stakeholders involved, the MARS token was initially minted on what is now Terra Classic. MARS holders as of two Terra Classic snapshot dates will be eligible to claim newly-minted MARS tokens on Mars Hub.
Details on the token claim process are expected to be announced closer to the launch of mainnet. After a user has submitted a successful claim for their tokens, the tokens will be airdropped to their new MARS address and accessible via a Keplr wallet.
The maximum supply of MARS tokens will be 1 billion and the final token allocation is as follows:
- Token Claim (66.6M): To be distributed to all MARS token holders on Terra Classic as described here. These tokens will be fully unlocked and claimable upon genesis.
- Community Pool (635.6M): To be distributed at the discretion of the community. Some of the use cases of this pool of funds could include incentivisation of staking/lending/borrowing, token grants and other community building programs.
- Mars Contributors (300M): Subject to transferability restrictions for up to three years.
Launching Mars Hub
Mars v2 will be enabled in phases as its components are heavily interdependent. Each phase is expected to build upon the previous phase(s) until the full activation of cross-collateralized rover credit accounts and Mars v2.
Note that Osmosis-based credit accounts will not initially support cross-collateralised strategies in the Fields of Mars. Instead, each credit account will feature isolated margin for each approved leveraged yield farming strategy. This means that users who open multiple leveraged yield farming positions will have multiple rover credit accounts on Osmosis. After launch, governance can potentially activate cross-collateralization within a single rover as liquidity matures on Osmosis. Chains with established liquidity are expected to support cross-collateralized rover credit accounts upon activation. These progressive activations are subject to change.
Celebrating Mars v2
Today, Mars’ vision is reborn. No longer tied to a single chain, it voyages through the cosmos as a planetary hub that links galaxies near and far. To celebrate the launch, a free limited edition badge will be available for minting (up to the supply cap) on Stargaze from now through 23:59:59 UTC on Sept. 26.
Mint your badge, and show the cosmos you’re a Martian pioneer by scanning the code below:
Then, travel deeper into the heart of Mars by reading the complete Mars whitepaper on Github. It includes expands on the concepts in this article as well as:
- Mars Hub’s architecture
- Validation and staking
- Liquidation mechanisms
- Areas for further exploration and more
Every thriving DeFi ecosystem requires credit, which currently isn’t available within the Cosmos ecosystem, to radically boost capital efficiency. Mars rovers kick this into overdrive, increasing capital efficiency beyond what traditional credit protocols can offer.
It is hoped the vision for Mars v2 inspires teams throughout the cosmos to join us and contribute to Mars. The protocol puts an emphasis on usability, composability and capital efficiency, so DeFi can surpass offerings on centralized exchanges and provide trading tools for sophisticated users seeking to maximize returns with leverage — all while maximizing decentralization.
Your rover awaits.
- Mission Control
Note: This article was updated on Feb. 14, 2023 to accurately reflect the number of tokens in the Mars token claim. Follow Mars on Twitter and subscribe to Mars’ email newsletter for the latest updates from Mission Control.
Remember, Cosmos and Mars are experimental technologies. This article does not constitute investment advice and is subject to and limited by the Mars disclaimers, which you should review before interacting with the protocol.