Mars Protocol Litepaper (Archived)

Important note

Contents

  1. Summary
  2. How it Works
  3. Controller — Dynamic Interest Rates using Control Theory
  4. Token Economics (MARS)
  5. Why Terra
  6. Trust-Minimised Agile Governance
  7. The Future

1. Summary

2. How it Works

  • Lenders: Deposit assets into Mars liquidity pools, earning an interest rate
  • Borrowers (collateralised): Borrow assets from Mars liquidity pools using their deposited assets as collateral. These borrowers must therefore also be depositors (lenders)
  • Borrowers (contract-based): Smart contracts that borrow assets from Mars liquidity pools without posting collateral. Each smart contract credit line must be approved by governance and will include a credit limit to mitigate the protocol’s risk exposure
  • Council: Stake MARS in order to earn protocol fees, participate in governance and backstop certain kinds of protocol risk

A. Collateralised Borrowing — C2B Lending

B. Contract-to-Contract (C2C) Borrowing — Leveraged Yield-farming Strategies

C. Liquidations

(i) Collateralised Borrowing

(ii) Contract-to-Contract (C2C) Borrowing

3. Controller — Dynamic Interest Rates using Control Theory

A. The Interest Rate Pricing Problem

B. The Mars Solution — Reactive Interest Rates

4. Token Economics (MARS)

A. Token Architecture

B. Staking — xMARS

  • Governance: 1 xMARS = 1 unit of voting power. Only xMARS (and MARS that’s locked for contributors) can participate in governance, making decisions on asset listing, risk parameters, treasury spending and more.
  • Fees: xMARS holders will receive a share of protocol interest-rate revenue. Similarly to SushiSwap’s SushiBar contract, this will be done by using the revenue to buy MARS on the open market and adding it to the xMARS pool.
  • Safety Fund: xMARS holders will be incentivised to backstop protocol risk by using a pool of reserved aUST (the ‘Safety Fund’) as a first-resort source of recovery for shortfall events and staked Mars as a last-resort source of recovery for Shortfall Events, with up to 30% of their stake being locked and sold in case of a shortfall event

C. Value Flows

D. xMARS Governance Rewards

E. xMARS-Governed Safety Fund and Coverage of Last Resort

  1. the Safety Fund, a pool of aUST funded continuously by a portion of Mars fees; and
  2. the pool of MARS that has been staked by xMARS holders.

G. Token Distribution/Allocation

5. Why Terra

A. Trustless Stablecoin

B . Cross-chain Hub

C. Low cost

D. Burgeoning DeFi Ecosystem

6. Trust-Minimised Agile Governance

7. The Future

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store