Prisma claims to be "The End Game for LSTs".
At first, I thought it's overstated.
However, after conducting research on its functionality and competitors, I realized I was wrong.
Here's why I agree with them and everything you need to know about @PrismaFi
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This thread will cover:
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Prisma's functionality
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Competitor and differentiation
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Opinion
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Actions you can do
This is NOT sponsored post. I came across it and found it promising.
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Prisma's functionality
Prisma allows users to mint $acUSD, a stablecoin fully collateralized by liquid staking tokens (LSTs).
Its code will be based on @LiquityProtocol hence it's immutable.
The key functionalities are:
ā¢ Multi-collateral stablecoins: Onboarding 5 different LSTs: $stETH $cbETH $rETH $frxETH $bETH
ā¢ Voting and bribing system: Stake $PRISMA to get vePRISMA and voting rights to direct emissions to the preferred LST collateral for minting
ā¢ LST wars: There must be a war where LST providers incentivize voters and Convex-like protocols will eventually occur.
This team is backed by legends e.g. Curve and Convex, hence, this war will be full of experts enhancing efficiency to the next level.
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Competitor and differentiation
Most of competitors has their own stablecoins:
@gravitaprotocol has $GRAI
@LybraFlnanceLSD has $eUSD
@raft_fi has $R
It's easy for one protocol to have its own stablecoin. The question is how to grind in order to become the top of mind.
The differentiation is the size of the flywheel.
The number of stakeholders in this game should be great enough for ecosystem.
And the incentive alignment is required to grow together and make one stablecoin to be the go-to decentralized stablecoin.
On Prisma, the stakeholders are LST providers, LST holders, and vePRISMA holders. All of them have skin in the game to make this successful.
2.1 LST providers: The privilege being collateral is not limited to stETH. The smaller LST providers get to become the collateral and increase liquidity size.
It's crucial to have deep liquidity as it's key component to integrate and expand usage of LSTs to a broader degree.
LSTs will have more functionality to increase the number of LST holders on that protocol.
2.2 LST holders
As Prisma enable more LSTs to become collateral, those LST holders can access Prisma's stablecoin, acUSD.
This neutralize the capital efficiency across LSTs, regardless of the market share that one LST has (e.g. stETH vs cbETH)
If you think about the market size, currently most of protocols are putting all focus on stETH, which is the right move but only in the short term.
Making smaller LSTs involve in this game is the way to play healthy competition, hence more stakeholders in this game.
2.3 vePRISMA holders
The other important differentiation is the governance system and stakeholders in this game.
They can control several aspects and parameters of the protocol:
ā¢ The stability pool
ā¢ Protocol fees
ā¢ Direct emissions to any LP tokens.
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Opinion
If you follow this LSD/LST narrative closely, you'll see the growth in terms of the functionality.
And I believe Prisma model will level up this game and encourage healthy competition among LST providers.
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Actions you can do
With enough attention, robust execution and experienced team, it could be the next decentralized stablecoin with actual adoption.
Keep an eye on the launch. I believe they'll reveal more details on its launch and its tokenomics.
We're still early.
The above is only TLDR and my opinion. You can read the full version here.
twitter.com/PrismaFi/status/1667170029090095104