Imagine having the power to tailor your risk profile in the Ethereum ecosystem. Sounds too good to be true? Not anymore frens!
Introducing the Mori Protocol, a revolutionary platform, lets you do that.
Let's dive into it š§µ
$MORI $LUSD $LBR #LSD
In this thread I will cover;
1ļøā£ What is $MORI ?
2ļøā£ Products
3ļøā£ Working Mechanism
4ļøā£ Risk Management
5ļøā£ Conclusion
1ļøā£ What is $MORI ?
The Mori Protocol is a native stable asset protocol that aims to offer users an alternative risk/return profile.
It achieves this by dividing the volatility of ETH into low-volatility stable assets and high-volatility derivative assets.
In the ever-changing landscape of cryptocurrencies, there is a growing demand for decentralized stable assets that can withstand market manipulation and regulatory uncertainties.
Time and again, we have witnessed how regulators or malicious actors attempt to shake the stability of traditional fiat-backed coins by spreading insolvency rumors.
As a result, many individuals in the crypto community are becoming increasingly frustrated with these disruptions.
$LUSDāa promising decentralized stablecoin candidateāthat aimed to address these concerns head-on.
However, despite its potential as an innovative solution within the space, it has faced challenges when it comes to capital efficiency and scalability aspects.
This is where Mori steps onto center stage with its compelling value propositionāsupercharging LSD ecosystem using their groundbreaking products: $ETHs and $ETHc to capture the value.
2ļøā£ Products
āļø ETHs : It is designed for users with a lower risk tolerance. It offers stability and reduced volatility compared to the underlying asset
Users who prefer a more conservative approach and want to minimize their exposure to market fluctuations may opt for $ETHS
āļø ETHc: It caters to users who are willing to take on higher risk in exchange for potentially higher returns.
These derivative assets mirror the volatility of the underlying asset (ETH), allowing users to benefit from price movements.
Traders and investors who are comfortable with market volatility and seek profit opportunities may choose to engage with these derivative assets.
3ļøā£ Working Mechanism
The ratio at which ETH is split into ETHS and ETHC is decided by the users when minting operation is done.
The price of ETHS is designed to change by 10% of the ETH price. For instance, if the ETH price rises by 10%, the price of ETHS rises by 1%.
Conversely, if the ETH price drops by 10%, the price of ETHS drops by 1%. This mechanism ensures that ETHS remains a low-volatility asset.
ETHC absorbs most of the volatility in ETH. This means that when the price of ETH fluctuates, the price of ETHC changes more drastically.
The Mori Protocol allows users to manage their risk exposure by offering two types of assets with different volatility profiles.
The price of these assets is dynamically adjusted based on the price of ETH and the quantities of ETH, ETHS, and ETHC within the protocol.
4ļøā£ Risk Management
The Mori Protocol implements a Collateral Rate (CR) system to manage risk and maintain balance within the protocol.
The CR is defined as the ratio of the value of ETHS to the value of ETH in the system, expressed as a percentage.
The protocol has established different risk management strategies based on the CR value.
These strategies are designed to prevent ETHS from absorbing more than 10% of the ETH value fluctuation, which could lead to greater volatility in ETHC and destabilize the system.
They are designed to restore market balance when the CR value is too low.
They involve adjusting fees and incentives to encourage certain actions that will help stabilize the system.
For instance, when the CR is less than 130%, the system discourages the minting of ETHS and encourages the minting of ETHC.
This helps to balance the proportion of ETHS and ETHC in the system, thereby managing the risk and maintaining stability.
5ļøā£ Conclusion
As we wrap up our deep dive into $MORI , it's clear that this is a project to watch. With plans to launch on L2 and add extra LSDs for minting, the protocol is set to increase the diversity and scalability.
The protocol has solid revenue generation sources, such as fees from minting and redeeming ETHS and ETHC, as well as an annual service fee on reserved ETH.
Keeping an eye on their progress is a wise move, and you can bet that I will.
MORI FINANCE ---> LSD, next-gen stable asset - $MORI for chads
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