As the ETH staking rate rises to nearly 20%, various liquid staking derivatives (LSDs) of ETH have become an important class of on-chain assets. LSDFi has also become a key part of the Ethereum ecosystem, with projects such as Pendle and Instadapp experiencing a resurgence.
Stablecoins are an important sector in DeFi and LSDFi. Projects such as Lybra Finance, Prisma Finance, and Raft have either planned or already issued their own stablecoins. Recently, Mori Finance, a native stable asset DeFi protocol on Ethereum, launched its testnet. PANews will introduce it below.
In all cases, the total value of ETHS and ETHC held by users is equal to the value of the ETH in the collateral. Initially, both ETHS and ETHC are priced at $1. The price volatility of ETHS is set to 10% of the ETH price volatility. If the ETH price increases by 10%, then the ETHS price increases by 1%, and the remaining increase is fully absorbed by ETHC. The price of ETHC is calculated by subtracting the issued value of ETHS from the ETH value in the collateral and then dividing the result by the number of ETHC tokens.
ETHS is a low-volatility stable asset. It can be viewed as a stablecoin-like asset backed by ETH, with minimized volatility, and can generate yield through subsequent ETHS/USDC LP farming. ETHC, on the other hand, is a perpetual token that is bullish on ETH. It represents a long position on ETH without a forced liquidation process, though leverage may be reduced through an emergency control mode under special circumstances. Risk Management Under normal circumstances, Mori does not restrict the ratio at which users mint ETHS and ETHC, yet the protocol must ensure that the price volatility of ETHS is 10% of that of ETH. In an upward market, this mechanism works without issue, as additional gains are absorbed by ETHC. However, in a downward market, if the proportion of ETHS is too high, the leverage and volatility of ETHC may become excessively high, potentially leading to a situation where ETHC cannot fully absorb the additional decline in ETH. Therefore, it is necessary to limit the proportion of ETHS and keep the leverage ratio of ETHC within the range of 1 to 4 times. When the collateral ratio (ETH value in collateral / issued ETHS value) falls below 130%, the minting of ETHS will be prohibited, and fees will be used to incentivize the redemption of ETHS, the minting of ETHC, and the reduction of ETHC redemptions. When the collateral ratio falls below 120%, the insurance fund will also be used to purchase ETHS on the secondary market and redeem it for ETH. Early participation in the testnet has been launched to obtain OG status. According to the official whitepaper, the native token of Mori Finance is $MORI, with a total token supply of 1 million. The protocol can charge fees from the minting and redemption of ETHS and ETHC, and can also obtain a portion of fees from ETH staking rewards.Mori Finance has now launched its testnet. Users who participate in the testnet (by submitting feedback through the form) and those who create content can obtain OG status. According to the roadmap in the whitepaper, the project plans to launch on the Ethereum mainnet in the third quarter of this year after completing the audit. Following that, it will participate in the Curve War and support more LSD assets. It is expected to launch on Layer 2 in the fourth quarter of this year, complete cross-chain deployment, and issue derivatives based on ETHS and ETHC. The Mori team members are currently anonymous, but they claim to have been responsible for wallet operations at a licensed compliant exchange from 2018 to 2019, and have been engaged in DeFi research and product development since 2020. The team was inspired by the thinking behind the Curve liquidity ecosystem and the f(x) Protocol incubated by AladdinDAO, leading to the construction of Mori Finance. Mori refers to f(x) as a co-builder and has also shared the relationship between the two in a tweet. Summary Mori divides the volatility of ETH into a low-volatility asset, ETHS, and a high-volatility derivative, ETHC, to meet the needs of users with different risk preferences. The volatility of ETHS is set at 10% of ETH, with the remaining volatility absorbed by ETHC. Currently, the project has launched its testnet. Participating in the testnet allows users to obtain OG status. The project plans to launch on the Ethereum mainnet in the third quarter of this year and participate in the Curve War. Disclaimer: This article only represents the author’s personal views and opinions, and does not represent the views or positions of this website. All content and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and transactions. The author and this website shall not bear any responsibility for direct or indirect losses arising from investors’ transactions. Disclaimer: This article is only for providing market information. All content and opinions are for reference only and do not constitute investment advice, nor do they represent the views or positions of this website. Investors should make their own decisions and transactions. The author and this website shall not bear any responsibility for direct or indirect losses arising from investors’ transactions.
