About $mkUSD

Bhim5551

"Prisma is a stablecoin based on LSD, and it's a fork of Liquity with significant improvements. Prisma allows users to mint mkUSD collateralized by various LSTs (such as wstETH, cbETH, rETH, sfrxETH, and WBETH).

mkUSD will receive incentives on Curve and ConvexFinance to create a capital-efficient flywheel. Users can earn trading fees, CRV, CVX, PRISMA, and ETH staking rewards.

My view on $mkUSD is as follows:
1. Competitive Value Proposition: Each LSD-backed stablecoin offers ETH yield for users. However, since mkUSD is deployed on Curve, users depositing mkUSD can earn trading fees, CRV, CVX, and PRISMA rewards. This could make $mkUSD more competitive among its peers.
2. Not a Medium of Exchange: mkUSD is a yield-bearing stablecoin, and the protocol doesn't prioritize using it as a medium of exchange. Most users hold mkUSD to earn the annual yield it provides.
3. Yield-Bearing Asset: Since mkUSD can generate returns for holders, some may use it purely as a store of value. If users trust its stability, it can be a good way to earn ETH yields.
4. Innovative Tokenomics: vePrisma holders will have the ability to incentivize specific pools, so LST providers may have an interest in incentivizing mkUSD with their own LST. This can create a positive feedback loop for mkUSD demand. According to the whitepaper, voters can direct issuance towards using specific collateral to keep activity borrowing with specific collateral and distribute rewards to any LP token holders. Given that deep liquidity is crucial for maintaining stability, this will be a significant distinguishing factor for Prisma compared to competitors.
5. Multiple LST Collaterals: There are several LSTs that can be used as collateral, such as wstETH, cbETH, rETH, sfrxETH, and WBETH, each with varying market values. Due to the unique tokenomics, these protocols can incentivize users to mint mkUSD, increasing exposure to Prisma.
6. Capital Efficiency Concerns: The overcollateralization model means $mkUSD has limitations in terms of capital efficiency, as users need to lock in more capital than they receive. Additionally, since the collateralization ratio should always be above 120%, there's always a risk of liquidation.
7. Strong Backing: Despite entering the market later than competitors, Prisma Finance has gained support from powerful backers like Curve Finance, FRAX, and Convex.

Please note that this is a translation of the provided text, and it may not represent a personal view or opinion."