Mento Stablecoin Factory

Mento
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Hello,

I have just published a blogpost introducing the concept of Mento Stablecoin Factory. It can become a new feature of Mento Platform streamlining the process of launching new decentralized stablecoins. Creating this post to start a discussion and collect community’s feedback about this idea. I will appreciate if you will spend 10 minutes to read an article and let me know what you think about it here.

Thanks and happy weekend everyone!

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All of us complain about the imminent arrival of CBDCs, it would be responsible for us to fully explore every possibility of having a stable currency specific to each country and that at the same time has decentralized characteristics. Only together we can make it possible.

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Thanks, @olenovyk for sharing - I’m excited about the focus on enabling swift deployment of use-case-specific stablecoins at scale, and I believe the Mento Stablecoin Factory is the right approach.

With the RedStone oracles and Mento Stablecoin Factory, would you imagine any other RedStone price feeds being used to build on-chain products, such as Grains, Metals, and Stocks?

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Thanks @olenovyk for sharing this exciting update about the Mento Stablecoin Factory! I think this decentralized approach has the potential to bring about a number of of community-governed currencies with their own distinctive features.

So my main feedback is around configurability (which I imagine is on the roadmap already). For example:

  • Configure vault strategy for collateral assets to earn yield from vetted sources (eg. Yearn) potentially redirected towards stability pool. Redstone supports a number of liquid staking tokens that have adoption (eg. stETH, swETH, crvUSD, etc.) which could be a good starting point.
  • Configure liquidation policies/pathways for collateral (eg. attempt GrandaMento-style OTC trade, else split order over time with TWAMM in multiple exchanges)
  • Ability for stablecoin tokenholders to govern the above parameters at the currency level (in addition to top-level governance from Mento gov tokenholders) using tokens or NFT-based governance.

I also think the Gauge System works well at scale (eg. Curve) but is vulnerable to governance bribing, particularly in the early days. So I think it may be a two-fold process to create a “first line of defense against” then determine “meaningful assets on the platform”.

The first line of defense could simply be automating aggregation/analysis of relevant information about the assets (eg. historical volatility, available liquidity, number of holders, upcoming vesting unlocks that could cause adverse price swings eg. tokenunlocks) so that users can make informed decisions. The incentivization to determine the “canonical” stablecoin for a given peg is tricker, and I think the Gauge system could be supplemented by Mento itself incorporating certain assets as a small portion of collateral in the main reserve. In the early days, this would be arguably the strongest signal to the community that an asset is both safe & meaningful.

Hats off to the Mento team for developing this stablecoin factory and explaining it in the blog post! Very much looking forward to future developments here.