MOR capital efficiency for BSC, a novel way to borrow and get paid for doing so, by Growth Ecosystem.

This is a post to detail what we’re currently developing for the GrowthDeFi Ecosystem and how it will benefit existing token holders.

Growth Charges ahead into the future.

For the past few months the focus has been on developing and improving our vaults portfolio on BSC which will start being audited by Consensys Dilligence the 14th of June. Its time now to turn the focus onto implementing something to add monetary value to the ecosystem. Once the vaults are audited they will be perfect to act as collateral which is why our next development is a fully collateralized stablecoin called MOR. This is how it will work and how it will benefit GRO, WHEAT and gROOT holders specifically:

What is MOR?

MOR is a stablecoin which is soft pegged to the $ through different stability mechanisms, its purpose is always being close to the 1$ mark and thus allowing users to leverage up in yield farming positions with low interest rates.

How can MOR be minted?

MOR can be minted in two ways:

1- Minting it with a stablecoin (BUSD, USDC, USDT, DAI, TUSD) at a fixed exchange rate, these stablecoins can later be used to redeem MOR for them.

2- Providing collateral:

There are two main types of collaterals:

  • Standard Tokens (BNB, BTCB, ETH…)
  • Vault Tokens (stkCAKE, stkBNB/BUSD CAKE LP…)

Each collateral has its own parameters depending on the risk of the collateral, the parameters are the following:

  • Liquidation Ratio
  • Stability Fees
  • Liquidation Buffer
  • Debt Ceiling

This ensures that all MOR in circulation is backed by either stablecoins which are hard pegged to the $ (not algorithmic) or backed by more $ in collateral than the amount of MOR minted.

What keeps the price of MOR stable?

There are different stability mechanisms to make sure that MOR keeps its peg, here are a few:

1-As long as there are stablecoins in the protocol’s reserves the price of MOR can only go as low as the redeemable exchange rate.

2-All the fees that are generated in the ecosystem generate what is known as a system surplus (this surplus is how many stablecoins would be left as reserves if all the debt was repaid and all the remaining MOR in circulation was redeemed for stablecoins).

3-If the price of MOR falls out of the peg then users with an open loan are incentivized to repay it (the difference from the peg is extra profit they make).

4-If MOR falls out of the peg then liquidations are more incentivized (the system assumes 1 MOR = 1 $ so if MOR is under 1$ that is extra profit and incentive for liquidators).

5-Arbitrage opportunity knowing that it is fully backed and it will eventually go back to the 1$ soft peg mark.

How is MOR useful for users?

The main purpose of MOR is capital efficiency, you can use it to leverage up a long position on any of the supported collaterals, this is especially useful for yielding collaterals since you can essentially be paid to borrow.

Example with stkCAKE:

If stkCAKE is yielding 120% APY and the stability fee charged for this collateral is 10% then users (if they want to long CAKE) can leverage up by providing stkCAKE as collateral, minting MOR with it, selling it for more stkCAKE and repeating the process until the desired leverage ratio is reached.

In this example if the user is leveraged 5x their portfolio value would go up and down 5x more than without leverage and they would be earning a net 560% annualized yield instead of 120%, if you are bullish on CAKE and know how to manage your risk to avoid liquidations this would be a no brainer.

MOR can also be used to borrow at cheaper rates than you would get if you were to borrow BUSD or another stablecoin from another protocol.

How does MOR benefit the GrowthDeFi Ecosystem?

MOR generates profits for buybacking WHEAT and GRO in four ways:

1-Mint/Redeem Fees:

Whenever MOR is minted with a stablecoin or is redeemed for one a small fee is charged.

2-Stability Fees:

Stability fees are the borrow rate that users pay for minting MOR with their collateral.

3-Liquidation Buffer:

Whenever a user is liquidated more MOR is burnt than the amount that was minted when the user opened up the position, this increases the system surplus.

These three ways increase the system surplus which in the end can be used to mint MOR and auction it to burn WHEAT and GRO.

4-Vault Performance Fees:

As mentioned above with the stkCAKE as collateral example some WHEAT vault tokens would be supported as collateral, this means that WHEAT and GRO would also benefit from the performance fees generated from these vaults.

MOR also benefits gROOT since it’d eventually be supported as a collateral (allowing the gROOT treasury to mint MOR using gROOT as collateral and generating extra profits with it).

It also allows the treasury to do higher yield strategies like the one mentioned above for stkCAKE.

We’ll be updating more about MOR as development progresses.

If you have any questions feel free to join our Telegram and ask.

Leveraging the power of DeFi protocols to maximize capital efficiency & value