KIP Draft: Partnership With mStable by adding mUSD and mBTC to the LP

Background

The rough definition of mStable’s use case is to negate counterparty risk of holding assets through the minting of mUSD or mBTC by depositing different versions of stables or BTC into their vaults and minting mUSD or mBTC. These can then be staked to a high apy or traded without slippage for other coins in the mStable pools. While I am not a huge fan of this product-market fit I do see value in adding mAssets to the KeeperDAO Liquidity pools and potentially partnering with the project.
image

Proposal

There are many directions that a partnership between mStable and KD can go here are some of my thoughts on how the tech from both projects might be the most useful to each other.

Adding assets to the Liquidity Pool

I propose that we add mUSD and mBTC to the KeeperDAO Liquidity Pools. The benefits of this include exposure to three additional stable coins through the addition of one liquidity pool. This means that Rook rewards are less fragmented between all the liquidity pools while having the benefits of adding a total of 6 assets that the Keeper bots can trade with. These new assets are for stablecoins:

  • TUSD
  • USDT
  • mUSD

The same logic applies to KeeperDAO’s exposure to 3 new BTC-based assets through the addition of one asset on those being:

  • sBTC
  • wBTC
  • mBTC

Routing of mUSD and mBTC

Currently, when a trade is performed using mUSD there is no slippage between the stable coins traded but there is a flat trading fee applied. I propose that Keeper bots be whitelisted on the mStable smart contracts to be exempt from these trading fees in return for maintaining the peg of its constituents. The reasoning behind this whitelisting is to minimize slippage when the bots use the protocol, in return mAssets have added utility by being able to be staked onto KeeperDAO and their pegs will be held more tightly.

Diversification of the treasury

Another component of this partnership could be the commitment to convert x% of our treasuries stable coin and Bitcoin balance into mUSD and mBTC respectively. These assets can then be deposited into their KeeperDAO liquidity pools. We can further diversify the treasury by trading x% of the rook in our treasury for the governance token of mStable, MTA from theirs to further decentralized the treasury of both parties.

Limitations

Routing orders thought mStable might make it impossible to effectively seize MEV due to the additional layer transaction have to go through. This can be rectified by pre-emptively burning mUSD into its most useful constituents in the backend. It is also possible that the team at mStable is not interested in a partnership with KeeperDAO.