miMatic: a Gift to the Polygon Community
The greatest gift you have to give is that of self-transformation
- miMatic is the first stablecoin based on Polygon
- miMatic is backed by Matic tokens
- Qi is the governance token for Mai Finance
- Stake Qi to participate in voting and receive rewards from the Mai Finance treasury
Stablecoins are pegged to stable assets like the dollar in order to keep the price of the coins stable. The benefits of this stability are numerous, since predictable coins allow for businesses and individuals to make long-term financing plans around them. There are several ways to build this pegging mechanism. USDC, Dai, and USDT are some examples of previous projects.
MiToken is the stablecoin designed by Mai Finance. The Mai Finance project is made up of two tokens: miTokens and Qi tokens. MiToken is the stablecoin and Qi is the governance token.
Both tokens can be purchased on exchanges. MiTokens are created when a user locks up tokens in a vault as collateral to mint MiTokens. When users lock tokens, they receive miTokens that have a soft peg to the dollar. For example, if a user locks up Matic tokens, they will mint miMatic. Users can then use the dollar-pegged miMatic tokens while maintaining ownership of the locked Matic tokens.
Given the volatility of cryptocurrencies, users are encouraged to overcollaterize their vaults. That occurs when the value of tokens locked by a user is greater than the value of the stablecoins minted. Collateral to debt ratio describes the relationship between how much collateral is locked in a vault and how many miTokens are minted.
Maintaining the peg
The initial minimum collateral to debt ratio will be 150% (the collateral locked will have to be worth at least 150% of the value of the minted tokens). If the value of the collateral falls below the 150% minimum ratio, other users will be able to buy the collateral at a discounted price. The user who minted the miToken will lose their collateral but keep their miTokens. This ensures that one miToken will always be redeemable for $1-worth of the tokens.
MiTokens are burnt when they are redeemed. MiTokens are destroyed because they are only backed by debt. So when that debt is removed, there is no need for the miToken.
Users are charged a small fee when miTokens are repaid, much like a bank charges customers for loans. This fee, which is paid in collateral tokens, is sent to the network’s treasury to maintain the stablecoin apparatus.
Who makes decisions on the Protocol?
First, you have to understand what a decentralized autonomous organization (“DAO”) is. The idea is that many people can vote to make decisions on a network. The DAO is governed by users that hold Mai Finance’s governance token: Qi. They get to decide on things like the interest rate, collateral to debt ratio minimums, tokens accepted as collateral, and much more. In order to participate in voting, Qi holders have to stake their Qi. Staking Qi creates xQi. xQi holders can not only vote on DAO decisions, but also receive rewards for holding xQi.
How to get involved