Draft SIP: The Sovryn Mynt

Dear Sovryns,

I am pleased to be able to present a draft SIP for the Bootstrap event and deployment of the Sovryn Mynt - the aggregator contract to create Sovryn BTC-backed stablecoins.

As I have frequently expressed, I believe BTC-backed stability is a game changer for making Bitcoin useful for everyday economic activity. I also think having a robust, decentralized stablecoin will help keep Sovryn sovereign.

Looking forward to the conversation:

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Am I understanding this correctly? The value of the “B-stable” is pegged to USD, but backed by BTC. Does that mean the B-stable is minted by depositing BTC into the protocol or other BTC backed tokens?

2 things: why don’t we draw the same fee models that aggregators like mUSD or XUSD have?

I think if we want to fundraise for a new initiative, that there should be more thought put into the business model.

Mynt is so core to Sovryn’s mission that one would think it would be a first party product, and I think it is within SOV bitocracy’s interests and bandwidth to govern it. The responsibility of Mynt in governing stablecoins from other projects might be too broad for a subprotocol.

For something like Zero, it’s a more focused project that is better fit for delegation to a separate Bitocracy.

In short

  • let’s add a business model
  • let’s keep it to $SOV
  • if we need funds, maybe we can take some of the proceeds of a Zero origins sale and devote to building Mynt, but I already foresee a counter to this that it’s not Zerocracy’s responsibility
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@Ingalandia You are welcome to propose the business model you refer to. How would you like to see it applied?

It is not always obvious how things will be monetized before the ecosystem that grows around them grows. In fact, with new systes or technology paradigms it is frequently the case that nobody knows how things will be monetized.

Facebook, Google and even Amazon all went for years without a clear path to sustainable monetization.

@IllusiveGoose Sovryn Mynt will not hold BTC directly, it will hold “aggregates” - tokens that are wrappers for the various ways BTC is collaterlized. That said, the user won’t typically see this - they will simply use the B-Stable token and redeem for BTC.

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Great to see more details on Mynt! Some questions:

  • One thing that can be a bit confusing I think is that the produced stablecoin is described as ‘Bitcoin-backed’ but the collateral with which the B-stable is minted consists itself of stablecoins (in a particular mix). If Bitcoin is not the collateral, how does BTC back the B-stable? Maybe a few more sentences on the aggregators would be good.

  • There is a very clear explanation on how Mynt relates to MoC, but there is no mention of BabelFish. Don’t we already have a stablecoin aggregator with BabelFish?

  • The discussion of the need for it to be a sub-protocol doesn’t convince me, personally. Mynt will provide no revenue and contributors to the Bootstrap event may turn out to be donations. If few are willing to do this, then few can be involved in governance through the MYNT token, creating poor governance. It also seems to me that the governance needs and decisions are perfectly manageable. The need for it being a sub-protocol is undermotivated (illustrating one of the more general worries I have about sub-protocols).

To try to be constructive as well, curious to hear the thoughts on the following alternatives to bringing it as a sub-protocol:

  • Alternative A: we simply launch it now as part of Sovryn, we separately vote for SOV funds to be given to the devs as donation. If need be, we can always still introduce a sub-protocol for it.
  • Alternative B: if Zero does create more revenue and has more governance needs, perhaps we could bundle Mynt and Zero in one sub-protocol? This might also make sense given that their usages are so intertwined.

Exciting stuff, looking forward to this taking shape!

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I have no idea how Strike earns revenue or its business plan but maybe Sovryn Mynt could be something like Strike but without the KYC, but focusing on payments for bitcoin backed stablecoins using the lightning network. Not sure how feasible all this is. Just an idea. Think its time to give Jack Mallers a call lol.

Lets be honest the next evolution of Strike Payments who are already changing the paradigm for payments is a Strike without KYC requirements. A decentralised Strike without KYC governed by Mynt token holders, that would be a dream. As i said probably not feasible atm but one day could be.

Love to hear your thoughts on this.

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Very exciting SIP, Mynt will be a great addition to Sovryn and a very important one.

there are pros and cons for a sub-dao with governance tokens or for direct governance by the sov bitcocracy.
I think it is very good that this SIP presents and discusses these possibilities.

I would prefer a “trial period” for Mynt under the SOV bitcocracy with a Binding election in [1-6] months after protocol start for spinning off into a sub-dao with a bonding curve and the Mynt token. Financial support for the developers over this period must of course also be voted on.

If the Mynt team can credibly demonstrate that they can launch a sub-dao of reasonable size despite little expectation of profit in the first few months, I would also support this with my vote.
Personally, as a sov staker, I would be happy to be involved in governance for mynt, but probably won’t purchase any mynt tokens for the time being, should that be necessary.

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@MattBrad What do you mean by

like Stike without the KYC

I understand Stike as a payment processing & remittance network on top of lightning with plans to monetize small processing fees. Not a 1-1 to a bitcoin backed stablecoin that Sovryn Mynt token is solving.

What considerations do you see missing in the SIP draft?

As we advance the tech integrating Sovryn with LN, the ability to transfer stables over lightening becomes a real possibility.

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I was just being a visionary, think of way Sovryn Mynt sub-protocol could generate revenue for mynt holders. Just my two cents.

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Hi Yago, this is my interpretation. Please correct me where I am wrong.

What I understand is that it is an aggregation of stables to build a superstable. There are requirements: the aggregates necessarily have to have bitcoin collateral. Moreover, it’s not something Babelfish would be working on, because XUSD would be an aggregate of USDT, DAI, USDC, BUSD, and others, (including DOC) . This is the reason why Sovryn creates it?

Doc is the only stable that so far meets the “rules” to be in that MYNT aggregate. Those conditions are not being fulfilled by XUSD as it is “contaminated” by the other non-collateralised stables in BTC. And Zero and others will arrive and join DOC. In that case, MYNT’s “superstable” would have high purity, due to the quality of each and all its aggregates.

On the other hand, if I understand correctly, a stable could only (?) be in Sovryn within the MYNT aggregate or within XUSD. For example, DOC could only exist in Sovryn as an aggregate of MYNT (as it is in XUSD of Babelfish), but if the SIP is approved, would it not have its own autonomous life in the protocol outside the aggregates as it has until now, or could it continue to be available as it is now (trading, pools, lending…)?

Finally, I would like to confirm whether MYNT would allow in the future, as necessary, the creation of non-FIAT stables.

I’m really looking forward to using the ZERO protocol, now trying to understand how Mynt fits into the picture, so a couple of quesitons.

Why are not ZERO and Mynt joined into the same protocol? It seems to me that in order for the ZERO protocol to thrive, ZUSD must develop diverse use cases beyond Mynt and thrive on it’s own as a bitcoin backed stable currency. However, the Draft SIP seems to infer that the ZUSD coin may be more of an inter-protocol necessity as “ZUSD token will not be needed by the borrower, as it will automatically generate the B.Stables minted by the Sovryn Mynt”. Is it possible to combine the protocols and just mint the B.Stables desired instead of ZUSD?

The primary motivation in the draft SIP described borrowing for fiat-denominated needs. What is the expected path to fiat currency utilizing these protocols? It would seem ultimately, I borrow ZUSD against my bitcoin, send to CEX, and convert to fiat. However, if ZUSD is primarily used to fund Mynt, maybe this is not the gameplan as there may not be sufficient non-mynt liquidity? Can you articulate the vision thru to fiat.

One other thought for combining the protocols is that it makes the bitcoin-backed argument much better. Clearly ZUSD is bitcoin-backed in this model, however, the B.Stables seem to be indirectly bitcoin backed as, if I read correctly, the bitcoin is not held in the Mynt protocol, but in the ZERO protocol so the B.Stables are backed by ZUSD (and DOC). While you might be able to make an argument to look through ZUSD and DOC to bitcoin, every additional step introduces the potential for differences in governance incentives, additional protocol risks, etc. so I think if at all possible, it would be better if they were one protocol.

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Your last paragraph would be my reasoning as to why these should be separate protocols. First, in a practical sense, these are indeed two separate protocols. And second, as your post points out, they have differing incentives. Mynt will seek to constantly improve and add the methods of stability employed (B.stables), while Zero presents a single method and indeed may seek to expand by creating new tokens based on different asset types (eg. SOV).

As for the question of Mynt being backed by aggregates rather than Bitcoin, I find that persuasive only in the most superficial sense. Its like saying the the top of the building is supported by the middle of building, not be the foundations. Or like saying that my laptop connects to my router, not to the internet. Or that the park is lit not by the sun, but by the atmosphere.

Just a few thoughts from someone far less technically capable than some of you but I have a pretty robust understanding of the crypto space at large and follow many projects. That said, my heaviest personal investment is by far in SOV so I wish you all the success in the world.

But I’m not a maximalist, I just think BTC has its own unique value prop, and if it gets the right development on RSK could potentially acquire a decent portion of the market share of the DeFi space. People will likely circle back to BTC again in the bear market.

When I read the idea about backing it by a set of different stablecoins this sounds genius. But there are other “geniuses” floating around the crypto space and many competitive ideas that have by now been made public knowledge. I think we should carefully examine them all then improve upon them with an edge and the kind of core philosophy Sovryn has.

So the first question that comes to my mind, is has this been done? Have top competitors stablecoin projects bee seriously examined?

The two that come to mind which seem the most innovative are UST from LUNA and MIM from the SPELL/TIME/ICE guys. Their ideas are gaining a lot of momentum.

Having a stablecoin backed by BTC but pegged to the dollar is fine, as long as the dollar is worth anything. Then what when that house of cards falls?

Have you considered the Olympus DAO’s concept of backing each OHM by DAI but not pegging it, but doing that with sats?

Something like this for SOV itself would bring added utility and value to SOV.

Just my two sats.

Hope it is helpful in some way.

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If I am not mistaken, OHM is pegged to DAI/USD.

Ohm is “backed” but not necessarily “pegged” to 1 DAI/USD. For every 1 Ohm that is minted there must be at least 1 Dai backing it. In other words,

1 Ohm >= 1 Dai

Since I was involved in defining how the bonding curve works, here is some relevant information about MYNT and its relationship to the bootstrap event and bonding curve that did not make it into the final SIP version.

Bootstrap Supply
P / c = W where P = Participating SOV , c = bootstrap conversion rate (0.01) , and W = Bootstrap Supply . P is the amount of SOV that participates in the bootstrap, if you want to try to calculate the final values ahead of time you can put any hypothetical number you want here.

Incentive Supply
W * m / (1 - m) = X MYNT will be generated in addition to the Bootstrap Supply and sent to the Exchequer Multisig for further distribution according to the table in SIP-0037, where W = Bootstrap Supply , m = Incentive Supply multiplier (0.1575) , and X = Incentive Supply

Bonding curve reserve
(Y * c) * r = Z SOV from the bootstrap event will be used as reserves for the bonding curve, where Y = Initial MYNT Supply (Bootstrap Supply + Incentive Supply) , c = bootstrap conversion rate (0.01) , r = reserve ratio (0.4) , and Z = Bonding curve reserve .

Treasury reserve
P - Z = T SOV from the bootstrap event will be sent to the Sovryn Treasury as a reserve, to be used for supporting Sovryn Mynt, where P = Participating SOV , Z = Bonding curve reserve , and T = Treasury reserve

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i think with the Defi on Bitcoin, all of the token be released that should anchor on the Bitcoin ( lock some of Bitcoin and release token ).

it is good for the Bitcoin’s Defi Ecosystem for the longterm