Table of Contents:

· Justin Sun minted over $60 million of mkUSD, and the issuance of PRISM tokens sparked heated discussions

· After the issuance of PRISM tokens, mkUSD decoupled, and the team continued to raise the debt ceiling

· Points system, retroactive airdrops, Prisma’s frequent actions before issuing coins

BlockBeats News, on November 6, the community of the LSD stablecoin protocol Prisma Finance has launched a second improvement proposal PIP-002, which aims to increase the interest rate of all collateral debts on the platform from the current 1% to 2 %, if the proposal is passed, it will increase protocol revenue without materially affecting risk.

The vote will end on November 9, and the current support rate is 99.04%.

Justin Sun minted more than $60 million in mkUSD, and the issuance of PRISM tokens sparked heated discussions

On November 2, Prisma Finance's governance token PRISMA was officially launched. At the same time, the address associated with Justin Sun deposited $112 million worth of wstETH into Prisma Finance, and minted more than $60 million in stablecoin mkUSD. Currently, the address holds over 60% of the Prisma wstETH pool.

The next day, according to Nansen 2 data, mkUSD ranked second on the Smart Money 24-hour list with an inflow of approximately US$22 million.

mkUSD is a stablecoin with income, and most users hold mkUSD to obtain the annual interest rate provided by holding mkUSD. However, crypto researcher 0xLoki (@Loki_Zeng) tweeted that "I really can't think of a reason why Prisma Finance won't collapse." He pointed out that "based on 1% mint fee, 39.55% apy, and 50% penalty rate, if Prisma does not fall, it will take 20 days to recover the cost by mining wsteth."

PRISMA is similar to CRV in voting rights binding and adjustment mechanisms, except that the maximum lock-up period of PRISMA is one year. Users can earn PRISMA by minting mkUSD, maintaining active loans, or depositing in stable pools.

It is reported that the total amount of PRISMA is 300 million, of which 62% (186 million PRISMA) are used by Prisma DAO to incentivize certain actions within the Prisma protocol and the liquidity of the liquidity pool; 20% (60 million PRISMA) are allocated to core contributors, and these tokens will be unlocked linearly for 12 months from the genesis; 10% (30 million PRISMA) are allocated to early supporters, and 5% (15 million PRISMA) will be stored in the Prisma DAO treasury; 3% (9 million PRISMA) will be allocated to veCRV voters and Prisma points holders.

PRISMA allows users to lock repeatedly, increasing voting power with each lock cycle, and the linearly decreasing voting power mechanism ensures that voting power is at its highest state when locking and voting. The purpose of locking is to maximize voting power and obtain the highest interest rate, which is desirable for both retail and commercial users.

For different user groups, retail users hold stETH and hope to earn interest and investment income, while enterprises want to hold EigenLSD or Puffer traders for risk management purposes. In addition to providing liquidity to other users, the latter can also stake their Puffer tokens in Prisma to gain more voting rights and obtain higher interest rates.

Related reading: "Puffer Finance: LSDfi Protocol to Lower the Barrier to Entry for Independent Validators"

Each LSD-backed stablecoin provides users with $ETH income, however, since the $mkUSD pool is deployed on Curve, users who deposit mkUSD can receive transaction fees, CRV, CVX and PRISMA rewards. However, 0xLoki believes that the interest rate of mkUSD is too low, there is room for arbitrage, and it may continue to de-peg slightly.

After the issuance of PRISM tokens, mkUSD de-pegged, and the team continued to raise the debt ceiling

As early as August 29, Prisma Finance stated on its social platform that it had successfully purchased and locked up 2 million CRVs. This acquisition will enhance the liquidity of mkUSD before the launch of Prisma. Now that Prisma has been launched for less than a week, according to coingecko data, the transaction volume of mkUSD has dropped by about 1/5 from the peak on November 3, and the price has also de-pegged slightly.

Three days ago, Prisma Finance's official Twitter account announced the launch of its first proposal, PIP-001, which aims to increase the debt ceiling of Lido Finance's wstETH treasury from the current 100 million mkUSD to 200 million mkUSD, allowing more users to participate in minting mkUSD.

The one-day proposal vote passed with 100% approval. Prisma Finance posted on social media stating that the wstETH debt ceiling was increased at around 7 a.m. Beijing time on November 5.

Prisma Finance’s move to continuously raise the debt ceiling for collateral was indicated as early as September 1, when it had just announced that the mainnet was officially launched on Ethereum.

Prisma initially supported wstETH, cbETH, rETH, and sfrxETH as collateral. The total amount of mkUSD that can be minted with wstETH, rETH, and sfrxETH collateral is $6 million each, while the total amount of mkUSD that can be minted with cbETH collateral is $2 million. Prisma sets the initial interest rate to 0% to encourage early participants.

Two weeks after the mainnet was launched, Prisma Finance officially announced that the debt ceiling of wstETH, rETH, and sfrxETH has been increased from 6 million mkUSD to 9 million mkUSD, and the debt ceiling of cbETH has been increased from 2 million mkUSD to 3 million mkUSD.

As of September 15, wstETH reached its debt ceiling. In addition, the total debt of the wstETH, rETH, cbETH and sfrxETH vaults reached a hard cap of $30 million after the debt ceiling was raised, with a total collateral value of $55.87 million.

On November 1, Prisma Finance announced that it would modify the debt ceiling of 4 collateral assets before the token was launched, reducing the minimum collateral ratio of wstETH, rETH and sfrxETH. At the same time, the lending rate will be set at 1% before PRISMA is launched.

Points system, retroactive airdrop, Prisma has made frequent moves before issuing coins

BlockBeats reported on June 1 that LSD stablecoin protocol Prisma Finance completed a round of financing. The specific amount was not disclosed. Curve Finance founder Michael Egorov, Convex Finance founder C2tP, FRAX Finance, Coingecko founder, OKX Ventures, GBV, The Block's Eden research director Adam Cochran, and many other founders and institutions participated in the investment.

Prisma supports the minting of stablecoins by mortgaging various Ethereum liquidity pledge derivatives (Frax, Lido, Rocket Pool, Binance and Coinbase). And Prisma's overcollateralization model supports automatic repayment, allowing the use of Ethereum staking income to automatically repay debts.

On September 11, Prisma Finance launched the Prisma points system to reward user contributions during the Prisma Guardian launch. Prisma points measure and focus on the on-chain contributions of early Prisma users. Points will be mainly awarded to users who open vaults and mint mkUSD, but other behaviors that contribute to the Prisma ecosystem will also be rewarded.

On November 2, Prisma Finance officially launched the governance token PRISMA on the Ethereum mainnet and announced the token contract address. According to the information on the chain, the total amount of PRISMA is 300 million. As of press time, PRISMA is quoted at $4.47.

On November 5, Prisma Finance announced the launch of Prisma retroactive airdrops, and the locked PRISMA tokens will be airdropped to Prisma points holders and addresses that voted for Prisma to be included in the Curve whitelist.

The purpose of the PRISMA retroactive airdrop is to stimulate participation in Prisma on-chain governance and enable the broader community to act as responsible stewards of protocol development. Among them, veCRV voters will receive 1% of the total supply, distributed proportionally to all voters. Prisma point holders will receive 2% of the total supply, distributed to early users in proportion to their points. Prisma stated that the airdrop tokens will be locked in the form of vePRISMA, 52 weeks for veCRV holders and 26 weeks for Prisma point holders.

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