General
What is Mustang Finance?
Mustang Finance is a decentralized borrowing protocol that lets users deposit ETH, LSTs, and ARB as collateral, and mint the stablecoin MUST at an interest rate depositors choose. Mustang Finance is a friendly fork based on Liquity v2.
The main use-cases for Mustang Finance are:
- Borrow MUST
- 1-click multiply exposure to collateral assets
- Earn yield by depositing MUST in the stability pool or farming elsewhere
- Stake NERI to direct PLI (Protocol Liquidity Incentives) and earn rewards
- Stream MUST as a subscription, salary, grant, or any other kind of payment
To understand Mustang Finance it's helpful to understand Liquity
Liquity V1 was an immutable lending protocol that allowed users to take 0% interest loans on their ETH to receive $LUSD. Over the past 4 years it proved itself resilient in a variety of market conditions.
Liquity V2 is the next iteration of borrowing, allowing users to set their own interest rate, and use more tokens as collateral.
Liquity V1 vs Liquity V2
| Similarities | Differences |
|---|---|
| Immutability | User-set interest rates – more control over your borrowing cost. |
| Decentralized | New collateral types - ETH, rETH, wstETH |
| Rigorous Security | Improved redemption mechanism (lowest borrowing rate is redeemed first) |
| Redemption of stablecoins for underlying collateral maintains the $1.00 peg no matter what | Troves are now transferable |
| ETH Mainnet Only | V1’s code was free and open-sourced (FOSS), while with V2, Liquity will have its code set as a business source license (BUSL) |
Mustang Finance vs Liquity V2
| Similarities | Differences |
|---|---|
| Immutability | ETH Mainnet (Liquity V2) only vs Arbitrum Only (Mustang Finance) |
| Decentralization | Additional Collateral: sfrxETH, weETH, tETH, tBTC, COMP, and ARB |
| Redemption of stablecoins for underlying collateral maintains the $1.00 peg no matter what | Mustang Finance adds Streaming: MUST can be streamed at any rate using Superfluid. Pay anyone every second. |
| Shared Security from Friendly Forks | ARB deposited in the protocol can be delegated by Mustang Finance governance. |
| Mustang Finance adds Additional security features to allow for the other features, like debt limits | |
Does Mustang Finance have governance?
Mustang Finance is subject to minimal governance which is solely tasked with distributing Protocol Liquidity Incentives (PIL), directing 25% of the protocol's revenue to external initiatives, delegating ARB, and updating collateral debt limits. Governance can never change the fee split, update protocol parameters, mint new stablecoins, or anything else.
Other Helpful Resources:
Dune Dashboard: https://dune.com/niftyteam/nerite
Supefluid MUST streaming dashboard: https://app.superfluid.org/