General
What is Mustang Finance?
Mustang Finance is a decentralized borrowing protocol that lets users deposit WETH, tBTC, SAGA, stATOM, KING, yETH, and yUSD as collateral, and mint the stablecoin MUST at an interest rate depositors choose. Mustang Finance is a Liquity V2 fork built specifically for the Saga EVM.
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
To understand Mustang Finance it's helpful to understand Liquity
Liquity V1 was a 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 |
|---|---|
| Decentralized | User-set interest rates – more control over your borrowing cost. |
| 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
| Key Differences | Description |
|---|---|
| Blockchain | Saga EVM (Chain ID: 5464) vs Ethereum Mainnet |
| Collateral Types | WETH, tBTC, SAGA, stATOM, KING, yETH, yUSD vs ETH, wstETH, rETH (Liquity V2) |
| No Gas Costs | Transactions on Saga EVM don't require gas or a gas deposit |
| Governance | More protocol parameters are governable: fees, LTV requirements, minimum debt, minimum interest rate, ability to add/remove collateral branches |
| Security Features | Additional security features including debt limits per collateral type |
| EVM Version | Built for Saga's EVM version vs Cancun EVM (Liquity V2) |
Does Mustang Finance have governance?
Mustang Finance has governance that can manage specific protocol parameters including:
- Distributing Protocol Liquidity Incentives (PIL)
- Directing protocol revenue to external initiatives
- Managing fees, LTV requirements, and minimum debt thresholds
- Updating collateral debt limits
- Adding or removing collateral branches via the Collateral Registry
Governance operates with a manual incentive direction system, replacing Liquity's original governance model.
Other Helpful Resources:
Mustang Github: https://github.com/MustangProtocol/must-finance
Block explorer for Saga EVM: https://sagaevm.sagaexplorer.io/
Saga Dev docs: https://docs.saga.xyz/
Saga EVM Subgraphs from Goldsky: https://goldsky.com/products/subgraphs
Squid Router for bridging to Saga EVM from anywhere: https://app.squidrouter.com/
Current Saga-EVM Tellor Price Feeds: https://saga-tellor-pricefeeds.vercel.app/