It’s been a while since we made a proposal for the community. 2022 and 2023 have undoubtedly been super challenging for us as a community and as a project.
However, brighter days are ahead of us, and we’re super excited to share that we have still made it here and that, as promised, we are going to deliver as a project.
This document showcases the plans for our new stablecoin (name under embargo) and the new vision for MAHA.
A Landscape Overview
To grow a stablecoin properly, we need to find ways to provide a decent source of yield to its users. To evaluate our decisions in the design of our new stablecoin and how we capture yield, we have looked at various projects and patterns in the space.
Ethena
Ethena is a fantastic case study for us to explore due to its recent growth in the last few months. The main criticism of Ethena is that USDe acquires most of its yield from the interest rates charged on the perp markets from various CEXs. The yield from this strategy offers a much higher multiple, but its trade-off is that it is incredibly centralized and works only in a bull market when funding rates are favorable.
Despite this, Ethena has grown widely regarding TVL due to its ability to offer high yields (in some cases, 40-50%) due to the funding payments from leverage perp traders.
Our learning from Ethena is that to grow a stablecoin sustainably; we should find an adequate, scalable, and sustainable source of yield.
Prisma Finance
Prisma recently launched ULTRA, an LRT-backed stablecoin. Despite the hack that happened to Prisma Finance back in January 2024, the interest rates charged by ULTRA are absurdly high (up to 15% borrowing fees).
Interest fees for borrowing ULTRA against rsETH is 15%
Interest fees for borrowing ULTRA against rsETH is 15%
However, unlike Ethena, Primsa finance is entirely decentralized, but it has failed to scale successfully (We believe due to its high borrowing rates).
In summary, the yield for ULTRA comes from LRTs, but it has not scaled correctly.
LRTs
LRTs are the most exciting thing to happen in the space recently. With the growth of Eignelayer and the subsequent LRT projects, we have seen the birth of highly liquid ETH-correlated assets such as Ether.fi, Renzo, Kelp DAO, and more.
LRTs are backed by ETH and yield-bearing, allowing users to earn an extra yield from the EigenLayer protocol via restaking.
Crypto/DeFi in General
While Crypto/DeFi have both come a long way, one thing that has stayed the same is the massive demand for leverage and yield.
Users are always looking for ways to be degenerate, find access to more yield, and leverage on positions with the lowest possible costs.
In the sections below, we design our stablecoin to cater to these needs.
Building a LRT-focused stablecoin and answering the question of yield
As summarized above, there are 3-4 sources of yield that we can choose from:
- RWA yield
- Over-collateralized lending on BTC and ETH
- Perpetual funding and the basis in futures
- LRTs or LSDs
To make the most out of the landscape above, we are super excited to introduce the creation of MAHA’s LRT-focused stablecoin for multiple reasons.
- LRT yield is scalable: Even at 1 billion or 10 billion dollars of TVL, we can expect the exact yield from LRTs to all stablecoin minters.
- LRT yield is real: The yield from LRTs comes from restaking and the EigenLayer infrastructure, the demand for which comes from AVS and other L2s. So, as usage of L2s and the ETH mainnet increases, LRT yield will also increase.
- LRT yield is decentralized: LRTs operate on a decentralized architecture, and by proxy, we can keep our stablecoin decentralized, unlike Ethena.
- LRTs provide a lot of incentives: A lot of the LRTs have various point systems and incentives that they pass down to their holders and by proxy dApps as well. In some cases, protocols can even benefit from a boost in points based on usage.
- Demand for low-interest rate borrowing: Users actively want to leverage their LRT positions without paying high-interest fees. Stability in interest fees makes it even more attractive for users to borrow against LRTs.
The three problems we can solve in this direction are:
- Create a stable, real, and attractive source of yield to attract users to our stablecoin
- Cater to a rising demand for borrowing against LRTs
- Offer a stable borrowing option to LRT holders who want to leverage without paying high fees
We will document the entire architecture for our stablecoin in later posts.
Incentive Model
Incentives are a growth mechanism. While we don’t like incentivizing growth to understand the platform’s real usage, we see it as a way to bootstrap liquidity for a protocol.
To incentivize liquidity and growth for the protocol, we propose the veTokenomics design, which is similar to Aerodrome/Velodrome, to apply to our governance and stablecoin tokens.
Revenue feedback loop for MAHA will similar to Aerodrome
In this model, the following things take place:
- Users can stake their stablecoin into a stability pool for stable minimal rewards.
- Users can stake the stablecoin/USDC LP tokens for MAHA emissions. MAHA emissions go through a 1-month vesting.
- Users who stake MAHA vote on where emissions will go - Emissions Voting.
- Borrowing fees earned from the protocol will be used to pay bribes to MAHA holders to vote on various gauges.
Revenue Model
To fuel the protocol’s growth, we need to carefully consider some sources of revenue that we can use to scale the protocol properly.
Revenue shows that there’s fundamentally enough demand for a protocol that users are willing to pay fees for, but it also funds further growth for the protocol if managed well.
There are two sources of revenue we expect to generate with our new stablecoin:
- Interest payments from borrowing fees from users who borrow with their LRTs: Whenever a user borrows our stablecoin with their LRT tokens as collateral, we’ll charge a 0-1% fixed interest fee per annum. This fee is far lower than other options in the market (Aave, Morpho, Prisma, etc.)
- Trading fees: As a stablecoin one of the most lucrative form of revenue is trading fees. A 1% uniswap pool with a $1mn daily trading volume would generate the protocol $10k in daily revenue. A well-traded stablecoin should ideally generate a lot of trading fees, which can be redirected back to the DAO.
For sometime, the fees generated would be redirected to the treasury to focus on growth and other initiatives. After the initial growth phase, the fees will be distributed directly to the MAHA stakers and the DAO.
A Change in Narrative
We are also shifting MAHA’s narrative from fighting inflation to focusing on LRTs and delivering a yield-bearing stablecoin.
Fighting inflation as a narrative had a few issues from the get-go.
- Inflation is poorly understood: Most people think the CPI just calculates inflation, but in reality, the CPI itself is subjective. While the M1 supply in the US economy has more than tripled (300%+) due to COVID and stimulus cheques, inflation staying at anything less than 10% is just a joke.
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USD Inflation does not apply to all nations: Not every country uses the dollar as its native trade currency. Since we live in a global economy where goods and currencies are traded freely, one currency’s purchasing power and inflation are very different from the US dollar’s. This means that whatever the inflation rate is for someone holding a US dollar would mean nothing to someone living in a nation operating on Euros or Yuan.
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Acceptance of a new currency is hard. The biggest challenge we faced when creating ARTH was getting people to understand and actually trade it or use it as a store of value.
Acceptance of ARTH was tough, and non-crypto users needed help digesting the price mechanics of something like ARTH.
For these reasons, the narrative of a yield-bearing stablecoin pegged to the dollar works far better than creating a new currency peg altogether.
As long as the yield we offer on the stablecoin is higher than the CPI rate or (if possible) the growth of the money supply, we can fight inflation as well.
Timeline
The rebrand and execution is estimated to take 4-5 months, with the new website unveiling in the first month. Within this timeframe, we expect to finish the protocol and start bootstrapping the growth.
We won’t put a set date in place, as the timeline can always get shifted one way or the other. But this includes the following:
- Completion of the new designs
- Completion of the frontend
- Audits for the new stablecoin codebase and MAHA governance
- A public beta (testnet) with the community
The biggest variable in the timeline is the duration of the audits, as we don’t want to compromise on or hastily complete them.
Growth Action Plan
To execute the growth plan, we intend to do the following.
- Work with the various LRT platforms to get boosted points for users who use their LRTs to mint the stablecoin.
- Provide a points system to airdrop MAHA to users who provide value to the ecosystem, similar to the Zero Gravity points system.
- Keep borrowing fees to 0% for the first six months or when the protocol has achieved initial growth. After this period, we’d increase the borrowing fee to 1% per annum, which is still far less than the competition.
Conclusion
It’s no secret that we love lending 
.
We did that with ZeroLend as a lending protocol and scaled it to the 10th largest lending protocol, and we will do it again with MAHA. We’ve learned a lot in the last 2-3 years and now look to apply what we learned for MAHA.
We’re super excited to execute this roadmap with the community and look forward to your feedback.