What is XMS&USDM

The USD stablecoin of the Mars Ecosystem is USD-Mars (USDM), and the governance token is Mars Ecosystem Token (XMS).

What is the XMS & USDM?

The USD stablecoin of the Mars Ecosystem is USD-Mars (USDM), and the governance token is Mars Ecosystem Token (XMS).

What is the core design of USDM?

Minting: USDM is generated through the minting mechanism. Users can get 1 USDM by placing $1 worth of any Mars Treasury whitelist assets into the Mars Treasury at any time.

Redeeming: USDM is destroyed through the redemption mechanism. Users receive $1 worth of Mars Ecosystem token (XMS) by returning 1 USDM into Mars Treasury at any time.

Mintage Control: The maximum circulating supply of USDM is determined & controlled by the market cap of XMS.

Every 3 minutes, the system calculates the average market cap of XMS over the prior 3 minutes and divides this average market cap by a parameter called the XMS Support Ratio. The support ratio is to be determined by the protocol governance. The number obtained defines the maximum USDM Supply Cap. In the next 3 minutes, users can only mint USDM up to this USDM Supply Cap.

For example, assuming that the average market cap of XMS in the past 3 minutes is 250 million USD and the XMS Support Ratio is 250%, then the USDM Supply Cap is 100 million. In the next 3 minutes, users can only mint USDM up to 100 million. If the current USDM circulating supply is 50 million, users can only mint 50 million new USDM at most as this would lead to the circulating supply of USDM to reach the USDM Supply Cap of 100 million.

Why is USDM price-stable?

The design mechanism of the Mars Ecosystem and the market behavior of users combined to ensure the price stability of the USDM.

When USDM market price > $1: Arbitrageurs can use $1 worth of the Mars Treasury whitelisted assets (such as BTC) to mint 1 USDM in the Mars Treasury. They can then sell the newly minted USDM in the market to make a profit. This arbitrage action will quickly bring the market price of USDM back to $1.

hen USDM market price < $1: Arbitrageurs can buy 1 USDM in the market for less than $1 and then redeem it in the Mars Treasury to obtain $1 worth of XMS. The redeemed XMS can be sold in the market to make a profit. As long as XMS has sufficient liquidity in the market, this arbitrage action will quickly bring the market price of USDM back to $1

Why XMS can efficiently capture the economic value of the protocol?

The value capture model of Mars Ecosystem's governance token XMS includes the following parts:

Mintage control mechanism.

Mars Treasury control rights value.

The transaction fees generated at the Mars DeFi protocols. When users trade on Mars DeFi protocols such as Mars Swap and Mars StableSwap, they will be charged transaction fees. Part of these transaction fees will be assigned to XMS holders.

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