Introduction

A brief look at MYSO and our core vision

What is MYSO?

MYSO v1 is a trust-minimized lending protocol implemented on the EVM that enables Zero-Liquidation Loans (ZLLs), which are crypto-collateralized loans without liquidations. The protocol allows borrowers to take out ZLLs through non-custodial liquidity pools, which on the other side liquidity providers (LPs) can fund. By design, since MYSO v1 doesn't involve any liquidations, LPs earn yield for bearing the risk that a loan may become undercollateralized and not be repaid. The associated risk-reward profile resembles that of an in-the-money covered call position, which is a well-known conservative yield enhancement strategy.

Rationale and Goals

The goal of the MYSO v1 protocol is twofold:

• Simplify crypto loans for borrowers by removing liquidations and associated overhead

• Provide a yield enhancement strategy for liquidity providers (LPs) to earn sustainable yield

ZLLs allow us to link these two goals together and make them complementary to each other. ZLLs act as a mutually beneficial risk transfer mechanism, in which the loan liquidation risk is transferred from the borrower to the lender, and the lender can earn yield for bearing this risk.

Zero-Liquidation Approach

The current DeFi lending landscape is dominated by protocols with liquidation-centric designs, that is, borrowers get liquidated and incur a liquidation penalty fee if the value of their collateral falls bellow a certain liquidation threshold.

Liquidation-centric borrowing systems introduce several systemic risks to the overall crypto market, including:

• Risk of cascading liquidations and over-liquidations

• Concentration risk

• Liquidation-related Maximal Extractable Value (MEV)

• Risk of oracle-related manipulations and exploits

Zero-Liquidation Loans (ZLLs) provide a novel approach to DeFi borrowing and lending that can help mitigate some of the aforementioned systemic risks and create a more robust and sustainable DeFi ecosystem.