FAQ

Frequently-Asked Questions about MYSO

• How is MYSO different from other lending protocols like Aave and Compound?

Today's DeFi borrowing and lending protocols all take a liquidation-centered design approach, meaning that they trigger liquidations as soon as a target LTV is breached. This design approach comes with several drawbacks:

• Periods of market turmoil intrinsically bring about mass liquidations, which result in millions of $ worth of liquidation penalty fees. In turn, this creates financial contagion risk, as cascading liquidations and increasing sell pressure pose a systemic risk to the overall crypto market.

• Liquidation related incentives are typically skewed towards liquidators causing so called “over-liquidations”. Moreover, they create MEV with well-known negative externalities

• Operational overhead is extensive when utilizing available DeFi protocols — borrowers need to constantly monitor health/LTV ratios and adjust positions.

• Oracles and precise price feeds are necessary to accurately price assets and trigger liquidations — today’s borrowing protocols are thus susceptible to oracle exploits and flash crash risk. This places a great deal of trust and reliance on proper oracle functionality and makes markets only available for assets (and blockchains) which have reliable oracle oversight.

MYSO's pool architecture and overall protocol design also deviates from that of Aave and other traditional lending protocols in several ways, including our isolated-pool approach and ability to support long-tail assets.

• Are my funds locked during the duration of a ZLL?

From the borrower side, you are able to reclaim your collateral at any point prior to expiry of the loan if you repay the loan amount plus some repayment fee. From the LP side, your lent funds are locked until borrowers repay their loans, at which point you can claim your pro-rata share of pool proceeds or left collateral.

• How is the interest rate determined for a ZLL?

When launching a pool on MYSO, there are a number of parameters that a pool creator can set, one of which defines the pool’s interest rate model.

The interest rate model for every MYSO pool contains two rates and liquidity bounds (r1, r2) and (L1, L2) that define both the upper and lower bounds of applicable interest rates and pool liquidity. This allows the applicable pool APR to decrease the more liquidity is added by LPs and increase the more liquidity is used i.e., level of pool utilization.

It's important to note that rates can never fall below r2, providing LPs with a guaranteed lower bound at which their capital is lent to borrowers.

• Why is liquidity provisioning (LPing) gated and when will it be open to all users?

Providing liquidity is currently gated on MYSO as we test new pools and determine appropriate lending conditions - as risk is transferred from borrowers to lenders with Zero-Liquidation Loans, it is important for us to ensure that lenders can be properly serviced and supported.

MYSO is currently undergoing early market validation, during which we are consistently evaluating new pools and offerings to provide the best user experience. Despite the ongoing testing and validation efforts, a specific date for the availability of liquidity provision has not been determined yet. However, we are striving to phase out gated access and open up LPing to all users in the near future.

• What's the difference between MYSO v1 and v1.1?

The MYSO v1.1 upgrade allows to test borrowing demand under various interest rate curve and maxLoanPerColl parameterizations. Moreover, the v1.1 comes with significantly improved capital efficiency. More specifically, the LTV decay kicks in only after 90% pool utilization, allowing for better borrowing terms and higher capital utilization.

With v1.1, a MYSO pool creator is able to adjust pool parameters after a pool has already been deployed. This allows for greater efficiency in adjusting to market conditions and pool utilization, allowing for a pool creator to have greater control over prospective borrowing costs, rate fluctuations, etc.

• Are there any plans for MYSO governance?

Community involvement is a core principle of DeFi as it ensures that a protocol can align with the needs and interests of its users. MYSO recognizes the importance of community engagement and has actively involved the community in different feedback iterations for our private and public testnet. We are committed to continuously seeking out and incorporating the perspectives of our community members to improve our protocol. Thus, we are exploring the launch of on-chain governance for MYSO in the future, though a concrete launch date has not been established.

• Are there plans to go multichain/expansion to ETH L2s?

MYSO is focusing on supporting chains that have thriving DeFi primitives and opportunities for growth. Our contracts are EVM-compatible, which allows us to explore all possible options. As we are still in the market validation phase of our growth timeline, we are constantly on the lookout for opportunities for expansion. In line with this, we recently launched MYSO on Arbitrum testnet and will soon launch our first pools on Arbitrum mainnet!