Integrate mBASIS on Euler Base Market

[Ivan_midas]

Summary

This proposal seeks approval to list mBASIS as a collateral and borrow asset on Euler Base market. This addition will provide users with access to an innovative, delta-neutral yield-bearing strategy, enhancing the diversity and utility of Euler’s Base market.

Motivation

About mBASIS

mBASIS is a tokenized basis trading strategy designed to deliver yield across varying market conditions. By dynamically allocating notably across BTC and ETH perpetual futures, mBASIS generates consistent yield without taking on directional market exposure. Managed by a licensed asset manager, mBASIS integrates professional risk management with the composability and accessibility of DeFi.

Why mBASIS on Euler Base?

• Institutional-Grade Strategy: Provides Euler users with access to a professionally managed, delta-neutral strategy that generates yield in bull and bear markets.
• Enhanced Liquidity: Increases the utility and adoption of stable assets and other tokens within the Euler Market on Base.
• Composability: Integrates seamlessly into Euler’s DeFi ecosystem, offering users new opportunities for collateralized borrowing and lending.

Risk parameters

Loan-to-values (LTVs)

• LTV for borrowing RWA assets with mBASIS: 0.90
• LTV for borrowing ETH-denominated assets with mBASIS: 0.80
• LTV for borrowing BTC-denominated assets with mBASIS: 0.80
• LTV for borrowing mBASIS with RWA assets: 0.90
• LTV for borrowing mBASIS with ETH-denominated assets: 0.80
• LTV for borrowing mBASIS with BTC-denominated assets: 0.80

Supply & borrow caps

Given those parameters are correlated with the liquidity profile of the assets, here is a summary of mBASIS’ liquidity:

Acquiring mBASIS

mBASIS can be atomically minted seamlessly with no minimums when acquired with stablecoins like USDC.

Daily atomic limits are evolving alongside the TVL and are set at 10m mBASIS per day.

Asynchronous minting is also available, processed as soon as possible, and may take up to 7 days.

Redeeming mBASIS

mBASIS can be atomically redeemed for USDC seamlessly with no minimums.

Atomic redemptions occur through the mBASIS redemption vault. This smart contract endpoint provides investors access to two atomic liquidity sources:

1. Direct redemption using USDC set aside within the mBASIS redemption vault.
2. Redemption via mTBILL liquidity providers: Midas partners with providers who maintain on-chain mTBILL token reserves for mBASIS trades. These mTBILL tokens are then instantly redeemed for USDC through mTBILL’s deep liquidity pool.

Asynchronous redemption is also available and usually takes about 7 days.

As of January 28, 2025, the instant redemption capacity stands at 2.85m USDC, with 923k USDC on Base representing over 25% of the circulating TVL.

The protocol aims to maintain instant liquidity at 10% of mBASIS TVL, with a 24-hour replenishment capability (see the “redemption capacity over time” report)

Permissionless liquidation

mBASIS functions as a permissionless token that can be liquidated seamlessly, ensuring smooth operations and eliminating bad debt risk. This frictionless redemption process makes mBASIS particularly attractive for lending protocols.

Independent Oracle

The mBASIS price oracle updates weekly and requires approval from both Midas and Ankura Trust (the verification agent) before updates are propagated on-chain, ensuring decentralized control. This dual-approval system helps guarantee that mBASIS values accurately reflect the portfolio, strengthening trust and transparency for Euler Base Lenders and the broader DeFi ecosystem.

Caps Suggestions

Based on mBASIS’s liquidity profile, we suggest an initial supply cap of 5,000,000 mBASIS and a borrow cap of 2,000,000 mBASIS.

Interest rates

• Target utilization: 0.25
• Target APY: 7%
• Max APR: 90%

Governance

Given Euler’s recent move to an optimistic governance framework, no formal on or off-chain voting is required for this proposal to pass. However, we encourage the Euler DAO and community members to provide feedback, share suggestions, and voice their opinions on this initiative. Community input will, as always, be crucial to ensuring that the Euler Base market remains relevant, competitive, and risk-managed.

Implementation

Unless any concerns are raised or the DAO would like more time for consideration of this proposal, the mBASIS market on Euler Base will be implemented by the Euler Foundation.

[Gauntlet]

Gauntlet - Parameter Recommendations for mBASIS on Euler Base (2025-03-05)

In light of the proposal by Midas, Gauntlet recommends the following risk parameters to the protocol. The rationale is similar to that for mEDGE and mMEV on Euler Prime that was posted on 2025/02/27, given the similar redemption and oracle pricing mechanisms.

We additionally note that because atomic liquidations currently require going through Midas protocol directly without the option of standard DEXes, we recommend that specialized liquidator bots be set up to monitor Midas markets on Euler.

Cap Recommendations

Gauntlet will recommend this asset is not initially borrowable as it presently has limited DeFi and DEX integration.

• Set supply cap to 2,000,000
• Set borrow cap to 0

Present TVL of mBASIS is $8.6M, though on Base the only atomic liquidity available to liquidators at present is limited to ~$600K available in a shared liquidity pool, which if depleted will require non-atomic redemptions until the pool is topped up again.

The proposed supply caps are mindful of expected TVL growth for this token while recognizing the present liquidity constraints.

Interest Rate Curve Recommendations

These assets are recommended to not be borrowable initially, so no IR curve need be set.

LLTV Recommendations

Here we aim to maximize risk-adjusted capital efficiency for users. We anticipate usage of markets in particular for looping mBASIS / USDC.

This table assumes mBASIS as the collateral asset.

Borrow LTVs are recommended as two percentage points less than the recommended LLTVs per collateral/debt pair.

Debt	LLTV
USDC	95%
USDS	90%
EURC	90%

Next Steps

• We welcome community feedback

[Objective]

Objective Labs: Recommendations for mBASIS on Euler Base

Thank you @Ivan_midas for submitting this proposal.

After careful consideration, Objective Labs has decided not to support listing mBASIS on the Euler Base market. Euler Base’s mandate is “A market tailored to borrowing stable assets against blue chip crypto assets.” We believe mBASIS does not clear the bar for listing due to 3 main reasons.

Total Addressable Market

The total supply of mBASIS on Base is 2.5M tokens (~$2.75M). There are 200 holders. Only 6 hold 10k or more tokens. In its current state this asset does not present a material business opportunity of Euler DAO. In fact, we believe this asset is incompatible with Euler Base’s mandate, “A market tailored to borrowing stable assets against blue chip crypto assets.”

Yield Dynamics

mBASIS is a yield-bearing product that tokenizes a basis trade strategy. This yield is highly volatile and broadly depends on market sentiment and leverage. For example, while mBASIS yielded in excess of 20% in November and December last year, current yields are 4-6%. Furthermore, mBASIS lacks a protective or fallback mechanism against low or negative rates. mBASIS has historically had weeks where it returned negative yield for its holders.

As long as mBASIS yield is lower than the Sky Savings Rate (6.5%) it is difficult to see a case for growth for mBASIS. In fact this is the reason why Ethena has transitioned to relying on the Sky Savings Rate as an alternative source of yield for its sUSDe.

Oracle, Fee Structure, Liquidity

Like all Midas tokens, mBASIS is instantly convertible to USDC from a redemption pool. Relative to supply, this pool is deeply liquid ($580k USDC). To support this instant redemption facility, Midas charges a 0.5% fee on redemptions. There are no performance, management, or minting fees. Midas and Ankura Trust run an AggregatorV3-compatible oracle which updates the exchange rate of mBASIS every 7 days, together with publishing a transparency report. Oracle updates have been on time for the past 10 weeks.

There is an undesirable interplay between the unpredictability of basis yield, the slow oracle schedule, and the 0.5% redemption fee. With current yields users would need to hold mBASIS for at least 5 weeks just to recoup the redemption fee.

Recommendations for Midas

The primary reason for declining this proposal is the yield environment. We expect that when basis yield goes up, so will mBASIS TVL, and by extension, its fitness for Euler Base.

Separately, we recommend that Midas commit to a more frequent oracle update schedule and consider reducing or waiving the redemption fee, to remain competitive with Ethena and Resolv.