🌌Background
Last updated
Last updated
Any currency serves three main purposes. The ability to act as a medium of exchange, a store of value, and a unit of account. We understand that price stability is necessary for crypto adoption. Compared to well-managed fiat currencies, the value of cryptocurrencies can fluctuate wildly due to inflation. This means that cryptocurrency prices for goods and services must be changed, making Dr merchants and users unreliable.
The mismatch of expected future cryptocurrency values has also affected commerce, and some merchants may not be willing to accept cryptocurrencies as a means of payment. At the same time, other customers may be positively optimistic about & future, thus reluctant to spend.
Most traders may be willing to exchange their cryptocurrencies for a more stable asset to avoid speculation. To compensate for the upbeat sentiment, clients can perform the spend and replace technique. However, these moves negatively affect the low-friction benefits of the cryptocurrency. In short, for cryptocurrency to become a real transaction, a huge stability in coin value is required.
All in all, the DeFi space can be cumbersome and quite confusing for many people, especially for those who are new to DeFi but not necessarily into crypto. MeeFi aims to simplify this process by creating a seamless and streamlined process of staking your assets to earn your deservedly high APY in the simplest and safest way while ensuring ensure sustainable growth in the MeeFi platform across multiple farming ecosystems and optimize profits to achieve maximum yield in a safe, sustainable and robust way.
Centralized Exchange to fiat As soon as most merchants receive cryptocurrencies, they want to exchange them for fiat currency. They tend to embrace more stable, liquid and familiar solutions than cryptocurrencies. They can be seen in other exchange-based solutions. Fiat currencies are also affected by the communication with the centrally controlled currency. They are affected by many regulations and high transaction costs, similar to traditional payment systems. They have eliminated the weaknesses of cryptocurrencies.
Stablecoins Backed by Fiat The idea is to use more stable fiat currencies like EURO and Dollar as collateral to give users the same cryptocurrencies. The reserves undergo compliance audits and are typically maintained by several custodians. Some of the stable coins that have experienced different adoption rates are USDT and USD coin.
Fiat-backed stablecoins use the current regulatory landscape, thus allowing the use of a fiat-backed instrument with less control than a direct interface to currencies fiat. overall complexity of stable money is similar to a direct fiat exchange, but issuers tend to manage complexity. Stable depositors and receivers are less subject to scrutiny, thus having similar cryptographic properties. Compared to fiat currencies, stablecoins are liquid and stable but have the same user experience as fiat currencies.
They are easy to accept and understand. Some of the limitations of stablecoins are the fact that their value is dependent on fiat currency reserves, and reserves create custody risk. A catastrophic loss can occur if the custodian manipulates or falsifies the funds, disturbing the ecosystem. This point marks the gap of stable money compared to fiat money and cryptocurrencies. They came up with a central point that could lead to failure.
Crypto-collateralized Algorithmic Stablecoin To solve the problem of fiat-backed stablecoins, an algorithmic stablecoin including MeeFi was introduced. While the mode of operation is quite different, they are over-collateralized by volatile crypto assets compared to those backed by fiat. This means that they are programmed to exist only on the decentralized blockchain. In other words, there is no centralized solution that forms the basis of the entire system.
This addresses the regulatory risks posed by stablecoins to some extent. It also provides an easy-to-understand UX for easy understanding of tokens representing fiat value. However, there are two risks associated with algorithmically stable coins. The idea of using volatile and illiquid assets to support stable value is risky. The entire system will be scaled down as the asset also depreciates in a controlled manner. It can lead to problems that can cause political interference or various cases of competition. This risk does not occur with fiat-based stablecoins because the appropriate reserve drops to zero as demand decreases.
Centralization of control is another issue with algorithmically Stable Coins. Collateral policies need to be adjusted over time, and algorithmically stable coins provide a second layer of governance tokens. When incentives are poorly designed in the worst case scenario, it can lead to lethargy holders of the governance coin and possibly affect minority stakeholders. MeeFi Bot approach Liquidity provider Liquid transaction fee Commerce merchant fee
After considering the problems of the method explained above, we have developed MFB, a trading solution that does not depend on any point of failure. It is easy to access and can reduce the volatility of the cryptocurrency, increasing its usage.
