The USD stablecoin of the Mars Ecosystem is
USD-Mars (USDm), and the governance token is
Mars Ecosystem Token (XMS).
USDm is generated and destroyed through the minting and redemption mechanisms implemented. Users deposit their assets into Mars Treasury when minting USDm, they deposit USDm to recieve assets from the Mars Treasury. Both minting and redemption are always at a 1:1 ratio when the Mars Treasury is utilized.
The Treasury mechanism is not an invention of Mars Ecosystem: the treasury reserve of the Terra protocol is its governance token LUNA, the treasury reserve of the Frax protocol is USDC and its governance token FXS, and the treasury reserve of the Fei protocol is ETH.
The unique aspect of the Mars Ecosystem is the implementation of a treasury assets classification mechanism.
When minting USDm, users need to place $1 worth of any Mars Treasury whitelist assets into the Mars Treasury. The whitelisted assets accepted by the Mars Treasury are divided into the following levels:
Digital gold (BTC)
Layer-1 leaders (ETH, BNB, etc.)
DeFi Blue Chips (UNI, AAVE, etc.)
Mars Ecosystem Token (XMS)
The volatility of assets from level 1 to level 5 gradually increases. Mars Treasury determines the maximum acceptable proportion of various assets in the Treasury according to the volatility of each assets. The greater the volatility of the asset, the lower the maximum acceptable proportion within the Treasury.
Mars Treasury assets have the following use cases:
Value support: Mars Treasury assets are the ultimate support for the value of both
Liquidity provision: Mars Treasury uses most of its assets to provide liquidity for USDm on Mars Swap to support the stability of USDm.
Yield-accrual: Idle assets of Mars Treasury yield earning from the Mars Ecosystem DeFi protocols or other external DeFi protocols.
External DeFi governance: Mars Ecosystem uses external DeFi protocols governance tokens in the Mars Treasury to participate in their governance to vote on proposals that are beneficial to the Mars Ecosystem.
Grants: Some assets are used to fund the development of protocols Dapps that can promote the wide adoption and use of USDm.