Prisma is a decentralized borrowing protocol that issues the mkUSD stablecoin, which is fully backed by liquid staking assets.
Prisma is a protocol that allows users to mint mkUSD, a synthetic USD stablecoin, by depositing supported liquid staking tokens (LSDs) like wstETH, cbETH, rETH and sfrxETH as collateral. Users can adjust their collateral ratio (minimum collateral ratio of 120%) and borrow mkUSD based on their personal risk tolerance. Users must have a minimum debt of at least 2,000 mkUSD in order to open a borrow position. This is to ensure that there is enough incentive for liquidators to step in and cover the position in case of a shortfall. Users can also repay mkUSD and withdraw their collateral at any time. Holders who bought mkUSD on the open market can also redeem their mkUSD against other borrowers' LSD collateral in return. Raft maintains the stability and peg of mkUSD through a combination of hard and soft peg mechanisms, such as stability pool, liquidations, fees, incentives, and governance.
Prisma generates revenue through a combination of fixed fees and borrowing interest rates. Users are charged a one-time minting fee when they borrow mkUSD against their collateral, which is added to their total debt and varies algorithmically between 0.5% to 5%, with an additional Liquidation Reserve charge that's refunded upon debt repayment. Additionally, a continuous borrowing interest rate is applied to the outstanding debt over time, serving as a recurring source of income for the protocol. The Prisma community, through governance votes, can adjust both the fixed fees and the interest rates, allowing the protocol to respond to market dynamics while incentivizing user participation and ensuring protocol stability and liquidity.
You can make money on Prisma by depositing supported LSDs as collateral to mint mkUSD. You can now use this newly minted mkUSD to earn yield from other DeFi protocols, while your collateral ratio improves over time due to the accruing of staking rewards on your underlying LSDs. You could also swap your mkUSD for more LSDs to leverage your exposure to a specific LSD asset.