How does the Meria stablecoin lending service work ?
Meria's Lending stablecoins service is a service designed on a risk-based approach and not a return-based approach. Thus, we do not seek to maintain a fixed return, but rather to maintain a consistent balance between exposure and risk. When you subscribe to Meria's Lending stablecoins you are instructing Meria to invest your crypto assets according to the following components :
Component 1: Diversification across protocols, compounders and CeFi platforms.
Currently, Meria offers diversification across the following protocols, DeFi (decentralized finance) compounders and CeFi (centralized finance) platforms, in accordance with our terms and conditions :
DeFi protocols: AAVE, AAVE AMM, Compound, Curve, PancakeSwap, SushiSwap
Compounders (DeFi) : Convex, StakeDAO
CeFi platforms: Binance, Nexo, Woorton
Meria will not place more than 30% of Crypto Assets on any one DeFi/compounder protocol in order to mitigate counterparty risk. In addition, exposure to CeFi platforms as a whole is limited to 40%.
Component 2: diversification of stablecoins
The diversification of the counterparties used also involves a conversion of the subscription stablecoin into one or more of the following cryptoassets:
BUSD (Binance USD)
GUSD (Gemini Dollar)
USDC (USD Coin)
USDP (Pax Dollar)
When using CeFi platforms, the actual distribution of the deposited stablecoin is not communicated by the platform, so we can only assume that the stablecoin is not converted by the platform in question.
Regardless of which stablecoin you subscribe to our lending service with (investment or deposit), your capital is spread over several of these stablecoins (note: diversification is not necessarily done over all stablecoins at all times).
Component 3: Maximum exposure to a stablecoin
The notion of maximum exposure to a stablecoin is a factor determined by projecting into a scenario in which all liquidity pools containing that stablecoin would be completely out of balance as well as all funds deposited on CeFi platforms (whose actual distribution we do not know). This is the maximum possible exposure to each stablecoin taking into account the distribution of protocols, compounders and CeFI platforms at the time of the calculation.
Let's take the following diversification:
30% of the funds invested in a USDT-USDC pool
15% on a USDT-DAI-USDC pool
25% in a pool containing only DAI
10% in USDP and 10% in TUSD on a CeFi platform (whose asset diversification we do not know)
10% in BUSD on a CeFI platform (for which we know the asset diversification)
The assumed maximum exposure to each stablecoin would be as follows