Mimas Finance is the second largest lending protocol on Cronos. Cronos is a young blockchain that is just starting to develop its decentralized finance field. If you are familiar with the Harmony ONE network, you might notice that Mimas Finance looks a lot like Tranquil Finance. This is because the same team is behind both projects and instead of having a multi chain lending protocol, they have decided to fork Tranquil Finance and make a new platform. One of the main reasons they have chosen to do this is to use all the knowledge around tokenomics they learned from Tranquil Finance and apply them to Mimas. 

Tokenomics

One of the fundamental issues with many lending protocols is that they have inflationary tokenomics without a great staking or burning solution for their token.  A large percentage of people who use lending protocols sell their rewards they earn soon after they are earned and it is easier than ever to automate this. There are three main methods that lending protocols employ to provide utility for their token

• Allow users to stake the token to earn a higher interest rate for lending/staking their assets.
• Governance, allowing the owner to vote on how rewards are allocated
• Provide direct rewards for staking. Frequently this also includes part of the protocol fees. This type of rewards does not increase the interest rate you receive for lending on the protocol.

Mimas Finance uses a two token system, MIMAS and rMIMAS. MIMAS is the active token on the protocol and the one with the most liquidity. rMIMAS are locked MIMAS. Unlike some other locked tokens rMIMAS are actual tokens that are put in your wallet when you earn them. You can redeem your rMIMAS for MIMAS and after 6 months they become fully unlocked MIMAS.

Mimas Finance allows you to stake your MIMAS to earn rewards. They allow you to lock your rewards for a 6 month period and in addition to the normal staking rewards, earn a share of 75% of the protocol fees earned by Mimas Finance. This mechanism takes the Mimas out of the pool of tokens that can be sold and helps stabilize the price. You can stake your rMIMAS to earn rMIMAS. The emissions on the rMIMAS vault are higher* than the MIMAS vault, this provides incentive to keep them locked. These two mechanism are great for reducing the number of circulating MIMAS. It allows for higher than normal rewards, but less inflationary selling pressure.

The team behind Mimas and Tranquil Finance has put a lot of thought into how to provide tokenomics that are rewarding, but also have long term stability that minimizes the selling pressure on MIMAS after it earns. The team is in the process of introducing Defira. Defira is a game that involve the Mimas Finance and Tranquil Finance ecosystem. There is a team of over 20 people working on Defira to produce a game that is fun and addicting to play. Defira will provide utility for the tokens outside of just being a lending platform. 

More details on Defira are coming out on a weekly basis with a soon to be released whitepaper. Defira is initially going to start with greater integration with Tranquil Finance and TRANQ, but transition to include Mimas Finance. Since such a larger percentage of MIMAS is locked for at least 6 months as rMIMAS, the team has some time to integrate Mimas Finance with Defira. This integration will help provide a true utility for MIMAS. Even if you are not a fan on games, you don't need to play the game to use the lending protocol and it provides a true use of MIMAS outside of the lending protocol.

Lending

Mimas Finance is the second largest lending platform on Cronos. It functions like most other lending platforms. You deposit a token and earn interest on that deposit. A portion of the interest is paid in the token that is deposited, MIMAS, and rMIMAS. The interest earned can be claimed at any time, as often as you want. 

You then can use your deposit as collateral and borrow against it. You pay interest to borrow, but you gain MIMAS and rMIMAS rewards that offset the cost of borrowing. If the borrow interest rate is above zero, you gain more MIMAS and rMIMAS rewards than the interest that you spend. If it is below zero, you pay more interest to borrow than rewards that you earn. The borrow and rewards APR is not fixed. The total amount that is borrowed and the utilization percentage impact the rates. 

How Does Lending and Borrowing Work

• You deposit a token and then click the option to use it as collateral. 
• You then can borrow a certain percentage of the amount that you deposited. This amount varies by the token that you deposited, many are 60%
• If the amount that you are borrowing increases above that limit a user can “liquidate” your assets
  • Liquidating your assets is where someone repays the amount that you borrowed to get under the borrowing limit.  110% of the amount that you are over your limit is used to bring you within your limit. The platform and the person liquidating you split the 10% as profit. The liquidity page shows all liquidation options that are available.
  • If you borrow the same asset that you deposit it is hard to get liquidated since the percentage that you borrow will be the same regardless of price movement. If you borrow an asset that goes up greater than the collateral you are at risk of liquidation. If your collateral decreases in value more than your borrowed asset, your risk of liquidation increases.
• The common strategy is to deposit, borrow, deposit the amount that was borrowed, and complete the cycle several times with the same asset. This carries a very low risk of liquidation while giving you leverage and greater rewards.

Conclusion

There are many decentralized finance lending and borrowing protocols out there. Mimas Finance is a great option on Cronos. It provides rewards that are far greater than the industry norm, but provides a short term and long term mechanism to prevent rapid inflation in the ecosystem and a decrease in the price of MIMAS. The team spent a lot of effort figuring out how to give utility to their token and there is much more utility than the industry norm.

Mimas Finance: https://mimas.finance/ 

Twitter : https://twitter.com/mimas_fi/

Medium : https://mimasfinance.medium.com/

Docs https://docs.mimas.finance/

Discord: http://discord.gg/X4aCwkjRmr

Telegram: http://t.me/mimas_finance