Polly nStable nest is currently containing 4 different stablecoins: RAI, Dai, USDT and USDC. While these assets are popular, they may not offer a sufficient level of diversification and decentralisation. USDT and USDC risks for the whole DeFi ecosystem were for instance underlined in this Defiant report.
The good news is that there is no short supply of stablecoins on ETH. Polygon-native stablecoins or stablecoins highly available on Polygon are however rarer. miMatic (MAI) from the QiDAO could be a great addition for those two reasons : MAI is a Polygon-driven coin with a decent liquidity ($48m). From a technical point of view, the coin is based on a Maker fork and has been audited. The protocol TVL is around $80m, with a presence on Solana, Avax and Fantom among others.
Last but not least, MAI has at least two active lending markets on Polygon: Market (a Rari implementation on Polygon) with $1m MAI loaned and UniLend (smaller and more niche), with $100k loaned.
In order to increase nSTable diversification and yield, I propose to:
- Choose a % of nStable TVL to allocate on MAI. A small allocation (1%-5%) is probably a good starting point. If the initial % is small enough, it can even be funded by converting farmed WMATIC from Aave loans.
- Implement MAI lending on Market to generate some yields for nStable holders.
- QiDAO team is an active promoter of DeFi on Polygon. They could probably be interested to discuss with Bao about this proposal or other possible integrations
(e.g. enable borrowing against synths assets).
- Out of this proposal scope but QiDAO has a governance coin (Qi) that can be a good addition to nDEFI