Prisma Finance: Unlocking the Huge Potential of Liquid Staking Tokens

Author: Prisma Finance

Compiled by: Shenchao TechFlow

Introduction: Prisma Finance is a new DeFi native focused on unlocking the full potential of Ethereum liquid staking tokens (LSTs). Through Prisma, users can use liquid staking tokens as collateral to mint an over-collateralized stablecoin (acUSD). This stablecoin will be incentivized on Curve and Convex Finance, providing users with additional yields such as trading fees, CRV, CVX, and PRISMA.

Prisma's codebase is based on Liquity, featuring complete immutability, aimed at creating a robust protocol and a truly decentralized stablecoin, with flexible collateral parameters that attract users looking to maximize the potential of their liquid staking tokens. The Prisma DAO will be responsible for managing parameters, issuance, and protocol fees. The project has received support from several top founders and institutions in the industry, including Curve Finance, Convex Finance, and FRAX Finance.

Overview

Prisma is a new DeFi protocol focused on unlocking the full potential of Ethereum liquid staking tokens (LSTs).

Prisma allows users to mint a stablecoin (acUSD) that is fully collateralized by liquid staking tokens. This stablecoin will be incentivized on Curve and Convex Finance, creating an efficient capital flywheel where users can earn trading fees, CRV, CVX, and PRISMA in addition to Ethereum staking rewards.

Prisma's codebase is completely immutable, based on Liquity, to create a robust protocol and a truly decentralized stablecoin with favorable and flexible collateral parameters, making it attractive for those looking to fully utilize LSTs without the risks associated with other stablecoins. The Prisma DAO will be responsible for parameters, emissions, and protocol fees.

Supporters

Prisma has received support from founders of Curve Finance, Convex Finance, FRAX Finance, Conic Finance, Tetranode, Llama Airforce, LlamaNodes' Michael B., Coingecko founders, Amplice and GearBox's Ivan, OKX Ventures, DeFiDad, MrBlock, Impossible Finance, 0xMaki, GBV, Agnostic Fund, Swell Network founders, Dialectic Fund's Magnus, BITKRAFT's Carlos, Adam Cochran, The Block's research director Eden, Fisher8's Kinnif, Stella's Tascha, Ankr founders, NodeGuardians' Sam, MCEG, Injective's Eric Chen, and Mirza among many others.

Current Status

The market for Ethereum liquid staking tokens (LSTs) has grown rapidly in recent years, currently valued at $18 billion, accounting for about 10% of Ethereum's total market value. According to DeFiLlama data, it has recently become the largest DeFi category by TVL, representing the largest potential market in DeFi.

Utility

Prisma allows users to mint Prisma's native over-collateralized stablecoin (acUSD) using any of the following LSTs, providing unparalleled capital efficiency for holders of liquid staking ETH tokens. With the help of Ethereum staking rewards, loans backed by LSTs will be automatically repaid.

By adding Curve pools, users can stake their stablecoins and earn additional rewards in the form of CRV and CVX, with the protocol providing strong incentives through participation in the Curve wars.

Liquity and Prisma

Prisma's codebase is based on Liquity. We strive to honor their spirit, firmly believing that this embodies the best qualities of DeFi: immutability, robustness, and decentralization. We also want Prisma to be unique, so we have added flexibility regarding collateral, parameters, and other aspects at the governance level. By utilizing veTokenomics, Prisma holders will have more control over the protocol.

PRISMA uses the veToken model to govern several aspects of the protocol:

• Stability pools;

• Pool parameters for new collateral;

• Protocol fees;

• Emissions (and which collateral should receive them).

Governance participants can also incentivize the minting of acUSD or change the minting and borrowing fees on their chosen collateral, aiming to encourage LST protocol participants to engage in Prisma's governance. vePRISMA holders can also choose to incentivize any LP token with PRISMA emissions.

Assets

Prisma will support the following assets:

• wstETH (Lido);

• cbETH (Coinbase);

• rETH (Rocket Pool);

• sfrxETH (Frax Ether);

• WBETH (Binance).