General

What is Mosaic?

Mosaic is a decentralized borrowing protocol built on Reef Chain that allows you to draw interest-free loans against REEF used as collateral. Loans are paid out in MEUR (a Euro pegged stablecoin) and need to maintain a minimum collateral ratio of 110%.

In addition to the collateral, the loans are secured by a Stability Pool containing MEUR and by fellow borrowers collectively acting as guarantors of last resort. Learn more about these mechanisms under Liquidation.

Mosaic as a protocol is non-custodial, immutable, and governance-free.

What’s the motivation behind Mosaic?

Stable-value assets are an essential building block for blockchain applications and have grown to represent tens of billions of dollars in value.

However, the vast majority of this value is in the form of fiat-collateralized stablecoins like Tether and USDC. Decentralized stablecoins make up only a small portion of the total stablecoin supply, meaning the vast majority of stablecoins are centralized. Additionally, most stablecoins are pegged to the US Dollar, leaving European users exposed to currency fluctuations.

Mosaic addresses this by creating a capital efficient and user-friendly way to borrow Euro-pegged stablecoins on Reef Chain. Furthermore, Mosaic is governance-free, ensuring that the protocol remains decentralized.

What are the key benefits of Mosaic?

Mosaic’s key benefits include:

• 0% interest rate — as a borrower, there’s no need to worry about constantly accruing debt
• Minimum collateral ratio of 110% — more efficient usage of deposited REEF
• Governance free — all operations are algorithmic and fully automated, and protocol parameters are set at time of contract deployment
• Directly redeemable — MEUR can be redeemed at face value for the underlying collateral at any time
• Fully decentralized — Mosaic contracts have no admin keys, making it censorship resistant

Can Mosaic be upgraded or changed?

No. Mosaic has no admin key, and nobody can alter the rules of the system in any way. The smart contract code is completely immutable.

How can I use Mosaic?

You can access Mosaic through the official frontend at mosaic.markets.

What are the main use cases of Mosaic?

1. Borrow MEUR against REEF by opening a Trove
2. Secure Mosaic by providing MEUR to the Stability Pool in exchange for rewards
3. Stake MSIC to earn the fee revenue paid for borrowing or redeeming MEUR
4. Redeem 1 MEUR for €1 worth of REEF when the MEUR peg falls below €1

What are MEUR and MSIC?

MEUR is the Euro-pegged stablecoin used to pay out loans on the Mosaic protocol. At any time it can be redeemed against the underlying collateral at face value. Learn more about the stability mechanism.

MSIC is the secondary token issued by Mosaic. It captures the fee revenue that is generated by the system and incentivizes early adopters. The total MSIC supply is capped at 100,000,000 tokens. For more information, please refer to MSIC Rewards and Distribution.

What do I need in order to use Mosaic?

To borrow MEUR, all you need is a wallet (e.g. Klever) and sufficient REEF to open a Trove and pay the gas fees.

To become a Stability Pool depositor or MSIC staker, you need to have MEUR and/or MSIC tokens. MEUR can be borrowed by opening a Trove while MSIC can be earned as a Stability Pool depositor. You can also use ReefSwap or another decentralized exchange to buy the tokens on the open market.

Does Mosaic charge any fees?

There is a one-off fee whenever MEUR is borrowed, and when MEUR is redeemed:

• For borrowers, there is a borrowing fee on loans as a percentage of the drawn amount (in MEUR).
• For redeemers, there is a redemption fee on the amount paid to users by the system (in REEF) when exchanging MEUR for REEF. Note that redemption is separate from repaying your loan as a borrower, which is free of charge.

Both fees depend on the redemption volumes, i.e. they increase upon every redemption in function of the redeemed amount, and decay over time as long as no redemptions take place. The intent is to throttle large redemptions with higher fees, and to throttle borrowing directly after large redemption volumes. The fee decay over time ensures that the fee for both borrowers and redeemers will “cool down”, while redemptions volumes are low.

The fees cannot become smaller than 0.5% (except in Recovery Mode), which protects the redemption facility from being misused by arbitrageurs front-running the price feed. The borrowing fee is capped at 5%, keeping the system attractive for borrowers even in phases where the monetary supply is contracting due to redemptions.

How can I earn money using Mosaic?

There are two different ways to generate revenue using Mosaic:

• Deposit MEUR to the Stability Pool and earn liquidation gains (in REEF) and MSIC rewards.
• Stake MSIC and earn MEUR and REEF revenue from borrowing and redemption fees.

Can I lose my funds?

As a non-custodial system, all the tokens sent to the protocol will be held and managed algorithmically without the interference of any person or legal entity. That means your funds will only be subject to the rules set forth in the smart contract code.

There are two scenarios under which you may lose a part of your funds:

• You are a borrower (Trove owner) and your collateral in REEF is liquidated. You will still keep your borrowed MEUR, but your Trove will be closed and your collateral will be used to compensate Stability Pool depositors.
• You are a Stability Pool depositor and your deposited MEUR is used to repay debt from liquidated borrowers. Since liquidations are triggered any time borrowers’ collateral drops below 110%, you will receive more REEF in return with a very high probability. However, if REEF decreases in price and you maintain exposure, you may lose value in your total pool deposits.

Please note that MEUR isn’t perfectly pegged to the Euro, and can deviate slightly in both directions under certain market conditions.

Although the system is diligently designed, a hack or a bug that results in losses for the users can never be fully excluded.