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V1

MUSDv1 introduces a new flexible, market-driven model for improved peg stability

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MUSDv1

Unlike the original MUSDv0 — borrowers now set their own interest rates. This upgrade creates a more dynamic, decentralized, and capital-efficient system where users are rewarded for contributing to protocol stability.
 

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1. Deposit BCH collateral

MUSD loans are backed by BCH as collateral. Moria Protocol requires 150% collateral for new loans, allowing them to go down to 120%. This let users to select their preference or capital efficiency versus safety from volatility.

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2. Set interest rate

You select your own interest rate for your loans. You can choose to minimize costs and actively manage risk, or set a higher interest rate for passive long-term positions

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3. Mint MUSD

Your Bitcoin Cash collateral is locked in a smart contract and you receive your newly minted MUSD

Repayment

When you repay your loan, the following happens:

  • You return the borrowed MUSD

  • You also pay the accrued interest, calculated from the rate you initially set

  • Once repaid, your full collateral is returned to you

Redemption

A redemption is when a loan is paid back by a third party. When someone redeems a loan, the redeemer repays the MUSD amount and receives part of the collateral backing up the loan, equaling the loan size, while the excess collateral (overcollateral) is repaid to the initial creator of the loan. The borrowed MUSD is also kept by the initial creator of the loan. The loan with the lowest interest rate can always be redeemed. Redemption is a mechanism to let MUSD keep the peg with USD.

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A loan is redeemed

Interest Rate: Cost and Risk

Lower Interest Rate (e.g., 0.5%)

  • Cheap borrowing

  • High redemption priority — third party may pay out loan position if redemptions happen

Higher Interest Rate (e.g., 5%)

  • More expensive to repay

  • Lower chance of being redeemed — you're more likely to keep your loan position

Liquidation

If a loan's collateral ratio drops below the minimum threshold of 120%, it can be liquidated:

  1. A liquidator pays off the entire loan debt (e.g., 300 MUSD)

  2. They receive all the collateral (e.g., 2 BCH)

  3. The borrower keeps the 300 MUSD but loses all their collateral

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A loan is liquidated

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Inquiries for Riften Labs  -  Contact hello@riftenlabs.com

The Moria interface (www.moria.money, app.moria.money) and all its associated assets and rights are developed, maintained, and owned by Whiterun LLC

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