Best Crypto to Buy Now: Mutuum Finance (MUTM) Is Reshaping DeFi

In the constantly evolving crypto market, it is important to stay ahead of the market by identifying unique market opportunities. One of the best projects right now is Mutuum Finance (MUTM), which is on the cusp of changing Defi forever. Let us take a deep dive into this transformative project.

Technological innovation Powers Mutuum Finance (MUTM)

Mutuum Finance (MUTM) aims to transform the Defi industry with technical innovation. It does not simply aim to be another project in the Defi space; it aims to be the go-to project for all Defi investors seeking out long-term growth.

This innovation can be seen in the design of its lending protocol. Lenders on the protocol can deposit their funds in a pool governed by an audited smart contract. Once in the pool, funds begin to accumulate interest at a rate defined by the pool’s utilization rate.

The utilization rate is a measure of the amount of borrowed assets against the total assets in the pool. When most of the pool’s assets are in use, the interest rate rises. This encourages borrowers to repay their loans, while also incentivizing lenders to deposit more funds into the pools to earn higher yields.

In the reverse, when the pool’s utilization rate drops, borrowers are incentivized to take more loans at the low rates, while the number of lenders goes down. That causes the rate to rise again, creating a self-sustaining cycle. The result is that the pool achieves optimal capital efficiency without external interference.

Protocol Safeguards On Mutuum Finance

The Mutuum Finance project is based on a philosophy of finding a balance between encouraging mass adoption and protecting the protocol’s solvency in the long term. To achieve this, it carefully examines assets that can be used on the protocol.

 Overcollateralization

One of the most basic safeguards used on Mutuum Finance is overcollateralization. It simply means that when borrowers take a loan, they must provide collateral that is of a higher value than the loan. This ensures that there is sufficient headroom in case of market volatility. If a position sinks below an established threshold, then it becomes eligible for liquidation. The liquidators are offered a chance to buy the debt at a discount, which ensures there is a buffer between assets and liabilities on the platform.

Deposit And Borrow Caps

These caps are used to establish an upper limit on how much of an asset can be borrowed or deposited. It helps to limit the exposure of the protocol to some assets, which may have low liquidity or high volatility. Additionally, it mitigates against exploits related to unlimited asset minting. To determine caps, factors like on-chain volume, price stability, and historical price data are used. The borrow caps are used to reduce the chances of insolvency due to manipulated price fluctuations.

Restricted Collateralization

Mutuum Finance may categorize certain tokens under the Restricted Collateralization Mode. This mode sees a single collateral asset used only for borrowing the same asset, with strict limitations. For instance, if the oracle data is unreliable, restricting usage ensures there is no system-wide impact due to rapid price changes.

Enhanced Collateral Efficiency

For assets that are known to have correlated price movements, such as popular stablecoins, Mutuum Finance can use the Enhanced Collateral Efficiency (ECE) mode. In this mode, users have elevated borrowing limits when the collateral and loan assets are in the same group. The main benefits are improved capital efficiency while ensuring there is no system-wide impact. Only tokens that demonstrate consistent pegs and near-identical behavior qualify for ECE.

Loan-to-Value (LTV) Ratio

The LTV ratio limits how much a user may borrow in relation to the value of their assets. For instance, an 80% LTV means that a user who pledges 1 ADA worth of collateral can only borrow up to 0.80 ADA worth of another asset. The LTV of an open position is dynamically set by the changing value of an asset over time.

Liquidation Threshold

A liquidation threshold is triggered when the debt becomes undercollateralized. For instance, if the threshold is set at 80% of the value of the collateral, and it drops below it, a liquidation is triggered. When that happens, liquidators can acquire the collateral at a discount, which protects the long-term stability of the ecosystem.

Liquidation Penalty

When a position is liquidated, a liquidation penalty applies, which is equivalent to the liquidation bonus the liquidator receives. A portion of this amount may go to the protocol treasury, where it is used as part of the risk module. An allocation factor is used to determine how much of the penalty goes to the liquidator and the treasury. It helps to balance incentives for liquidations with the long-term solvency of the ecosystem.

The Reserve Factor

A reserve factor collects some of the interest from the borrower. An aggregate is used to collect assets and is used to offset any potential default during extreme market movements. Tokens with higher stability feature a small reserve factor and vice versa.

Success Of The Mutuum Finance (MUTM) Presale

The unique technical innovations mentioned above have resonated with crypto investors and led to a surge in interest in the presale. So far, the presale has received over $10.1 million from investors. Over 11,700 investors have taken part in the presale, which is currently in phase.

The pace of the phase 5 presale has been quite fast, with over 1% of the tokens set aside already sold. In the upcoming phase 6, the token price will go up by 16.67%, reducing the guaranteed ROI to 71.43% from the current 100%. As such, this phase presents your best opportunity to be part of a revolutionary crypto project that will transform Defi forever. 

For more information about Mutuum Finance (MUTM), visit the links below:

Website: https://www.mutuum.com/ 

Linktree: https://linktr.ee/mutuumfinance