MIP 34: Origin acquisition of mStable

Author	Origin Protocol
Discussions-To	https://forum.mstable.org/t/mip-34-origin-acquisition-of-mstable/1019
Status	Proposed
Created	2023-03-17

Summary

This MIP is following on Origin’s RFC discussion

We propose that Origin Protocol acquires mStable assets and key team members. We hold the mStable team in high regard and recognize their significant contributions to the DeFi space. The mStable team have established themselves as respected professionals in the space, known for their expertise and innovative spirit. Their passion for DeFi aligns with our vision for creating the best possible products for our users, and we believe that we’ll be able to accomplish even greater things by joining forces.

Throughout our discussions with the mStable team, we have been impressed by their professionalism and shared values. The cultures between our two organizations are surprisingly similar. We are excited about the potential to work together to bring decentralized yield-products to the world.

Abstract

This document outlines a proposal for an acquisition of mStable assets and key team members after mStable has completed an upgrade of the mAsset strategy along with their treasury redemption, and product sunset process.

Deal terms

$50K in OGV shall be distributed to eligible MTA holders upon mStable’s 1) completion of the upgrade of all mAssets to OUSD, 2) completion of the mStable treasury redemption process as currently proposed in MIP32, 3) completion of product sunset as currently proposed in MIP 31, and 4) transfer of control of key smart contracts and wallets to Origin.

This is an asset acquisition, and any and all outstanding liabilities of mStable remain the responsibility of mStable and related parties.

Motivation

The mStable team has demonstrated a strong understanding of the OUSD product given the similarity between our two products. This understanding creates a high potential for the team to make immediate contributions to our own team. Moreover, the Meta Vault technology that mStable employs has the potential to enhance OUSD’s yield strategies and integrations.

Specification

Team Migration

We have already started conducting interviews with the team and are scheduling additional meetings and follow-up conversations with the mStable team. We will be evaluating each team member’s skills and fit with our culture and values before extending individual offers.

We have confirmed two key team members that we would like to onboard full time and an additional four other team members that we are currently interviewing for potential full time or contract roles.

Other team members are under ongoing consideration for both full time positions or contract roles.

Onboarded team members will be offered similar positions at Origin. Team members that receive job offers from Origin should expect to receive the same or better base pay they have been receiving from mStable. In addition, they will also receive additional OGN and OGV grants. All token grants are subject to 4 year vesting with a 1 year cliff.

Compensation will be funded from the Company’s treasury. We expect team members to be on the Origin payroll as soon as our HR processes are complete and deal terms are completed.

Origin has multiple years of runway to fund our business lines (headcount, operations, marketing, etc.) and is committed to driving value to our token holders (including community and team members).

We will be sharing Origin’s product roadmap with the mStable team and look forward to collaborating on how mStable’s products and learnings could help accelerate our plans.

Product Transition

We will be continuing conversations with the mStable team to evaluate the best way to gracefully transition mStable’s mAssets to OUSD. While there are a lot of details to flesh out, we are aligned that any changes to the protocol should be communicated well in advance and the goal is for mStable’s token holders to end up better off, not worse, as a result of this deal.

The current plan is for mStable to swap mAssets to OUSD on Ethereum and wrapped OUSD on Polygon. mStable would also sunset all products per MIP 31.

For the Meta Vault, we plan on incorporating concepts that the team has designed around safely entering and withdrawing from Curve onchain. We also plan on incorporating potential work that was done regarding Aura and Balancer.

Funding

$50K in OGV shall be distributed to eligible MTA holders upon mStable’s 1) completion of the upgrade of all mAssets to OUSD, 2) completion of the mStable treasury redemption process as currently proposed in MIP 32, 3) completion of product sunset as currently proposed in MIP 31, and 4) transfer of control of key smart contracts and wallets to Origin.

We would price $50K worth of OGV tokens upon completion of deal terms. Eligible MTA holders will have six months to collect consideration. We are open to investors unvested tokens being allowed to participate but we leave this for decision based on outcome of MIP 32.

Origin is well capitalized. Origin’s treasury is approximately $60 million and Origin Dollar has generated over $4 million in fees to date. Origin has multiple years of runway to fund our business lines.

Governance

97.54% of participating OGV holders voted in favor of us exploring this acquisition. We recognize that our success is tied to our ability to work quickly and collaboratively. We believe that this acquisition has the potential to create significant value for both of our communities, and we look forward to continuing the discussion with you.

About Origin

Origin Dollar (OUSD) is the first stablecoin that generates yield right in your wallet. Its price remains pegged at $1, and holders automatically receive additional units of OUSD as yield is generated by the protocol. OUSD is fully collateralized and can be redeemed at any time for USDC, USDT, or DAI. Its circulating supply reached a peak of over $300M. OUSD can be found listed on top exchanges such as KuCoin, Gate, Uniswap, and Curve.

In addition to OUSD, Origin Dollar has a governance token named OGV. This token is listed on several exchanges, including Curve, Uniswap, Huobi, Kucoin, and Gate. Previous investors in Origin Dollar include Pantera Capital, Foundation Capital, 1kx, Kenetic Capital, Spartan Group, Blocktower Capital, FBG, and QCP Capital.

Copyright

Copyright and related rights waived via CC0.

Appendix: Follow-up Q&A from RFC Proposal**

1) Team

1. Which team members are being considered part of the acquisition deal?

We have been interviewing as many of the team members as possible. We have confirmed two key team members that we would like to onboard full time and an additional four other team members that we are currently interviewing for potential full time or contract roles.

Other team members are under ongoing consideration for both full time positions or contract roles.

1. Will the retained team members be offered similar or different positions at Origin?

Onboarded team members will be offered similar positions at Origin.

1. Which token compensation retained team members will be offered token compensation in the acquiring company as part of the deal?

Team members that receive job offers from Origin should expect to receive the same or better base pay they have been receiving from mStable. In addition, they will also receive additional OGN and OGV grants. All token grants are subject to 4 year vesting with a 1 year cliff.

1. How does decision-making work at Origin? Who will be responsible for making major decisions related to the mStable and its future development?

There are two aspects to how we operate. On one hand, the OUSD protocol is fully decentralized with the smart contracts governed by OGV. OGV uses a modified veToken model to give economic and voting power that favors holders that vote-escrow (e.g. lock) their tokens for longer durations. Important protocol proposals and decisions are implemented after veOGV holders’ votes are tabulated amongst the community.

On the other hand, we operate a lot like a traditional startup. Our core team comes from iconic tech companies like Coinbase, YouTube, Google, Paypal, Dropbox, and Pinterest. Our founders are serial entrepreneurs, and multiple team members have founded and exited successful ventures.

Josh and Matt are the ultimate decision makers as the founders of Origin. Most engineering decisions are made by our VP of Engineering, Franck. In general, our team structure is extremely flat. Our culture is one that believes that good ideas can come from anywhere.

We respect key team members’ demonstrated leadership at mStable and hope they will take on leadership roles at Origin.

1. How will retained team members’ compensation will be funded and from which date do you expect them to be on Origin’s payroll?

Compensation will be funded from the Company’s treasury. We expect team members to be on the Origin payroll as soon as our HR processes are complete and deal terms are met.

Origin has multiple years of runway to fund our business lines (headcount, operations, marketing, etc.) and is committed to driving value to our token holders (including community and team members).

2) Product

1. What is the acquiring company’s vision for the current product line of mStable?

We are exploring several ideas for mStable technology. Our first idea will be upgrading the mAssets to OUSD. For the Meta Vault, we plan on incorporating concepts that the team has designed around safely entering and withdrawing from Curve onchain. We also plan on incorporating potential work that was done regarding Aura and Balancer.

1. More precisely, which part of the existing product line would transition or be sunset?

We expect mStable to upgrade the mAssets to OUSD and sunset all other products according to MIP-31.

1. Will the current product line be integrated into Origin’s existing product line, or will it be maintained as a separate product?

The plan is to integrate some of the learnings and code to improve Origin’s products.

1. Will any changes be made to mStable current product line after the acquisition, and if so, what kind of changes?

mAssets will have been swapped to OUSD. The other products will have been sunset according to MIP-31.

1. Will Origin support mStable’s development roadmap, or will it be altered?

We will be working on bringing mStables core innovations over to Origin’s product lines.

1. Are there any potential new product lines that the acquiring company plans to explore with the current team?

Yes. We will be sharing the details privately with key mStable team members first but plan to reveal an updated roadmap to the community shortly thereafter. We have begun early work on an exciting and ambitious new product in the Origin DeFi ecosystem.

1. You mentioned the migration of mUSD liquidity, could you give more colour to this?

We would like OUSD to become the sole strategy for mAssets. We intend to work with the mStable team on the specific details on the best way to make this happen.

3) Deal terms

• What is the proposed exchange ratio / aggregate purchase price for the acquisition?

$50K in OGV tokens

• Do you anticipate paying a premium and distributing existing treasury (i.e., stables + Origin Gov Token consideration) or offering an exchange ratio and taking control of the mStable treasury (i.e., Origin Gov Token consideration only)?

$50K in OGV will be distributed to eligible MTA holders upon completion of deal terms above including mStable’s completion of their treasury redemption process.

• At what point and via what methodology do you plan to price the treasury/deal consideration?

We would price $50K worth of OGV tokens upon completion of deal terms.

• For how long will MTA holders have the ability to collect consideration?

Eligible MTA holders will have six months to collect consideration.

• Will any currently unvested tokens (such as those held by investors, advisors or team members) be accelerated/allowed to participate in this swap?

We are open to investors unvested tokens being allowed to participate but we leave this for further discussion with mStable.

• Could you elaborate on the difference between OGN and OGV tokens?

OGN was our original token when we first launched Origin Protocol. We’ve since split out OGN for our NFT platform, and OGV for Origin Dollar and future DeFi products. To remove any confusion between the two sides of the business, we are only considering offering OGV at this time.

• Can you provide the addresses or details of Origin’s current treasury size?

Origin’s treasury is approximately $60m.

• Can you provide details on past and expected fee generation as well as cash burn/runway (standalone and pro forma for the transaction)?

Origin Dollar has generated over $4 million in fees to date and has multiple years of runway.