mUSD - Is it hard pegged to USDC?

So I’d like to bring up this discussion regarding mUSD. Currently it’s classified as being soft pegged to USDC, but after doing some thinking, it’s quite close to being hard pegged to USDC.

  • USDC can be used to mint mUSD 1:1 as long as USDC won’t make up 55% of the basket.
  • USDC can be redeemed from mUSD 1:1 as long as there’s USDC in the basket, and another asset doesn’t hit the max weighting.

So some caveats for it being 100% hard pegged to USDC all the time, but is it close enough? What are your thoughts?

Argument #2: aTokens and cTokens are also not 100% redeemable. If there’s is not enough market liquidity, they can’t be redeemed for the underlying token. Yet we still classify them as being hard pegged to the underlying token. (11.7m aDAI but only 1.2m can be redeemed) cTokens can also lose their peg if the collateral backed loans backing them go bad.

It is clear that there’s some flexibility for a pair to be qualified as being hard pegged. And mUSD/USDC may be included in that definition.

I think mUSD’s mint and redeem process has some clear distinctions from the USD++ and Curve mint/redeem process, which is why I brought it up for discussion.


This is from mStable website:
“mStable assets are liquidity shares that also function as stablecoins in their own right.
Our first asset is mUSD.
MINT mUSD assets with your stablecoin, at a 1:1 ratio”

While minting with some assets is not available for some periods of time, at times it’s possible to mint mStable with any stablecoin.

That’s a hard peg in my book

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I think this hard/soft peg thing is a distinction without a difference and we should consider moving towards a single wrapFactor.

Aside from wETH is there any token that’s actually a hard peg (i.e. always redeemable for the underlying)?