Dissecting the Mint Cash White Paper: A Deliberate Performance of Academic Language, Negative Case Studies of the White Paper

Written by: Deep Tide TechFlow

With the explosive rise of USTC, Mint Cash has become popular.

In our previous article, "Exploring Mint Cash: Borrowing the Terra Corpse to Summon Souls, A Beautiful Airdrop Marketing," we mentioned that LUNC or USTC has long become a MEME coin, but still possesses strong speculative value.

The premise of speculation is a positive expectation for this new product, Mint Cash.

So, how is Mint Cash designed? Currently, there are many in-depth analyses from third parties on social media, but most are based on the founder Shin's statements on Twitter.

Following the old routine, to evaluate the level of a project, there is a more intuitive reference: the official white paper materials.

Out of curiosity, I dug into Mint Cash's white paper and was first shocked by its length—40 pages long.

After a rough glance, I also found that the white paper is not short of various high-level mathematical formulas and economic models, which seem to have some substance.

Is Mint Cash trying to recreate the glory of the Luna system through rigorous theoretical validation, or is it packaging itself in a serious manner?

With this question in mind, we took a deeper look at the white paper to bring you the latest interpretation.

40 Pages of White Paper, 10 Pages of "Prehistoric Preparation"

The first part of the white paper is called "Past Work." It mainly describes the explorations of predecessors regarding stablecoins in the crypto market and how to maintain stability in real-world currencies.

However, this "past" is quite distant—dating back to the last century.

Yes, you read that right; Mint Cash's white paper spends a significant amount of space on a "prehistoric preparation": it details the classical economic model of economist Keynes from the last century and elaborates on its mathematical formulas.

My major in college happens to be related to economics. To prevent some readers from being unfamiliar with this, I can provide a brief explanation:

The IS-LM model and the AD-AS model are economic theoretical models proposed in the early to mid-20th century. They are common concepts in macroeconomics; the former translates to "Investment-Savings - Liquidity Money" model, which analyzes the relationship between interest rates and output (national income) at a given price level; the latter is called the "Aggregate Supply - Aggregate Demand" model, which explains the relationship between the prices of goods and output in the economic world.

Sounds a bit high-level? That's right; these two models are very famous in academia and are definitely seen on the blackboard of every undergraduate economics student.

But the problem is that these two models are too broad and classical.

For a specific crypto project, aside from increasing its "academic feel," they do not provide much theoretical support. This is somewhat like wanting to draw a triangle and then going through various letters and formulas to derive the well-known Pythagorean theorem in detail.

Not necessary.

Moreover, in the latter half of this section, the author also spends a lot of ink describing the forms of stablecoins in the crypto market, including algorithmic stablecoins, over-collateralized stablecoins, and fiat-backed stablecoins, along with their respective advantages and disadvantages in terms of capital efficiency, centralization, and security.

The problem remains the same—there is no incremental information.

Spending a large amount of effort in a paper to specifically describe things that everyone already knows indeed creates a "highly academic" effect.

Commonly Discussed Design Principles

After the lengthy preparation, the white paper succinctly uses just a few pages to explain what kind of stablecoin design we need today:

No Centralized Collateral Risk:

Unlike USDT, it eliminates dependence on external centralized banking systems. The core principle is to ensure that anyone who can accept Bitcoin payments can also accept Mint Cash payments, free from the constraints or censorship of the existing financial system.

Support for Multiple Currencies:

Multi-currency support allows Mint Cash to adapt to the needs of different countries and regions, especially for users who do not use the dollar as their primary currency.

Synthetic Swaps, Liquidity, and Collateral Construction:

Mint Cash adopts a synthetic swap mechanism that allows for exchanges between different asset types. This design reduces the need for additional liquidity, allowing the system to support multiple currencies.

However, compared to the lengthy preparation, the description of the design principles seems very thin.

At the same time, the design principles mentioned above are actually common topics in the entire stablecoin sector, and the depth of analysis is weak. Comparing it to articles in Vitalik's daily blog reveals the biggest difference:

Mint Cash only "states" on the surface rather than delving into "analysis."

Substantive Content in System Design

In fact, the latter half of the white paper contains the substantive content, detailing the entire Mint Cash system's conception and specific implementation methods.

For readers who wish to participate in the Mint Cash project and pay attention to USTC, if you need to conduct investment research, it is recommended to start directly from this part, which can save a lot of time.

To facilitate quick understanding, I have categorized the explanations in this section into four parts: design objectives, problems solved, implementation methods, and potential effects.

Implementation Based on Terra Core:

• Objective: Utilize the experience advantages of building stablecoins with Terra Core while avoiding its failures.
• Problem Solved: Construct a decentralized and censorship-resistant stablecoin implementation.
• Implementation Method: Based on Terra Core but with significant modifications. This involves using the Cosmos SDK blockchain framework while improving and enhancing the stability and security of the original system.
• Potential Effect: Provide higher stability and resistance to censorship.

No Centralized Collateral Risk:

• Objective: Avoid reliance on centralized collateral assets.
• Problem Solved: Reduce risks arising from centralized asset management.
• Implementation Method: Fully rely on Bitcoin as collateral, avoiding the use of centralized assets as collateral. This means all Mint Cash stablecoins are backed by Bitcoin, ensuring they are not influenced or controlled by traditional financial systems and centralized institutions.
• Potential Effect: Reduce censorship and financial risks, enhancing the independence of the stablecoin.

High Capital Efficiency:

• Objective: Improve the efficiency of using crypto assets.
• Problem Solved: Address the low capital efficiency issues arising from the over-collateralized stablecoin model.
• Implementation Method: Allow users to directly use Bitcoin for synthetic asset swaps to mint new stablecoins without going through loan positions, reducing the additional capital needed to obtain stablecoins.
• Potential Effect: Provide sufficient liquidity for stablecoins while lowering borrowing costs.

Liquidity Management:

• Objective: Control and manage capital liquidity.
• Problem Solved: Prevent excessive capital inflows or outflows, maintaining system stability.
• Implementation Method: Mint Cash controls the flow of funds by setting liquidity limits, including restrictions on the amount of collateral entering or leaving the system. This approach helps maintain system stability by reducing rapid capital inflows and outflows.
• Potential Effect: Prevent market volatility and maintain price stability of the stablecoin.

Monetary Policy Under External Price Shocks:

(Note: This method is only theoretically discussed in the white paper; the actual implementation effects await market testing.)

• Objective: Enable the system to absorb short-term and long-term price shocks in the market.
• Problem Solved: Stability of stablecoin value.
• Implementation Method: Mint Cash has designed a dynamic monetary and fiscal policy to absorb short-term and long-term price shocks in the market, aiming to reduce the range of value fluctuations between the stablecoin and the corresponding fiat currency, rather than enforcing a hard peg of one-to-one.
• Potential Effect: Reduce market volatility and improve the price stability of the stablecoin.

Liquidity of Non-Dollar Stablecoins and Deposits:

• Objective: Support multiple non-dollar currencies and maintain their value stability.
• Problem Solved: Provide support for various fiat currencies.
• Implementation Method: The system supports multiple currencies through a synthetic swap mechanism, meaning there is no need to provide on-chain liquidity for each currency pair.
• Potential Effect: Supporting multiple currencies not only increases trading demand, especially in markets outside the dollar, but also serves as a hedge against different external interest rate regimes. This helps improve the market acceptance and trading opportunities of the Mint Cash system while enhancing its currency stability.

From these design directions, it is clear that Mint Cash's white paper has carefully considered various issues in the current stablecoin market, attempting to create a stable and decentralized digital currency system that can respond to economic fluctuations and support multiple currencies.

Through these methods, Mint Cash hopes to provide broader currency stability and market adaptability while maintaining the decentralization and security advantages of Bitcoin.

I hold a positive attitude towards such a vision.

Current stablecoins each have their own problems and have not produced a best product through competition. Mint Cash emerges amidst controversy, and if it can impact the existing stablecoin market landscape, it indeed provides users with another choice.

However, beneath the ruins of Luna, too many memories and shadows are buried.

From creation to extinction, the entire crypto market has no substantial demand for the Luna ecosystem. Rebuilding a new stablecoin on the ruins, creating demand by borrowing corpses.

How far this path can go, let us wait and see.