mToken

mTokens

mTokens are ERC-20 tokens on the Mage Protocol, representing user balances within the protocol. They are akin to Compound V2's cTokens, but with specific functionalities tailored for Mage's ecosystem. mTokens enable users to engage in lending and borrowing activities on the platform, facilitating interest accrual and asset collateralization.

Deposit and Minting of mTokens

• Minting Process: Users can deposit certain assets into Mage Protocol to mint mTokens. For example, depositing BTC would mint mBTC.

• Asset Utilization: Deposited assets become lendable by Mage, earning interest for the depositor.

Earning Interest through Lending

• Interest Accumulation: Lenders earn interest by minting mTokens. The interest accumulates not through direct distribution but via the changing exchange rate of mTokens. Learn more about interest rate model.

• Redemption: Over time, as interest is earned, the value of mTokens increases, allowing users to redeem more assets than initially deposited.

Borrowing Against mTokens

• Collateralization: Borrowers can use mTokens as collateral to borrow other assets on the platform.

• Interest Offset: Collateralized mTokens continue to earn interest, which can potentially offset some of the borrowing costs.

Transferability and Restrictions

Exercise Caution! By transferring mTokens, you’re transferring your balance of the underlying asset inside the Mage Protocol.

• General Transferability: mTokens are generally transferable between users, providing flexibility within the Mage ecosystem.

• Respecting Underlying Asset Restrictions: mTokens adhere to the transfer restrictions of their underlying assets, especially for permissioned assets.

• Liquidity Considerations: Transfers that could result in negative liquidity for borrowers are prevented to maintain the stability of the platform.