# Introduction The current market cycle is driven by three major trends The first major trend is that with the emergence of modularised blockchains, we also see the proliferation of new ecosystems emerging for different use cases such as artificial intelligence, gaming, decentralized finance, internet of things, so on and so forth. what we observe is that with these new emerging ecosystems will also create a corresponding supply of liquid staking tokens (LSTs) that generate yield and will initially have limited utility. An opportunity emerges for projects to take advantage of this yield to create value for stakers and the ecosystem. The second major trend is omnichain points farming. Ecosystems are bootstrapping liquidity pre-token with points farming where liquidity is attracted from other chains to theirs with the promise of points that can be redeemed for airdrops at an undefined future date. For liquidity providers, there is a real desire to participate in these flows as they can be extremely profitable. The dilemma faced by many liquidity providers is that their alt token holdings might not be as relevant for this activity; only token majors tend to have sufficient utility for points farming and stacking on different projects to make the risk reward make sense. The third major trend is that in this bull market, on chain borrow fees for USDC and USDT are at all time highs ranging from \~15-60%. As traders go max long and loop on lending markets, the search for cheaper leverage will only intensify. Monroe represents a groundbreaking decentralized protocol to take advantage of these three major trends with the creation of an omnichain stablecoin protocol to mint the RoeUSD stablecoin. RoeUSD accepts non-yielding major tokens such as wBTC and the new world of liquid staking tokens (LSTs) and Liquid Restaking Tokens (LRTs). Through the utilization of Layer Zero OFTv2, we enable the seamless generation of omnichain synthetic assets. These synthetic assets can be used for omnichain points farming and enable cheap leverage. The technical design is iterated from industry leaders like Liquity, Lybra, and Prisma to improve capital efficiency and safety. Monroe is currently prioritising integrations on Avalanche, Manta, Merlin and IOTEX. More chains will be integrated as the project continues to iterate. # General Monroe Protocol is a decentralized stablecoin protocol that mints synthetic assets following an oracle price feed that can be decentralized or centralized. There are various mechanisms used and these will be covered in concepts

Each synthetic asset ecosystem is made of: * An omnichain synthetic token * Collateral vaults that receive tokens that can be non-yielding or yielding such as LSTs to mint synthetic debt * A safety pool for each collateral vault, holding a single collateral Use Case * Cheap Leverage: Collateralise to mint for free RoeUSD in exchange for Protocol being to distribute yield. User can use RoeUSD to swap for Token and mint more RoeUSD and swap again for Token to increase delta exposure * Safe Additional Yield: Deposit in Safety Pool for additional yield without price risk * Omnichain Farming: Collateral stays on home chain, RoeUSD is bridged across to different chains to take part in farming opportunities # Yield-bearing LST/LRT #### Liquid Staking Tokens (LST) Liquid staking tokens are digital assets that represent a staked position in a proof-of-stake (PoS) blockchain. When users stake their native tokens in a PoS network to support network security and operations, they receive liquid staking tokens in return. The primary advantage of liquid staking tokens is that they enable users to maintain liquidity and participate in other DeFi activities without having to unstake their assets. LSTs effectively solve the liquidity dilemma by allowing users to "double dip" - earn staking rewards while simultaneously using the liquid tokens for other liquidity provision activities that generate additional rewards. There are many types of staked tokens. Monroe only accepts tokens that distributes rewards on a daily basis. Tokens that have irregular reward schedules are not good candidates as collateral. #### Liquid Re-Staking Tokens Liquid re-staking tokens pioneered by Eigenlayer are a further evolution of the liquid staking concept. They not only represent a staked position but also automatically reinvest or re-stake the staking rewards generated by the underlying assets. This creates a compounding effect, where the rewards from staked assets are continuously re-staked to earn more rewards, increasing the overall yield over time. These tokens can be added into other protocols such as Pendle to generate further yield. #### Incentive Alignment and Advantages for Monroe These tokens are highly liquid and are yield-bearing, that make it good collateral for incentive alignment. In iterating on the peg stabilisation mechanisms, the liquidity provider assigns the right on how the yield is distributed to Monroe Protocol to maximise positive behaviour to incentivise positive behaviour to defend the peg and promote supply increase. Different LSTs will have different rates of yield across different chains and LPs can take advantage of this design to move across to different chains via Layer Zero to take advantage of these yield farming opportunities at scale. **Sample Flow:**

Token A can be producing 10% APY on one Chain A Token B can be producing 30% APY on another Chain B LPs can collateralise Token A on one Chain A and mint monUSD this monUSD is bridged to Chain B and deposited into the Savings Pool to earn higher yield **Benefits** * Token A LP enjoys higher yield * Token B LP still enjoys leverage opportunities * Chain A ecosystem retains TVL * Chain B ecosystem sees increased TVL and attention The ideal is that Monroe creates an omnichain yield farming ecosystem that is non-rivalrous between ecosystems as it is now. One ecosystem's gain in TVL tends to be another ecosystem's loss in TVL. At scale, Monroe in effect reduce the need for ecosystems to print rewards at an unsustainable rate. # Omnichain Monroe synthetic USD (RoeUSD) and stablecoins are natively omnichain. #### Omnichain Tokens Omnichain tokens are designed to exist and operate across multiple blockchain networks simultaneously. Unlike traditional decentralized stablecoins which are native to one specific chain, Monroe stablecoins are Omnichain Fungible Tokens, based on LayerZero OFTv2 standard. This allows for a single token to be used in various ecosystems without the need for bridging solutions. The primary advantages are interoperability and capital efficiency, as MonUSD can be bridged anywhere without needing liquidity pools, to be used in various DeFi protocols. For example, MonUSD can be minted against STONE on Manta, or stETH on Ethereum then sent to another chain where the yield is higher or transaction costs are lower. #### Benefits * **Interoperability:** Designed to work seamlessly across different blockchains without requiring bridges, allowing for wider compatibility across various blockchain networks. Multiple native LST tokens can support Monroe stablecoins. * **Integration Speed:** Monroe is able to create partnerships quickly with ecosystems and liquid staking partners without any dependencies. * **Security:** Built on LayerZero security, eliminating the necessity for third-party bridges and locked liquidity pools associated with bridge mechanisms, which could pose risks of failure or vulnerability. Omnichain tokens strive to offer a more unified solution, potentially decreasing dependence on third-party bridge services. * **Usability:** Provide a smooth user experience by enabling a single standard for transactions across multiple chains, eliminating the need for token wrapping or unwrapping processes. # Peg stability Overview Peg stability is the number one criteria to create trust and confidence in RoeUSD. Monroe implements a number of soft and hard mechanisms to maintain the peg. #### Over-Collateralization and Liquidations Monroe USD vaults are overcollateralized. When the Loan-To-Value (LTV) decreases below a threshold, vaults can be liquidated: liquidators are incentivized to come and repay debt in exchange for its value in collateral with a fee that starts from 2% and increases linearly to 10% for collateral ratio between 150% soft liquidation to 120% hard liquidation. Since at any time the value of the debt is lower than the value of the collateral in the vaults, the protocol is always solvent. Monroe accepts various types of token collateral across various chains. The protocol uses a discretionary formula to determine the minimum LTV required for different tokens based on a multitude of factors such as token on chain liquidity, token market cap, token yield generation mechanisms, availability of oracle feeds. Each collateral type is segregated. Each collateral type can have different protocol parameters based on protocol risk assessment. #### Hard Redemption Mechanism Any user can at any time redeem some amount of stablecoin for its value in collateral less a fixed fee of 0.5%. If the price of Monroe RoeUSD goes below $0.995, arbitragers can buy 1 Monroe RoeUSD on the open market and redeem it for $0.995 equivalent in collateral. When the price of RoeUSD is below the peg, it incentivises arbitrageurs to buy the token and redeem it for a profit, thereby bringing the RoeUSD price closer to $1. # Redemption & Capital efficiency Overcollateralized protocols face the issue of **capital efficiency**, as vault holders need to maintain enough collateral for their position not to accrue bad debt in case of flash crash However, another problem is that hard redemptions push the collateral ratio of vaults upward. In Liquity for example, the minimum Collateral to Debt Ratio (CDR) is 120%. However the hard redemptions target the lowest LTV vaults first. This mechanism therefore inevitably slowly pushes the actual minimum CDR higher than it needs to be, currently [over 340%](https://dune.com/queries/32129/64753) (2024/02/28). Given that the minimum is 120%, the difference of 220% represents high capital inefficiency. This can create huge disincentive from opening new vaults lower than the CDR of the accepted number as they would be redeemed against first. Lybra attempted to improve on this problem by only allowing hard redemptions against vaults that had opted-in, for an additional yield. In theory this appeared to be an elegant solution. However, in practice, in a flash crash the opt-in vaults were quickly redeemed against and once the peg went below the hard floor set. There was no assets left to defend the stablecoin peg and its price goes into free fall. Confidence in the stablecoin erodes and the project inevitably loses its growth trajectory. We improve the Liquity model without compromising security by allowing hard redemptions against **all the vaults simultaneously pro rata**.

Sample Flow: Assuming Token $1,000 Debt $500

With this mechaism the effect for Monroe hard redemptions: * are always available to secure the peg * are fair, as they do not particularly penalize the lowest LTV pools who are the most capital efficient * push the LTV of the protocol up as a whole, improving the protocol overall healthiness # Defence Against Sell Pressure One of the key elements often overlooked in algorithmic stablecoins is the soft peg mechanism. For a stablecoin to truly serve as a reliable store of value, it must closely track its target value at all times. Even a slight deviation, say from 0.995 to 1.05 (a 10% shift), can reduce confidence in RoeUSD being a reliable store of value of economic transaction. Monroe depends on this confidence for its growth so prioritising its defence is a key part in protocol design. For Monroe, one of the key flows is users minting and selling stables to a pool composed of stables and token. A major concern will be how will we address peg stability when there is constant sell pressure. \ \ IF the token/RoeUSD price is higher than token/USDC price, we expect that users will stop leveraging. An equilibrium will be reached between the demand for leverage and the demand for savings. As the project grows, RoeUSD can also be swapped for other stables to allow LPs to foresake their yield and farm elsewhere. In a bullish market, users tend to leverage long, minting and selling the stablecoin, causing its value to drop to the hard redemption floor. Conversely, in a bearish market, people seek to hold onto stablecoins, driving up demand and pushing the price higher. This scenario forces individuals to purchase the stablecoin at a premium during bearish times, only to sell it at a discount when the market turns bullish. This situation is not ideal. By using LST/LRT as collateral, Monroe generates daily yield. Instead of distributing this yield with a fixed ratio, Monroe divides it between collateral owners and the USD savings pool based on the price of Monroe RoeUSD. This adjustment in distribution means that during a bull market, when there's pressure on the USD price, the yield distributed to the savings pool can be significant, incentivizing buyers. During a bear market, all the yield goes to vault holders, encouraging them to maintain more collateral and debt, or to repay their debt to withdraw assets. This mechanism sets Monroe apart, as Liquity lacks yield, Lybra directs all collateral yield to eUSD holders, and Prisma allocates even more to incentivize various DEX vaults (debt APR > LST APR). # Safety Pool When a massive market events happen, it can cause a flash crash that cause token prices to plummet dramatically in a short period of time, there can be a situation where some vaults need to be liquidated due to low LTV. The protocol is incentvised to defend against bad debt that can compromise the stability of the ecosystem. In these situations, the regular liquidation process can be hampered because there is insufficient on chain RoeUSD to repay debts. To address this risk, protocols like Liquity have a stability pool, a pool of LUSD ready to be used to urgently repay some debt. This pool usually gets some additional yield in regular times, and buy discounted collateral when market events happen. Those assets can be sold for USD later when liquidity is back. Monroe addresses this risk with the opposite approach. Instead of having a vault of USD, Monroe has a pool of LSTs that receive an additional distribution of yield from stakers that have minted to secure the system.

When stakers mint RoeUSD they give up the right on how the yield is distributed. Monroe assigns additional yield to be given to the safety pool LPs. When this flash crashes occur, the Safety Pool assets absorbs the debt. As the Safety Pool assets are the same as the collateral assets, the assumption is that its size will be able to increase the LTV of the ecosystem's debt to a level of safety in a comfortable manner. This in effect buys the protocol time where price can appreciate or bounce back to have RoeUSD to repay the debt when the asset price appreciates again. The advantage of this system is that instead of being yet another pool of USD getting some yield, the safety pools are pools of LST getting additional yield without getting additional risk in the form of price exposure. With the current base parameters, we estimate a **stETH vault could yield depositors 9% without taking on additional price exposure.** This is a new DeFi offer that comes as a byproduct of Monroe architecture. # Oracle Monroe uses decentralized oracles such as Chain Link and Red Stone for tokens that have an existing price feed. For tokens without an existing price feed with major oracle providers, the project uses its own centralized oracle relying on feeds from LST providers that are tend to be redemption rate for the token. These tokens tend to be cross chain assets that are migrating from one chain to another with no other major protocol utilising its liquidity. # Managing a vault Go to the vaults page and pick a collateral to open a vault.

A vault has an amount of collateral deposited and some amount of debt minted that eventually needs to be repaid. In your vault page, there is a box to deposit and withdraw collateral, a box to mint or repay some RoeUSD debt, and a box with stats. You can deposit collateral to increase your collateral to debt ratio (CDR).

# Mint & Redeem Stablecoin Once you have collateral, you can mint some debt. Input an amount of collateral to see in the right box how it will affect your health factor. If the resulting factor is acceptable, then you can mint some debt. The minimum health factor is 160%.

You can similarly repay debt and it will increase the vault health factor in a corresponding manner. # Liquidations When the health factor falls below the limit (by default 150%), a position can be liquidated. Liquidators earn between 2% - 10% that rises linearly as the health factor decreases from 150% to 120%.

The page shows a list of existing vaults, ordered by increasing health factor.

Click on a vault then choose an amount of debt to repay. The liquidation bonus shows the bonus perceived, in collateral terms. In the screenshot example, if you repay 100 RoeUSD of user debt, you'll get $103.9 worth of STONE collateral, at the current price. # Auctions Part of the yield from the LST collateral goes to the vaults, and a part goes to the RoeUSD savings pool. This yield is deposited in the pool and a dutch auction starts. The dutch auction bonus goes up 1% every 30 minutes, up to 50%.

In the above example, there is some collateral available for purchase. The discount bonus is now 50%, which means anyone can buy 0.034 STONE for half its oracle price. The auction starts when yield is perceived. Monroe works with LSTs that receive yield once per day. # Crosschain Transfer Cross chain transfers allow transferring RoeUSD natively using Layer Zero: MonUSD follows the LayerZero Omnichain Fungible Token (OFT v2). Currently bridging isn't yet enabled. # Audits Beosin Blockchain Security: \ \ Peckshield:
# Oracles Monroe uses Chainlink and Redstone oracles where available. However many LSTs do not have an oracle yet. In those cases, Monroe runs its own on demand oracle feeds. Any action changing vault balances or debt require passing a signed price update that is within the staleness limit (around 1mn). Where used, those price feeds are behind an upgradeable proxy, to allow switching to common oracle providers whenever they start serving that price data. # Points Calculation & Community **Points (phase 1)** Collateral: 9 points/$100 every 24 hour Debt: 9 point/$100 every 24 hour **Community** Roles are important - there is a ranking system where users can climb from Recruit rank up to Major rank (similar to miltary style), these are the basic ranks. But there are special roles as well for contributions that will unlock when users have contributed enough. We categorise contributions based on these following criteria: Content Creation * Tweets, threads, articles, graphics, videos, etc. Entertainment * Memes, copypastas, showcasing talents, singing, etc. Value Add * Education, guidance, referrals, etc. **Monroe Missions** Monroe is named after Fort Monroe. A safe place to store value. Monroe Missions are missions to earn points to rank up - climb the leaderboard and climb the ranks. There are a total of 5 ranks: @Monroe Recruit, @Monroe Private, @Monroe Corporal, @Monroe Sergeant, @Monroe Lieutenant and @Monroe Major. Once you have attained all the 6 ranks, you will be given a thick chunk of bonus points as a show of appreciation, in a way you will have graduated from service and officially become a senior soldier of Monroe. Roles are the key ways to game for the airdrop for community sense. These have already rolled out in the discord - and will be adding more stuffs to play with and roll out once things get moving # Deployment Addresses | | Manta, Avax, Ethereum | ZkLink | | ------------------- | ------------------------------------------ | ------------------------------------------ | | Controller | 0xb2E609ef662889a32452598F0131863035974878 | 0xD620b0613568406F427a6f5d4ecA301870a1A3d5 | | Monroe USD | 0xDf3d57c3480951958Cef19905E4cf7FC1bA9ad42 | 0x051baaA86328Fc7F522431932B8010F66f260A6a | | Savings Pool monUSD | 0x4773C1d42Cf4231e6e5469186c2F77ff2c6ca824 | 0x7262B20085ab1829b3Ad6888DBC989Cd8894D353 | | | | |