Introduction
Recently, the cryptocurrency market has entered a cooling period. For many experienced investors, rather than buying high-risk altcoins at the bottom, it is better to steadily purchase Bitcoin, the largest and most widely accepted digital gold. Although buying Bitcoin is a more stable approach, the Bitcoin purchased can only lie idle in the wallet.
Therefore, Mezo proposes the concept of Bitcoin economy, hoping to allow investors to earn income and future airdrop opportunities while HODLing through an innovative mechanism. This article will help you understand the innovative aspects of Mezo and tell you how to start participating.
Mezo Network Introduction
Although Mezo Network (hereinafter referred to as Mezo) is a traditional definition-compatible EVM Bitcoin Layer 2 protocol, it tends to create a Bitcoin economic layer, dedicated to promoting BTCFi to more Bitcoin holders.
The core logic of Mezo lies in utilizing staked Bitcoin and minting MUSD for liquidity use, and MUSD can be used not only in the cryptocurrency space but also in the real world for consumption. Currently, products such as cold wallets and gift cards have been launched for users to purchase.
Mezo Financing Situation
Since 2024, Mezo has completed two rounds of financing plans, raising about $28 million for protocol development, with participation from top VCs. The financing situation of Mezo is summarized in the table below.
Financing round, financing amount, leading institution A round financing $21 million Pantera Capital, Hack VC strategic financing $7.5 million Ledger Cathay Capital, GSR
Mezo Gas Fee Subsidy Program
Mezo has also launched a special Gas subsidy program. By participating in daily activities through the Lolli platform or shopping online, you can receive BTC Gas subsidies and exclusive Mats points rewards from Mezo. If users happen to have online shopping habits, they can earn Bitcoin cashback while also laying the groundwork for airdrop rewards.
Mezo Protocol Performance
Although Mezo's TVL shows only over $2 million, it can be inferred from its over-collateralized minting model that there should be over $17 million worth of Bitcoin or stablecoins collateralized on the Mezo official website; otherwise, the market cap of MUSD would not reach $17 million.
Mats Points System Analysis
Mats is a points system exclusive to the Mezo ecosystem, with a name derived from Mezo + Satoshi, intertwined with a strong Bitcoin ecosystem color. The sources of Mats acquisition, apart from the aforementioned Lolli consumption platform, must be obtained through participation in Mezo's designated activities.
MUSD Minting
Before participating in Mats points farming, you must first prepare MUSD for Mezo-related activities. On the Mezo official website, you can borrow MUSD by collateralizing Bitcoin, and the collateralization ratio can be adjusted based on the user's preference. Currently, the minimum asset amount accepted for collateral by Mezo is 0.03 Bitcoin.
If you prefer high-risk options, you can choose a higher borrowing rate to borrow more MUSD. For lower risks, opt for a lower borrowing rate to ensure a larger liquidation space. After borrowing, it is essential to pay attention to the current price of Bitcoin and the liquidation price. In case of liquidation, Mezo will charge additional fees as liquidation costs.
Liquidity Pools
The first way to earn Mats points is by participating in the liquidity pools launched by Mezo to enhance the liquidity of transactions on the protocol. Currently, Mezo has launched nine different pools for users to choose from, whether it's Bitcoin/stablecoin pools, Bitcoin/Bitcoin LST pools, or dual stablecoin pools, Mezo has options available for selection based on individual needs.
However, it is still advised to prioritize choosing liquidity pools with higher TVL for storage. Otherwise, when others withdraw funds from the pools, it may lead to an imbalance in fund ratios, resulting in impermanent loss.
Vaults
Another way to earn Mats points is through the MUSD Vaults jointly launched by Mezo and curator August. Depositing the earned MUSD in the vault can not only yield a 15% annualized reward but also allow for the earning of rich Mats points.
By using the Vaults function to store MUSD, you can also earn other BTCFi reward points, including Babylon. This way, you will have the hope of obtaining multiple tokens related to the Bitcoin ecosystem through a single protocol, which is quite advantageous.
However, it is important to note that while deposits and withdrawals from the vault do not incur additional fees, Mezo has a waiting time of 25 hours for withdrawals to prevent bank run situations, so it cannot be considered a liquid deposit item.
How to Participate in Mezo
After reading the detailed introduction of Mezo and the analysis of Mats points above, if you are interested in the Bitcoin economy of Mezo, you might consider participating step by step as described in this section to earn points.
Step 1: Hold MUSD
Since most channels to obtain Mats require MUSD for participation, it is advisable to obtain some MUSD in advance. If users do not want to use Bitcoin for collateral, they can exchange through the Swap function on the Mezo official website, which shows that Swap Earns Rewards. Although the reward content is not explicitly mentioned, it is speculated to be Mats points.
Step 2: Choose and participate in liquidity pools (choose between pools and vaults)
After holding MUSD, you can choose liquidity pools for storage. For users with past DeFi experience who understand impermanent loss, it is advisable to choose the BTC/MUSD pair with the highest TVL for storage. For users who have never participated in DeFi and are more unfamiliar, it is recommended to choose based on the following types to avoid impermanent losses, but risk assessment is still advised first.
Dual stablecoin pools: Mezo offers pools such as mUSDC/MUSD and mUSDT/MUSD, both of which are primarily stablecoin-based. The benefit is that both belong to the stablecoin category, and under normal circumstances, there will not be significant decoupling, and due to the stability of currency prices, impermanent losses are less likely to occur.
Dual Bitcoin-based pools: If you are a long-term Bitcoin holder, you can choose pools like BTC/mSolvBTC, which are primarily Bitcoin-based. Although you still need to bear the fluctuations of Bitcoin, both are centered on Bitcoin, and there will not be significant price differences without decoupling.
Step 2: Participate in Vaults (choose between Vaults and liquidity pools)
Compared to liquidity pools, the vault is simpler, requiring only the deposit of MUSD through the official Vaults interface to start earning yields and Mats points. However, the vault still carries some risks, which will be explained in the subsequent risk section.
Step 3: Wait for settlement and receive Mats points rewards weekly
After depositing funds in Mezo, you can wait for weekly settlements and receive Mats points as farming rewards. After the token economics is announced in the future, you can estimate expected token earnings through the points leaderboard.
Mezo Risk Warning
Although Mezo provides good returns and potential airdrop expectations, there are still several risks to be aware of when participating.
Annualized figures are too high
If the officially estimated Mats rewards are included, many pools in the liquidity pool provided by Mezo offer a potential annualized reward of 200%+, although the reason behind this may be due to low TVL, leading to a small number of users sharing a large amount of rewards. However, it is still unknown how Mezo calculates such high annualized returns.
Lower participation funds
The fund volume of a single Mezo liquidity pool is about several hundred thousand dollars, which is still not considered a top-tier BTCFi protocol in the market. Therefore, it is advised to assess risks before participating and to participate in a low-amount manner to avoid large investments without caution.
Vault Curator Risk
Recently, many protocols in the DeFi market have entrusted vaults to third-party curators for planning. If the curator fails to use the funds properly or includes high-risk currencies in the vault, it may lead to user fund losses. When participating in Mezo, it is recommended to monitor the address 0x221B2D9aD7B994861Af3f4c8A80c86C4aa86Bf53 to observe if there are large amounts of funds being moved out.
Conclusion
The emergence of Mezo successfully provides an alternative choice for Bitcoin holders, maximizing benefits from MUSD through borrowing functionality while retaining Bitcoin. Users can even earn points from Bitcoin ecosystems like Babylon. However, when participating in on-chain protocols, it is crucial to prioritize risk. Although Mezo has ambitious goals, it is still considered a small to medium-sized protocol in terms of capital participation, and one should prioritize safety research before participating.
This report is for informational sharing only and does not constitute any form of investment advice or decision-making basis. The data, analysis, and viewpoints cited in the text are based on the author's research and public sources and may have uncertainties or changes at any time. Readers should make investment judgments prudently based on their own circumstances and risk tolerance. For further guidance, it is recommended to seek professional advisor opinions.
