BTSE AMA Highlights: A Conversation with MBM Foundation on September 9, 2021
On September 9, 2021, the BTSE Telegram Community invited MBM Foundation advisor Jonathan Ip for an AMA.
MBM is a decentralized protocol for issuing structured investment products built on the Ethereum network, wrapped in the form of non-fungible tokens (NFTs). It aims to connect with issuing partners like exchanges, wallets, and traditional financial institutions, so as to offer NFT-based structured investment products to a wide range of clients.
Here are the consolidated and edited highlights of the AMA.
• • •
Introduction
BTSE Moderator:
Hi Jonathan, please introduce yourself and your core team.
Jonathan Ip:
I am very pleased to be an advisor of the MBM Foundation. The foundation was set up by veterans of traditional finance markets with broad experience in investment products, electronic trading markets, blockchain, and DeFi. As for myself, I am also the founder of Iterative Law, a law firm based in Canada with a focus on blockchain and crypto law.
MBM founder Wojtek Kaszycki was involved in structured investment products in Poland for over 10 years. He has worked with Modelity Technologies, a company providing tools for collateral preparation for structured investment products, and PKO BP, the biggest retail bank in Poland, which leveraged Wojtek’s expertise and know-how to offer structured investment products to its retail banking customers.
BTSE Moderator:
What is the main problem that the core team is solving?
Jonathan Ip:
Investors are looking for safe investments while trying to maximize their yield. To address this need, traditional financial institutions invented structured investment products, which give higher yield for the customers while limiting the potential risk of losing funds. However, since these products are issued as contracts between the issuing bank and a customer, they are not liquid.
That is where our solution comes in. The MBM Foundation intends to provide a way to tokenize each structured investment product, so that, subject to applicable laws, they are tradable and liquid. The MBM Foundation team is moving forward with generating the specifications and documentation, and creating a network of potential customers — TradFi players — who will be the first users of our system.
According to Bloomberg, the global market for structured investment products is over US$7 trillion in invested assets. While this is a significant market in the TradFi world, these product offerings are largely absent for DeFi assets. We believe digital assets are also a great underlying instrument to structure, so we see a bright future for the MBM Foundation and its token.
BTSE Moderator:
Who are MBM’s current investors and partners? Does it have partnership plans for other projects?
Jonathan Ip:
The MBM Foundation is formalizing partnerships to support all aspects of its protocol. We are partnering with Chainlink for its oracle network and data consumption to value assets in real-time, as well as Polygon for the creation of the MBM structured investment product smart contract. We are also looking to partner with banks and financial institutions that will be the first users of the MBM platform, such as PKO, Natixis, and others.
• • •
Product Overview
BTSE Moderator:
What is an MBM structured investment product?
Jonathan Ip:
Structured investment products, or SIPs, are financial instruments whose performance or value is linked to that of an underlying asset, product, or index. These may include a mix of assets customized to meet specific investor needs. SIPs typically include the use of derivatives, and are created by investment banks for hedge funds, organizations, or the retail client mass market.
The MBM structured investment product will be an ERC1155 compatible smart contract, where each SIP will be minted as an NFT, setting out its value, underlying instrument(s), and payout structure.
BTSE Moderator:
What are the features of the MBM SIP?
Jonathan Ip:
MBM SIPs will address and modernize two important features of SIPs: settlement and structuring. Settlement refers to payouts given to the SIP owners. When the MBM SIP changes hands, the new owner will receive future payouts. As for structuring, as an ERC1155, the SIP is immutable, fully decentralized, and secure to use.
BTSE Moderator:
How do these features tie back to the problem that the team is solving?
Jonathan Ip:
The ERC1155 token standard allows for SIPs to be issued digitally and transferred between investors seamlessly and instantaneously. By providing an SIP in the form of a digital token, we solve the main problem of traditional SIPs, which is the lack of liquidity. In doing so, we anticipate enabling secondary market trading and the development of marketplaces for SIPs.
BTSE Moderator:
What type of structured products are you most excited about?
Jonathan Ip:
Our goal is to add a digital asset class to the list of underlying assets of SIPs. We expect our first products to be linked to Bitcoin and other top 10 digital coins available on the market. The most exciting SIP we anticipate being released will be based on the DeFi market that is growing rapidly. We plan to structure staking and yield farming in the form of NFTs, so they will be much easier for investors to understand and use.
• • •
Token Overview
BTSE Moderator:
Please tell us about the project’s token.
Jonathan Ip:
MBM tokens (ERC-20) are utility tokens designed to ensure the settlement of payments on the MBM platform, and to be used as collateral locked in smart contracts to support the issuance of MBM SIPs.
Currently, MBM tokens are intended to grant holders the right to become a member of the MBM platform and community, stake MBM tokens through the MBM smart contracts and receive staking rewards, as well as access a fiat-to-crypto on-ramp through the MBM platform and receive a discount on payment processing fees.
BTSE Moderator:
When and where will this token be launched?
Jonathan Ip:
As we will use Ethereum and Polygon to create structured investment products, we will keep our token in the form of an ERC20 token for the time being. In the second version of our MBM SIP platform that we plan to develop in the future, we will build a dedicated blockchain solution for structured investment products, which will be fueled by the native version of our token.
The MBM token is currently listed on BTSE. We anticipate additional listings and related developments in the near future.
BTSE Moderator:
Will users be able to stake or farm? How would that work?
Jonathan Ip:
Yes, users will be able to stake the MBM token. We plan to release off-chain staking in about a week and other initiatives are coming. More importantly, we also plan to release a structured investment product where our MBM token will be the underlying digital asset, so we anticipate a lot of value creation in staking the token by itself.
BTSE Moderator:
How would you classify the MBM token, and can you tell us more about its benefits?
Jonathan Ip:
The MBM token has three main use cases: utility, governance, and value exchange. Firstly, it is a membership token needed to structure SIPs on the MBM platform. Secondly, it is needed to vote for significant changes and improvements to the protocol. Thirdly, MBM tokens hold value when structuring SIPs and provide value in staking and yield farming.
We expect that demand for the MBM token will increase as we expand our service offerings and grow our user base. As institutional and issuing partners get onboard the MBM platform and integrate the MBM SDK, they will create a supply and demand cycle. The more MBM SIPs they sell, the more MBM tokens will be added to the collateralization pool.
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Unique Selling Proposition
BTSE Moderator:
There are quite a few derivatives trading platforms out there. How does MBM SIP platform compare to them?
Jonathan Ip:
The MBM platform is unique from other platforms in that it is being built to specifically address the structured investment product market, and to provide tools for issuers to more efficiently structure and issue products for SIP investors.
BTSE Moderator:
How does your project’s solution compare to CeFi players?
Jonathan Ip:
The MBM platform simplifies and standardizes structured products, making the terms — such as maturity, selection of underlying assets, rates of return — easier to understand and speeding up the issuance of products.
MBM SIPs will be valued using on-chain price oracles supplied by Chainlink, in contrast to the valuation of traditional structured products. The ability to mark-to-market MBM SIPs on a continuous basis improves the price transparency of MBM SIPs and improves the liquidity and tradability needed for secondary trading of the products.
• • •
Questions from the Community and Twitter
Tran Truong (@trantruong90):
These days, many projects are multi-chain. Is this on MBM’s roadmap?
Jonathan Ip:
We are currently looking at Ethereum and Polygon as initial platforms, but are open to operating on other chains to increase adoption and use of the MBM platform.
@Shohid_Afridi2:
Smart contracts are vulnerable to bugs, and three big new DeFi projects were recently victims of this, costing users funds. How efficient and secure is your smart contract?
Jonathan Ip:
We expect the MBM token to also be used for participation in DAO-style community governance. Details of such governance mechanisms and processes will be made public once the parameters and technical aspects have been further advanced by the team.
Our team is well aware of the potential for bugs and exploits in smart contracts and will follow best practices in the development of the MBM platform. We take these concerns seriously and anticipate completing code audits and penetration testing as part of the development process.
@Ipman15547444:
What is the most ambitious goal of your project, and what is the ultimate vision that your project is trying to achieve?
Jonathan Ip:
Our ambitious goal is to disrupt the structured investment products industry, with SIPs that will allow for quicker execution and lower fees, more data and transparency to improve price discovery, and allow for secondary trading and early redemption.
• • •
Future Plans
BTSE Moderator:
Can you share your future plans?
Jonathan Ip:
The MBM Foundation is finalizing an agreement with Chainlink this week. It also has a partnership with Polygon to develop a two-way bridge between Polygon and Ethereum, so that MBM tokens can be migrated to Polygon for increased scalability. In the future, the MBM platform will be used to issue SIPs on Polygon in the form of NFTs.
Partnerships with traditional financial institutions are being negotiated, and a token listing on KuCoin is expected for October 2021.
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MBM’s social media
Stay up to date with MBM’s new developments:
Website: https://mbm.foundation/
Twitter: https://twitter.com/mbm_foundation
Telegram: https://t.me/MBMFoundation
Contact: board@mbm.foundation
