Introduction

Why Mystic

The volume of tokenized assets (e.g. bonds, stocks) is projected to explode in coming years, as institutions realize blockchain rails are more efficient than their current infrastructures and thus can provide cost benefits.

Currently sitting at around $40 billion in volume, most tokenized securities sit on private blockchains and are controlled by banks and asset managers. It is Mystic’s assumption that tokenized securities on public or semi-permissioned blockchains will also dramatically increase, as institutions focus more and more on generating revenue with these assets beyond just cost-cutting.

Securities-backed lending is standard practice in the financial space, as it enables investors to access liquidity on their portfolio and thus leverage their positions. Crypto-backed lending has itself taken much inspiration from securities-backed lending. However, as tokenized securities come on-chain, existing crypto-backed lending platforms are unfit to support them.

This is because these assets are much more illiquid and fragmented than their crypto counterparts. This is due to both the intrinsic nature of the asset being more specific (e.g. a small business loan) and due to multiple parties being able to tokenize the same asset (e.g. 3 tokens for gold), which results in fragmentation. Not to mention several of these assets are securities, meaning they are under AML regulation and thus need extra compliance attention. To introduce these assets in DeFi, a lending market which solves for this is needed.

What is Mystic

That’s where Mystic comes in - we’re making a environment dedicated to RWA-backed lending which takes RWA's different characteristics into account and not only supports them, but leverages them to their full potential. The Mystic protocol has 4 components that help us achieve this:

• Core Pools - shared model lending market boosting efficiency for core assets on Plume's ecosystem.

• Curated Structured Vaults - vaults that separate supply into Junior/Senior tranche for isolated risk exposure and enabling loans against illiquid collateral.

• Custom Permissioning - KYC access can be set per pool, to better adjust to each asset's compliance needs.

• Leverage Strategies - 1-click deploy leverage to facilitate looping.

The result of this architecture is a protocol that can modularly support both RWAs and digital assets of all liquidity profiles, whilst maximizing for capital efficiency and risk reduction. Mystic is the lending market of tomorrow, built to bring DeFi to whole new asset classes.