M^0 Frequently Asked Questions

M^0 is an on-chain protocol, as well as a set of off-chain standards and APIs, that allows multiple Minters to issue a fully fungible cryptodollar called $M. Minters connect to the protocol to manage the supply of $M, while Validators support the process independently by providing near-constant information on the presence of off-chain collateral held in best-in-class storage structures. This coordination is underpinned by a novel governance mechanism called the Two Token Governor.

$M is a fungible token that can be generated by a Minter by locking Eligible Collateral, currently short term T-bills, in a secure off-chain facility. Once generated, a Minter can then sell these tokens into the market. With selling and buying back these tokens at the price of $1, $M serves as a cryptodollar, offering a stable, digital representation of the US dollar. $M can also be used as raw material to create other cryptodollar products.

A Minter is an institution that connects to the M^0 protocol and is permissioned by governance to generate and manage the supply of $M. The M^0 protocol has been specifically designed to support multiple Minters.

A validator is an independent entity that connects to the M^0 protocol and is permissioned by governance to provide timely information about the off-chain collateral being used by Minters to generate $M.

$M is minted by permissioned Minters on the M^0 protocol. It is anticipated that outside of the protocol Minters may correspond to financial institutions (such as cryptodollar issuers).

In order to generate $M, a permissioned Minter must have a sufficient off-chain balance of Eligible Collateral. The Minter interacts with a permissioned Validator that can check such off-chain collateral balance and sign a message confirming this to be factual. The Minter then updates this signed information with the M^0 protocol (Minters must perform this action routinely). Once the Minter has collateral that is verified, they can interact with the protocol to propose minting an amount of M that is within their available collateral. When there are no objections, the Minter can interact with the M^0 protocol one final time to effectively mint the proposed amount of $M. They are then free to sell that $M to counterparties.

A permissioned Minter can receive an existing amount of M from a counterparty. The Minter initially interacts with the M^0 protocol to burn that amount of $M. The Minter then interacts with the protocol again requesting to retrieve collateral. The M^0 protocol will validate this request against protocol rules, and if valid will return a retrieval identifier. The Minter can then interact with the operator of an Eligible Custody Solution, present the valid retrieval identifier, and request that the proper amount of collateral be redeemed. Finally, the Minter must interact with a permissioned Validator in order to check the updated off-chain collateral balance and sign a message confirming this to be factual. The Minter then updates this signed information with the M^0 protocol.

Eligible Collateral is a description of portfolio composition that can be locked in Eligible Custody Solutions and be used to mint $M. One can assume that guidance at launch will be such that 30-90 day US Government T-bills are considered Eligible Collateral.

A set of entity structures, jurisdictions, contractual agreements, and other details that are sufficient for the custody of Eligible Collateral. The guidance from governance will likely be that these solutions need to be structured as orphaned special purpose vehicles (SPVs) domiciled in approved jurisdictions.

The M^0 protocol uses a new on-chain governance mechanism called Two Token Governor (TTG). TTG is used to vote on proposals seeking to manage various inputs such as governance parameters, protocol parameters and lists of permissioned actors. TTG is a mechanism by which holders of the voting tokens are penalized for failing to vote. There are two utility tokens used in the M^0 TTG: POWER and ZERO. POWER holders will earn ZERO in exchange for their direct participation in governance.

For more information on M^0 Governance please check the documentation portal.

POWER tokens are used by holders to vote on active proposals and can be considered the primary management token of the Two Token Governor (TTG) mechanism. POWER holders will earn ZERO tokens in exchange for their direct participation in governance.

ZERO tokens are held by governors, who comparatively to POWER holders are passive in the voting process (only voting on important changes). Governors ultimately use $ZERO holding to safeguard the system against corruption, and have the ability to reset the POWER token supply, stripping POWER holders of their voting rights.