Designing Secure and Resilient Stablecoins | Antonina Norair - M0 Labs

on how TradFi and DeFi stable coins can kind of work together. Next up, we've got Antonina who leads engineering at M 0, and she'll be sharing more around the stablecoin infrastructure that M 0 has built from a really cool engineering plus a product point of view. Antonina, all the best and over to you. Okay. Hello.

Waiting for my presentation. Okay. So, hey everyone, my name is Antonina and I'm leading and I'm leading engineering team at M 0. M 0 is a universal stablecoin platform. A few words about me.

Before M 0, I was also on an engineering team of Compound Labs. Compound used to be one of the biggest borrowing and lending protocol which kickstarted DeFi summer back in 2020. And before Compound, I was also with ConsenSys, which legendary company that helped to make Ethereum happen. And also, I don't know if you guys know, but kickstarted this conference, which was very small back back in the early days. So, I'm very happy today to present you my thoughts about secure secure and resilient stablecoin designs and what it makes to really make it through the bull cycle and the bear.

So, if you On that point, we can go back to stablecoin to the classics, to the stablecoin trilemma. I don't know, everyone is in the phones, but curious to know how many of you heard about stablecoin trilemma. Anyone? No? Okay, then then let's let's go through it.

So, stablecoin trilemma first time was introduced in 2021 in heavy academic paper. And very quickly, it became a default classification framework of stablecoins which existed at that point in time. So, if you are stablecoin and you are decentralized, if you are stablecoin or just and you are decentralized and peg stable, it means you have to be over collateralized because most likely your collateral is crypto. It is It has a high volatility and it needs to be offset with over collateralization buffer. So, one example of such stablecoin was MakerDAO, DAI in its original version version.

And also, LUSD and RAI. If you are peg stable and capital efficient, meaning for $1 of collateral, you can you can issue $1 of stablecoin, it means you need to be centralized. And this where incumbents like USDC and USDT live. And if are capital efficient and you decentralized, you are algorithmic and most likely you are dead. So, let's speak about death of algorithmic stablecoins.

So, first of all, most of them died very very suddenly, very quickly and via the death spiral. There was a lot of experimentation in algorithmic stablecoins space during DeFi summer. My Claude Opus 4.6 agent told me that there were about 260 stablecoins and less than 5% of them made it to this day. So, the path of most of these stablecoins was similar.

It was the death spiral. So, what happens? There is an external shock in the market and the size of external event doesn't matter. It can be something small which leads to the confidence loss. There is a selling pressure on stablecoin.

The price dips below $1. Protocol, which is very commonly backed by so- The protocol of stablecoin, which is very commonly backed by so-called called homogeneous collateral, starts to mint backing token to absorb the selling pressure. Backing token price slides down because arbitrageurs trying to sell it as fast as possible. The price of backing token going even faster than the price of stablecoin itself, meaning the protocol starts to mint more and more of this backing token, eventually hyperinflates. The backing token price go to zero, stablecoin price go to zero, the end of spiral.

So, this is the famous Terra Luna Terra Luna crash. Also, one year before that, there was an Iron Iron Titan crash, which was the first crypto bank run. So, what is what is learnings from stablecoins? The first learnings, our space stopped doing stablecoins because there is no way you can build a rely you can build resilient stablecoin backed on a collateral which is issued by protocol itself. It's like if you don't have if you don't have collateral, you have to be algorithmically smart.

It's like if your collateral are poor, you have to be logic smart, but it works as long as there is a heavy bull cycle and it's usually ends very fast. So, what happens next in the space? So, algorithmic stablecoins ceased to exist and overall, the market changed. First of all, the macro environment changed where we ended ended zero interest rates era and switched to the era of high fed funds rate. So, what what it meant that all of the sudden, there was an off-chain collateral which was given very competitive yield and this off-chain collateral start to come on chain.

So, it's tokenized bonds, tokenized treasury bills. Additionally, new models start to come. So, for example, Ifena, delta neutral stablecoin was invented in 2023. And all of these stablecoins didn't really work well for stablecoin trilemma. So, instead of stablecoin trilemma, we switched back to understanding that resilient stablecoin is possible.

So, what needs to happen for that? First of all, there should be a collateral which is stable, solid and 100% of stablecoin should be in it. This allows to for stablecoin to be capital efficient and keep the peg stability. At this point, peg stability becoming just a function of liquidity. So, if there is enough liquidity in the market and the market volatility is low, that's when stablecoins keep the peg.

The moment market start to crash, you obviously have to have more liquidity on chain to offset all the markets all the market volatility. So, let's look at some of the crashes. Let's look at some of the lessons of the last year, 2025. So, what happens? First of all, the year was very good, but then towards the end, we start to have a few of sudden events.

On Friday, there was a beautiful beautiful big announcement about tariffs coming and all of the sudden, crypto market went in disarray. A lot of liquidations, 19 billion liquidations cascade. Ifena depegged to 65 cents on Binance, kept its price back on other venues. Luckily, a lot of Actually, nothing nothing major happened. Not not a single big protocol stablecoins failed.

But then, 1 month 1 month later, we start to see the aftermath of this October crash. So, first of all, the Stream Finance apparently lent its collateral to the fund manager which was broken which went broke during October crash. The second thing, there was also the stablecoin project uh Elixir, which lends now its collateral to the Stream Finance. So, there was a cascade of crashes. Accidentally, at the same time, there was a Balancer V2 exploit which led to which um there was a rounding issue in the protocol and all of the sudden, one more stables one more stable protocol got ceased to exist.

So, that led to unfortunate demise of three stablecoins and um it also affected a lot of major a lot of major protocols and vaults. What are learnings from this? First of all, that DeFi composability works as long as your weakest link in this DeFi composability. So, if you're giving collateral, if you're lending out collateral of your stablecoin, first of all, the question why you're doing that? And the second question, to whom to whom actually are you lending this collateral?

One thing I want to bring up that we noticed that during October during October crash, there was also Ifena depegged on on Binance. And Ifena is an interesting model which was introduced in 2023. And um it's a delta So, it's a delta neutral stablecoin, meaning that the protocol hold long its crypto collateral, but offset this position with a short perpetual short perpetual positions to offset the price volatility. Price movements are canceled out and the yield yield comes from the funding rates. And it works very well when we are in a bull cycle because in a bull cycle, the funding rate is positive.

And then, the protocol can send this funding rate back to stakers or to the the users of protocol. When it's not really working well during during the bear cycles. And looking at Ifena crash events, every time there is some market uncertainty, we see that something happens to Ifena. So, for example, there was a macro uncertainty with Japan Japan carry trade, If Ifena had a stress event. There was a Bitcoin halving Bitcoin halving event.

If you know how event, Ifena had a stress event. the to stress event, Crypto liquidations of crypto liquidations of October 2025. Again, Ifina has has a stressful has a stressful performance. And overall, obviously, now we're not in heavy bull market, so the funding rates are also going down, and it's only a question how long protocol which offsets its volatility with uh hedging hedging position can pay negative funding rates. Well, on the on that note, it's obviously very very complex.

It's financial engineering. It's not the actual engineering, but I have I have a good news. Actual engineering is relatively simple. The stable coin is probably the one of the most simple primitives we can use, especially if you taken out algorithmic stable coins and we stop playing with logic versus collateral. I'm trying to show on on the right side of the slide, actually, this is Ifina.

Ifina is 36 line loan contract, and um the most in- interesting part of this contract is actually the phrase on the top, which says dust on crust. I mean, it's a little bit of speculation because this contract also using a lot of libraries, but at the end of day, it's it's very very simple piece of code. And the con- uh stable coin contracts itself, it's basically trans- transfer approve functions, some permits and roles. Well, you can say, "What about yield? What about yield bearing stable coins?"

First of all, yield bearing stable coins are not as popular anymore about after genius after genius act, but that's the one the That's the one aspect in engineering of stable coin, which is actually which is interesting and it's left for us to work on. Um in my presentation, I'm showing two I'm comparing M0, which is a protocol I and our team built out with Tempo, which recently re- recently released uh their own framework for stable coins, and how they calculate the yield in M0 versus Tempo. So, in M0, we're using index and principle and continuous compounding, and a Tempo is using distribution of rewards. Just a few words about M0. I have 40 seconds left.

I'm not very frequent speakers, so uh M0 itself is uh stable coin plat- It's universal stable coin platform, and it connects issuers with algorithmic builders. Recently, we launched like 2025 was very heavy year of us. We launched a lot of stable coins. One of the most popular is MetaMask USD. And how it works.

So, we build a protocol where issuer can come, and if they comply with the set of rules, they can issue the stable coin on top of that. Stable coin itself uses extension frameworks built by our team, which allow to compose different features which go into this stable coin. In the end, builder using a stable coin, and in addition, they allow to have optional features like liquidity support, and if issuer wants also interoperability between the stable coins. So, thank you so much for attention, and if you have questions about M0, please let me know.