Prisma Finance

Prisma Finance is a non-custodial, decentralized Collateralized Debt Position (CDP) protocol on Ethereum that lets users mint the stablecoin mkUSD by depositing Liquid Staking Tokens (LSTs) such as wstETH, rETH, sfrxETH, and cbETH. It also issues a second stablecoin, ULTRA, via PrismaLRT, which backs it with Liquid Restaking Tokens (LRTs) like weETH, allowing holders to retain all native staking/restaking rewards and points on their collateral while unlocking its value as a stablecoin for use across DeFi.

How Prisma Finance generates yield

Users deposit Liquid Staking Tokens (LSTs such as wstETH, rETH, sfrxETH, or cbETH) or Liquid Restaking Tokens (LRTs such as weETH) as collateral into vaults. In return, they mint the stablecoin mkUSD (or the second stablecoin, ULTRA, when using LRTs). Crucially, users keep all the rewards that their original collateral was earning — native staking yield, restaking rewards, and any EigenLayer points — while also unlocking that value as a spendable stablecoin.

Borrowers pay two costs on their loan: a mint fee when they first open the position, and an ongoing interest rate on their debt. The DAO (governed by vePRISMA token holders) sets the interest rate. Earlier vaults had a maximum rate of 4%; newer vaults allow higher rates, and the protocol can sunset a vault at a 50% rate if the collateral type is being phased out.

Where the fees go

All protocol revenue — from interest and mint fees — flows to a smart contract called the FeeReceiver. Under the current rules:

• Up to 100,000 mkUSD per week is shared among vePRISMA holders.
• Of that, 25,000 mkUSD gets paired with PRISMA tokens and put into a liquidity pool (the mkUSD/PRISMA pool). The DAO owns this pool stake permanently.
• The remaining mkUSD (up to 75,000 per week) goes directly to vePRISMA holders.
• Any fees originally earned in LST form (e.g., in wstETH) are first sold for mkUSD before distribution.

How vePRISMA directs incentives

PRISMA holders can lock their tokens to receive vePRISMA (vote-escrowed PRISMA). The longer you lock, the more voting power you get. With that power, holders vote on where new PRISMA emissions should go — for example, toward a specific collateral vault, the Stability Pool, or users who stake LP tokens. This creates a mini-market where protocols and vaults compete for emissions to attract more users and liquidity.

Stability Pool and liquid lockers

The Stability Pool accepts mkUSD deposits. When liquidations happen, depositors earn a share of the liquidated collateral. A tokenized version called smkUSD is being introduced, which would let these deposits be used elsewhere in DeFi (making them composable).

Separately, platforms like Convex Finance and Yearn act as "liquid lockers": they accumulate vePRISMA and offer instant liquidity to users who lock their PRISMA, optimizing yields for vault owners and liquidity providers.

Cross-chain reach

mkUSD also integrates with LayerZero and Stargate, enabling omnichain transfers. This means mkUSD can move between blockchains, opening up additional yield opportunities across different networks.