Prisma Finance is a Liquity-inspired collateralized debt position (CDP) stablecoin protocol on Ethereum that launched September 2023, allowing users to deposit liquid staking tokens (wstETH, rETH, cbETH, sfrxETH, WBETH) as collateral to mint mkUSD — a non-custodial dollar-pegged stablecoin — without ongoing interest payments (only a one-time minting fee), with peg stability maintained via a stability pool (mkUSD holders backstop liquidations and receive LST collateral at discount), and a redemption mechanism (worst-collateralized positions redeemed at face value), governed by PRISMA token holders, until a March 2024 exploit drained approximately $11.6 million from the protocol.
| Stat | Value |
|---|---|
| Ticker | PRISMA |
| Price | $0.01 |
| Market Cap | $829,780 |
| 24h Change | -0.2% |
| Circulating Supply | 97.55M PRISMA |
| Max Supply | 300.00M PRISMA |
| All-Time High | $18.64 |
| Contract (Ethereum) | 0xda47...d71c |
How It Works
- LST collateral — Users deposit liquid staking tokens (earning ETH staking yield) as CDP collateral. Unlike LUSD (Liquity’s stablecoin backed by ETH), mkUSD is backed by yield-bearing derivatives of ETH, allowing the underlying collateral to appreciate while maintaining its dollar-peg role.
- mkUSD minting — Users open a Trove (same terminology as Liquity), deposit LST collateral, and borrow mkUSD up to the minimum collateral ratio (typically 110–120% depending on collateral type). A one-time borrowing fee (0.5–5%) is charged instead of ongoing interest.
- Stability Pool — mkUSD holders can deposit into the Stability Pool. When under-collateralized Troves are liquidated, Stability Pool depositors absorb the mkUSD debt and receive the liquidated LST collateral at a discount — generating profit for depositors while maintaining mkUSD peg.
- Redemption — Any mkUSD holder can redeem mkUSD at face value (~$1) for LST collateral from the most under-collateralized Troves (similar to Liquity’s redemption mechanism).
- PRISMA governance — PRISMA token holders vote on which LSTs are accepted as collateral, their collateral ratios, the stability pool boost parameters, and protocol treasury allocation.
- Convex-style vePRISMA — Similar to Curve’s veToken model, PRISMA can be locked as vePRISMA for boosted emissions and governance power.
Tokenomics
| Parameter | Value |
|---|---|
| Ticker | PRISMA |
| Max supply | 1,000,000,000 (1 billion) |
| Distribution | Community (emissions to protocol users), team/investors |
| Governance | vePRISMA locking for boosted governance and emission weight |
| mkUSD | Prisma’s stablecoin (mintable against LST collateral) |
Use Cases
- LST-backed stablecoin minting — Create dollar liquidity from yield-bearing LST positions without selling ETH staking exposure.
- Stability Pool yield — Earn LST collateral at a discount by providing mkUSD liquidity to backstop liquidations.
- Capital-efficient staking — Earn staking yield on LST collateral while simultaneously using that collateral’s value for DeFi liquidity.
History
- 2023-09 — Prisma Finance launches on Ethereum mainnet. The protocol is co-developed by multiple pseudonymous developers with association to Curve Finance and Convex Finance ecosystem members, leading to criticism of anonymous development and close ties to Curve’s ecosystem influencers. Immediately attracts LST holders seeking to leverage ETH staking positions.
- 2023-Q4 — Prisma TVL grows rapidly as major LST holders (wstETH users, cbETH holders) mint mkUSD against their staking yields. Convex Finance’s Prisma integration allows vePRISMA to be used similarly to vlCVX for gauge voting.
- 2024-Q1 — Prisma reaches hundreds of millions in TVL. Multiple security audits had been conducted, but a complex vulnerability remained.
- 2024-03 — Prisma Finance is exploited for approximately $11.6 million. The attacker exploits a flash loan vulnerability in Prisma’s MigrateTroveZap helper contract. Prisma pauses all contracts within hours. The attacker subsequently sends on-chain messages demanding a “white hat” bounty. Prisma’s development team engages the attacker on-chain. The full $11.6M is not recovered.
- 2024-Q2 — Prisma relaunches after patching the exploited contract. The protocol undergoes additional audits. TVL recovers partially but not to pre-hack levels. The anonymous developer structure draws sustained criticism.
Common Misconceptions
“Prisma is a Liquity fork with no differentiation.”
Prisma’s core differentiation is LST-collateral support (wstETH, rETH, cbETH, sfrxETH vs. Liquity’s ETH-only) and the vePRISMA/Convex-style emission governance layer. The underlying CDP mechanism is Liquity-inspired, but the LST collateral model and emission structure are novel.
“mkUSD is the same as LUSD.”
Both are CDP stablecoins with stability pools and redemption mechanisms. Key differences: mkUSD accepts LST collateral (yield-bearing ETH derivatives), while LUSD accepts only ETH. mkUSD’s collateral accrues staking yield, which partially subsidizes the borrowing fee model.
Social Media Sentiment
Prisma’s launch attracted strong interest from Curve/Convex community members given its association with ecosystem developers. The anonymous development team is a persistent criticism. The March 2024 exploit significantly damaged community trust, particularly the attacker’s on-chain “white hat” messaging (which was widely viewed as ransomware negotiation tactics rather than genuine white-hat behavior). Post-hack community debate about recovery, governance, and the viability of anonymous team protocols was extensive.
Last updated: 2026-04