Research Type: Protocol Analysis
Status: ⚠️ No Longer Active (Contract disabled Apr 2026)
Date: 2026-05-09 (Updated: 2026-06-13)
Related: RS054 CashToken Swaps, BCH Sellers, Decentralized Pull System
MUSD (Moria V1) was disabled in April 2026 following discovery of a smart contract vulnerability.
Timeline:
Current Status:
Impact on Asgaya:
Source: Moria Money Emergency Notice - April 23, 2026
MUSD WAS a BCH-native, overcollateralized stablecoin built on CashTokens by Riften Labs (Moria Protocol). Users locked BCH into vaults to mint MUSD at a 1:1 USD peg. It was not fiat-backed (no USDT style reserves) — it was a decentralized CDP (Collateralized Debt Position) model similar to MakerDAO, but on BCH.
Users lock BCH into Moria smart contracts (CashScript covenants with CashTokens) to mint MUSD:
User locks 0.15 BCH (worth $150 at $1,000/BCH)
→ Can mint up to $100 MUSD (150% collateral ratio)
→ MUSD tokens are sent to user's wallet
→ User can repay MUSD + interest to unlock BCH
Collateral requirements (v1):
MUSD stays at $1 through two mechanisms:
Redemption: If MUSD trades below $1, third parties can repay the lowest-interest loan at face value, claiming the BCH collateral. This reduces MUSD supply and pushes price back up.
Liquidation: If collateral falls below 120%, the position is liquidated. Third parties repay the loan and claim the BCH (plus a premium).
Moria uses an on-chain oracle system (d3lphi) that tracks:
| Milestone | Status |
|---|---|
| MUSDv0 test run (Dec 2024 - May 2025) | ✅ Concluded |
| MUSDv1 deployment (May 2025) | ✅ Live |
| Security audit (Hashlock) | ✅ Passed |
| DefiLlama integration | ✅ Active |
| Cauldron DEX MUSD/BCH pool | ✅ Active |
| Moria Cash (merchant payments) | ✅ Beta |
| TVL | ~$596K (post DefiLlama listing) |
Moria v1 improvements over v0:
In the current covenant architecture, the Merchant receives BCH when the contract matures. For a merchant in Venezuela, receiving volatile BCH adds risk they didn’t ask for:
MUSD solves this neatly:
Asgaya doesn’t need to issue or hold MUSD. The bulletin board can:
Minimal integration effort: The bulletin board just needs to read MUSD price from Moria oracle or Cauldron and display it as an option for merchants.
| Factor | Detail |
|---|---|
| TVL is small | ~$600K — enough for early adoption, but liquidity depth for large swaps is limited |
| Peg history | MUSDv0 had trouble maintaining $1 peg during high volatility. v1 improved this but it’s still experimental |
| Oracle dependency | Relies on d3lphi oracle — if oracle fails, liquidations and redemptions pause |
| Not multi-currency | MUSD is USD-pegged only. For VES-pegged stability, a separate token would be needed (see RS054) |
| Swap fees | Cauldron DEX charges fees on MUSD/BCH swaps — may need to factor into merchant pricing |
MUSD is NOT viable for Asgaya. The protocol has been permanently disabled due to smart contract vulnerability.
It’s already live, audited, and has basic liquidity. This was true on May 9, 2026. On April 23, 2026, the contract was discovered to have a critical vulnerability despite the Hashlock audit.
Key lesson: Even audited smart contracts can have critical vulnerabilities. Young protocols (MUSD launched May 2025, failed April 2026 = 11 months lifespan) carry significant risk.
| Phase | MUSD Integration |
|---|---|
| Phase 0 (MVP) | ❌ NOT POSSIBLE - Protocol defunct |
| Phase 0.1 | ❌ NOT POSSIBLE - No active contract |
| Phase 0.2 | ❌ NOT POSSIBLE - Would need Moria V2 (timeline unknown) |
Alternative approaches:
For Asgaya architecture decisions:
The core principle remains:
“If merchants face even a small risk of loss, adoption collapses.”
Building on immature stablecoin infrastructure violates this principle. The MUSD failure proves that “audited and live” ≠ “safe for production.”
Recommendation: Asgaya Phase 0 should ship with simple BCH covenants only. Merchants already manage BCH volatility successfully (LocalBitcoins, Binance P2P). Don’t introduce NEW risks (smart contract failure) to solve an EXISTING risk (volatility) that merchants already handle.
Researched: May 9, 2026 Research by: Yakyak (OpenYak)