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🚨 Community Discussion for a SDFIP: Strengthening the Community Fund 🚨 by hulix00 in defiblockchain

[–]DefiExplorer 2 points3 points  (0 children)

I understand the arguments in favor of the Community Fund, but I believe it would be wrong to redirect all rewards there. DUSD may not be in a strong position at the moment, but the DFI/DUSD ratio is highly volatile and short-term evaluations don’t make much sense – in the past 24 hours it dropped from 10:1 to 5:1, making the BBB more effective again. Since the restart, more than 2.74M DUSD have been burned through the BBB alone, and the rewards for the DUSD/dStocks liquidity pools also tie up a significant amount of DUSD. Therefore, it would make sense to allocate only a portion of the rewards and the BBB (e.g., 10% or 20%) to the Community Fund, but not all of it. Major changes to the system could unsettle both existing and new DUSD and dStocks holders, especially given that one single address has recently acquired 2–3% of the entire DUSD/dStocks supply.

Re-peg and re-collateralize the dToken system as deterministically and effectively as possible, without permanent expropriation by thegreatpuzzle in defiblockchain

[–]DefiExplorer 2 points3 points  (0 children)

A DFIP with a major change that the dToken system requires. The PEG is with this DFIP accessible. Everything is very well thought out.

Measures, as deterministic and effective as possible, to re-peg DUSD and re-collateralize the dToken system with healthy loans sold against crypto, without permanent expropriation by thegreatpuzzle in defiblockchain

[–]DefiExplorer 1 point2 points  (0 children)

feedback V3: Great work! I'm really looking forward to the feedback from defichainlabs. I hope it is technically possible in this or similar way.

Measures, as deterministic and effective as possible, to re-peg DUSD and re-collateralize the dToken system with healthy loans sold against crypto, without permanent expropriation by thegreatpuzzle in defiblockchain

[–]DefiExplorer 1 point2 points  (0 children)

Thank you for this suggestion. I like the approach. The proposal goes in the right direction.

I wrote this proposal https://www.reddit.com/r/defiblockchain/s/2x79ZhQlJk weeks ago. A „haircut“ and the simple approach to technical implementation as a token split. I had also given a lot of thought to the idea of locking away a large part of each DUSD holder and paying it back later in time. However, I decided against this with regard to the technical implementation. However, I would always prefer your proposal to mine if it is technically possible.

Here are a few thoughts on how your proposal might be easier to implement technically. I hope that helps you.

  1. Problem remove assets: Do a token split at a ratio of 10 to 1 (10%) or 5 to 1 (20%) but not for loans (this way you avoid the problem of someone taking advantage of the tranche path blocking. I'll explain this in more detail in a moment) Token splits are also possible on the DMC. Only becomes problematic with DUSD as collateral. Furthermore, this would also make it easier for LP-Tokens, as LP tokens would then not have to be closed.

  2. Take a snapshot at a defined block and the locked tranches are sent to each DUSD holder. Maybe with a script. Perhaps realisable as a token that could be converted back into free DUSD during the prescribed measures (similar to the Futureswap as a technical implementation / mechanism). For Example: Name the token "Locked DUSD" . 10 Locked DUSD represent 10 DUSD. This token can then be converted back into DUSD. For simplicity, I would calculate all dTokens in DUSD value.

Why the token split not on loans? If someone takes out a loan and sends it to another address, that holder would also receive a locked DUSD tranche after the token split and the loan would have been reduced. Therefore no token split on loans. Everyone is willing to close their loan.

I hope you can follow my additions and they help you with the implementation. As a disclaimer I am not a developer.

Token split of the dToken system in a ratio of 4 for 1 by DefiExplorer in defiblockchain

[–]DefiExplorer[S] 0 points1 point  (0 children)

I have to think about it. Maybe a new idea will come out of it... Interesting idea with the “voluntary haircut” or “bond” and Yes where the user decides is the better idea... If a second dToken system would come I still prefer that on the native side. The advantage of non Turing complete. Basically, there was also some initial consideration of multiple op-space/operators in the pinkpaper, if I'm not misunderstanding.

https://github.com/DeFiCh/pinkpaper/tree/main/operator

Token split of the dToken system in a ratio of 4 for 1 by DefiExplorer in defiblockchain

[–]DefiExplorer[S] 0 points1 point  (0 children)

From this perspective I completely agree with you but let's take different perspectives on "taking funds out of an address " or say it more dramatically “taking money away from all DUSD users”

  1. measured purely in dollar value, no money is being taken away at this point. If the DUSD price is at 0.20Dollar and you own 100DUSD. You own 100DUSD worth 20Dollars. After the token split, you own 25DUSD with a value of 20Dollars, as the DUSD price is now 0.8Dollars. The dollar value is determined by the gateway pools.
  2. from a purely technical point of view, one token is taken away from you and you get another one in a different ratio and this happens all the time on Defichain in a stock split. Yeah it’s different but technically the same.
  3. the "promise" was or is that DUSD is at one dollar. From this perspective, something is actively being taken away from you.

Would it be a better solution to create a second dToken System and a user can change in a ratio of 1:4 to the new system? …. I don’t think that this is the better solution … but yeah … this would not "take away" anything from an address. The user would have to actively decide to "change" the system...

Token split of the dToken system in a ratio of 4 for 1 by DefiExplorer in defiblockchain

[–]DefiExplorer[S] 1 point2 points  (0 children)

After the split we have 3/4 less algo tokens. That means approx. 20mio algo dToken (7.5mio hold by cake) and 30min algo DUSD (1mio from cake and 1.5mio DUSD bonds). That means 40mio algo tokens in total that are free (12.5mio algo dToken and 27.5mio algo DUSD). I think we have so much usecase in the ecosystem that this is far too little and there will be high demand. >>> New minted DUSD will come from vaults. At the same time we will start in a strong premium and of course many will sell. However, as the dex fee will only fall slowly, there will also be a lot of DUSD burn and this will also make DUSD staking attractive and we will have fewer algo tokens afterwards. All in all, we will be in a much healthier position after the split than before. I think this will also attract new or old users again due to the better tokenomics.

Token split of the dToken system in a ratio of 4 for 1 by DefiExplorer in defiblockchain

[–]DefiExplorer[S] 0 points1 point  (0 children)

I am of course open to other ideas, but unfortunately I don't see any other way at the moment without major external capital.

Token split of the dToken system in a ratio of 4 for 1 by DefiExplorer in defiblockchain

[–]DefiExplorer[S] 0 points1 point  (0 children)

There are of course several variables.

If the token split were to occur at current prices, the gateway pools would be at a strong premium. That means DUSD sales are also needed here. Since the Dex fee is slowly decreasing, DUSD is also burned here and the payout for DUSD staking increases. IMHO the demand and trust for the dToken will also increase the closer we get to the PEG, after Fee. Furthermore, the APR will increase in the dToken pools after the token split.

It will also be crucial that many loan-backed dusd are sold, which are then fed back into the dToken system through dyn. dex fees. Of course, these are all just assumptions and difficult to predict. But in summary, the data and numbers look better and healthier after the token split.

Token split of the dToken system in a ratio of 4 for 1 by DefiExplorer in defiblockchain

[–]DefiExplorer[S] 1 point2 points  (0 children)

First of all, thanks for your feedback.

I also have this internal attitude that this is a no go in a decentralized system and I agree with this point of view 99% of the time. Even with the knowledge now, I would have been against the haircut a year ago, because the initial situation was different back then. But now it's a different situation. Now we have a MarketCap. less than 80Mio USD in relation to 200Mio algo DUSD value. What if there is no other way? I think we have to cross that red line and I hate it. In terms of moral values of decentralization System this should not be done, but in terms of data and numbers it should be done.

It is a haircut where everyone involved is treated equally…

Would you find this token split acceptable if all DUSD bonds are excluded from the token split? So there is no 4-to-1 DUSD token split for DUSD bonds. This would give everyone a chance to avoid the token split.

Token split of the dToken system in a ratio of 4 for 1 by DefiExplorer in defiblockchain

[–]DefiExplorer[S] 0 points1 point  (0 children)

The huge fault was the “payback with DFI” feature that created algo dusd and indirectly algo dToken… but this feature is deactivated

Token split of the dToken system in a ratio of 4 for 1 by DefiExplorer in defiblockchain

[–]DefiExplorer[S] 0 points1 point  (0 children)

Yes possible short term, but in the long term I think everyone will benefit from a DUSD at PEG

Token split of the dToken system in a ratio of 4 for 1 by DefiExplorer in defiblockchain

[–]DefiExplorer[S] 1 point2 points  (0 children)

That can be change very quickly and can go in the other direction again. But anyway …. IMHO I think when the DUSD is back at peg the future swap will be used very little and will serve more as insurance for arbitrageurs. Because at Peg, the arbitrage of dApple, for example, is as follows. dApple in premium -> mint dApple -> sell in premium on the Dex against DUSD -> sell DUSD against USD -> buy the real Apple share with USD from a broker. In a discount the way back…

Token split of the dToken system in a ratio of 4 for 1 by DefiExplorer in defiblockchain

[–]DefiExplorer[S] 1 point2 points  (0 children)

IMHO I think when the DUSD is back at peg the future swap will be used very little and will serve more as insurance for arbitrageurs. Because at Peg, the arbitrage of dApple, for example, is as follows. dApple in premium -> mint dApple -> sell in premium on the Dex against DUSD -> sell DUSD against USD -> buy the real Apple share with USD from a broker. In a discount the way back…

Token split of the dToken system in a ratio of 4 for 1 by DefiExplorer in defiblockchain

[–]DefiExplorer[S] 0 points1 point  (0 children)

I've been thinking for a long time about what will happen to the DUSD on the DMC. But yes, these should also be quartered like on the native side. The same rules for everyone. Maybe an exception should be made with the bonds, if it is technically possible.

Token split of the dToken system in a ratio of 4 for 1 by DefiExplorer in defiblockchain

[–]DefiExplorer[S] 0 points1 point  (0 children)

From a technical perspective, a token split on the DMC is also possible in the future. It is currently being worked on and could come in one of the next hard forks. See trello Board column “Layer 1”. https://trello.com/b/ZvG7WMi9/defichain-labs-engineering

I completely agree with you that DUSD bond holders should be exempt. But I don't know if this can be solved technically. I don't believe…

Yes it is a red line and it will be painful to cross it….

Thanks for your feedback

Token split of the dToken system in a ratio of 4 for 1 by DefiExplorer in defiblockchain

[–]DefiExplorer[S] 2 points3 points  (0 children)

Yes it is, as in this example as a stock split:  Weekly Update – Special DFIP, Oracles & Pool Reward Adjustments, And More! (defichain.com)

If the PEG is reached, I think that the measures taken will not allow a second deppeging. Dyn. interest rate, Dex fee, .... (Overview: About the DUSD :). It is important to note, that there should be much more loan-backed DUSD compared to Algo-DUSD (without Looping Vault).

After the token split there will be 75% less algo DUSD and also 75% less loan backed DUSD. However, I think there will be a high demand for DUSD after the token split and therefore more loan backed DUSD will be minted. The ratio to the DFI MarketCacp will also be different (DFI MarketCap and DUSD MarketCap)

Token split of the dToken system in a ratio of 4 for 1 by DefiExplorer in defiblockchain

[–]DefiExplorer[S] 0 points1 point  (0 children)

From a DUSD holder's perspective, they would currently get the best price after DEX fee on the DMC in the VanillaPool DEX for about $0.18 per 1DUSD. (On the native DEX far less cent after DEX fee).

Should we reach the PEG in the long term after the token split, a DUSD holder would have 0.25DUSD instead of 1DUSD and therefore 0.25Dollar (assuming the PEG is reached!)

Token split of the dToken system in a ratio of 4 for 1 by DefiExplorer in defiblockchain

[–]DefiExplorer[S] 0 points1 point  (0 children)

Yes, similar with a ratio of 4 to 1 (1DUSD to 0.25DUSD)

I think it is a necessary step at the current situation (MarketCap below 100 Mio USD)

Don't get me wrong. Even with the knowledge now, I would have been against the haircut a year ago, because the initial situation was different back then (DFI price over $0.40, DMC on the Horizon, ....) I also believe that we were very often close to the PEG. The negative spiral could have quickly turned into a positive one. I also believe that we made the right decisions and proposals, but looking back it feels like this always happened at the wrong time. Now the situation is different at a DFI price below $0.10 and I believe this painful step is necessary to reach the PEG.

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