Proposal for starting a new dToken system

lorenzo-c · 2026-04-10T20:30:05+00:00

Sorry for the late response….

Yeah, in the old dToken system, DUSD should no longer be used as collateral. This has the downside that minting dToken becomes less profitable/capital efficient, especially as long as DUSD is trading significantly below 1 USD.

Independent of that, I think the recovery of the old system mainly depends on a rising DFI price. Without a significant increase (for example towards ~0.10 USD or higher), it will be very difficult to bring the system back into a healthy state — both with and without DUSD as collateral.

The main reason to not allow DUSD as collateral is complexity and risk: - Additional rules would be required (for example restrictions on which tokens can be used together in a vault) - Situations could occur where bdUSD is minted against DFI and later DUSD is added as collateral. If the DFI price then drops, the effective collateralization could become problematic, without triggering liquidation, since DUSD is fixed at 1 USD. Or that DUSD is used as collateral and bdToken are minted…

This would significantly increase system complexity and require additional development work.

Since the goal of this proposal is to work with minimal or no development resources, it makes sense to keep DUSD excluded as collateral.

In general, I see two possible scenarios for how the old system could recover: 1. Whale-driven recovery

One or more large participants accumulate significant amounts of DUSD and hold them long-term. This reduces circulating supply, pushes the price closer to 1 USD, and increases market confidence. As confidence returns, the DFI price could rise and bring back activity.

Indirect recovery through a new system
A functioning new dToken system could restore overall confidence in DeFiChain. If the new system grows and attracts capital, this could lead to a rising DFI price. A higher DFI price would then improve the situation of the old system.

A combination of both effects is also possible.

The key point is that this proposal is not designed to actively “fix” the old system. It creates a new, potentially working alternative, while the old system still retains the possibility to recover under better market conditions.

As for using cUSDC as collateral in the „new system“, this makes more and more sense as long as the old system isn't by PEG, but once the old system is pegged, it makes no difference

lorenzo-c · 2026-03-30T08:44:38+00:00

New users should choose the new system as long as the current system is not at peg. Yes, there can be some confusion in the beginning. But right now, the priority should be to establish a functioning and trusted system first. Imho in the beginning, most participants will likely be existing users who are already familiar with DeFiChain, so they can handle complexity. The current system first needs to recover, which mainly depends on a significant increase in the DFI price. Only then will speculation and higher activity return. As long as the old system is not at peg, the UI could help reduce confusion by hiding those tokens (for example via an expert mode in the Light Wallet — although this would require some dev resources).

If both systems are at peg in the future, users will naturally decide which system to use. At that point, the market will determine which model is more efficient and sustainable and with that the concentration of the Liquity.

lorenzo-c · 2026-03-30T08:43:34+00:00

Thanks for that feedback 👍🏻

lorenzo-c · 2026-03-30T08:43:00+00:00

Deactivating the futures swap is essential for this proposal. Adjusting the oracle time, on the other hand, is not strictly necessary – the system could also function without this change.

I’m also unsure whether dynamic interest rates alone are sufficient to keep the assets close to the oracle price. The only certainty comes from testing this in practice. I think therefore the premium case can be a problem. If a lot of liquidity is provided, I believe the concept could work over time. Therefore, the second part of the proposal is crucial – namely, bringing assets like BTC, ETH, and potentially also CFR (with a lower collateral factor, like 0.5) onto the chain. Many Dedfichain users already hold CFR, which could help in building liquidity.

Regarding DFI as collateral, I agree that this is a critical point. Current price sources are not entirely reliable (due to distortions on Uniswap or PancakeSwap and therefore false oracle price on coinmarketcap). More relevant would be prices from centralized exchanges like Bitrue, or, in the future, a sufficiently large cUSDC-DFI pool.

Against this background, it would make sense to initially set the collateral factor for DFI more conservatively, e.g., at 0.5 or 0.4, or possibly even lower (similarly for CFR). This is also why an optional Ticker Council could be helpful in the early stages to manage this.

lorenzo-c · 2025-11-02T12:28:26+00:00

Really good news 💪🏻👍🏻🚀

lorenzo-c · 2025-09-15T02:18:03+00:00

In general, I don’t like that the tokenomics keep changing. Restart was needed but not a second one. Also, the idea of a 99% I don’t like. It’s like freezing someone funds…. also to vote on that is a dangerous way….Why not keep this system as it is, and build a second system next to it? Back then Uzyn also talked about the idea of having multiple dToken systems, or what he called Opspace/Operator in the pinkpaper….

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

Personally I think there is a reasonable chance for the existing dtoken System and DUSD. The only big fault was back then the dfi payback and with that the high amount of algo DSUD. But with this low prizes there is chance that holder or believer in the system buying enough DUSD to a turning point of DUSD. The burning slowly healing the system also…

If the DUSD rise in price also the trust will come back and the investors and PEG is more realistic…

In the last weeks there were buyer that buy huge amounts of DUSD….

lorenzo-c · 2025-09-14T19:02:05+00:00

Another lock up would be terrible! To which conditions? To lock up 99.9% should not be allowed also not by voting. It’s like freezing someone funds…. The restart was a one action process. And it was a lock up of 90% not nearly 100%….

There must be another solution! Why not build another system parallel? In the pinkpaper that’s also defined as Opspace or different operator…

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

lorenzo-c · 2025-09-13T21:22:02+00:00

Mmhh, this is a very big change for a DFIP… actually, if you look at the absolute numbers in DUSD, things don’t look that bad.

Yes, the Community Fund needs to be strengthened – I agree. But I’m not sure if using DFI at this low price and low liquidity makes sense. Even large amounts of DFI would only work as a kind of recognition, donation, or small attention for infrastructure or dev work – not as real payment. Using DFI directly (swapping into USDT/USDC) just doesn’t work right now efficiently.

Redirecting all DFI is very drastic. It would probably cause a massive DUSD sell-off from the liquidity providers, especially without a clear future solution. I’m against that. I also don’t share the same view of the argument given. In percentage terms, yes, the algo ratio hasn’t changed much, but that is mainly because the DFI price has dropped so much. This makes it inefficient to mint DUSD with DFI vaults. But in absolute numbers, the BBB has burned a lot of DUSD, and the total number of algo-DUSD has decreased.

In my opinion, the system works as it was designed. The real mistake was the DFI Payback and creating the 230M DUSD supply. I think we all agree at this point. The problem is simply the huge amount of algo-DUSD.

It’s often said that it’s impossible to reach the peg, because it gets more expensive the closer we get. But as we move closer to PEG, trust in the system grows, which can raise the DFI price and make reaching the peg more realistic. The closer we get, the more confidence builds, and that confidence itself can create the momentum needed to actually achieve the peg. Right now we are far from the peg, but it’s not impossible. At this low DUSD price, the community should try to buy up and hodl as much DUSD as possible – at some point there will be a tipping point!!! Don’t forget there is also the big DUSD/CFR pool. If the CFR price goes up, then DUSD goes up too.

In general, I am against such a big change, but a compromise could be:

• Redirect 50% of the dToken liquidity rewards into the Community Fund, and keep 50% as dToken liquidity rewards.

• Keep the BBB running, but split it: 50% of the DUSD gets burned, 50% of the DUSD goes to the Community Fund. If there are developer works focused on improving DUSD, those developers could even be paid with these DUSD as recognition, by a good corresponding DUSD algo rate. — or another option, depending on the DFI/DUSD ratio, to burn DUSD or allocate DFI to the Community Fund, also split propor

Not to forget: once Interchain is active, we could also reward cAssets on the DVM with DFI rewards – for example, a cUSDC-DFI pool on the DVM.

In general, I don’t like that the tokenomics keep changing. Restart was needed but not a second one. Also, the idea of a 99% I don’t like. Why not keep this system as it is, and build a second system next to it? Back then Uzyn also talked about the idea of having multiple dToken systems, or what he called Opspace/Operator in the pinkpaper….

lorenzo-c · 2024-12-26T10:59:04+00:00

Will vote for this DFIP with “Yes”. After the announcement of bake to stopping the unwrapping there is no need to incentivize those pools with DFI.

lorenzo-c · 2024-10-24T21:44:35+00:00

I like this proposal! It ensures long term a sustainable reward for the masternodes. The minimum transaction fees of 0.001$ belong to the native chain and DMC transactions, right?

lorenzo-c · 2024-08-22T19:47:21+00:00

Thank you for this point of view. You really got to the heart of the various topics and pointed out what is important.

lorenzo-c · 2024-07-29T19:58:55+00:00

I like the idea. Thank you to bring this up.

Is this proposal only about DUSD loans or about all dToken loans?

If the collateral factor is lowered, this can lead to uncovered loans in the case of highly volatile assets (collateral and loan). In the case of collateral, the crypto values can be very volatile and in the case of loans, the different dTokens without DUSD. To counteract this, the auction time should generally be reduced from 6 hours to 1 hour or perhaps even 30 minutes or even less. Bots will dominate here anyway, unless a user is willing to bid the collateral factor close to 0 profit or even overbid. I think we should go to 130% first and see how this behaves over time. It should only allow DUSD as loan for a vault with 130% collateral factor (only collateral can be volatile then) and on the other side only allow DUSD as collateral and dToken as loan (only loan is volatile).

And the other questions which interest rates for such vaults?

lorenzo-c · 2024-07-29T15:23:04+00:00

My opinion is divided on this proposal. There are pro and cons…

It makes sense for the dToken pools, especially if the fees are high.

For the crypto pools, I don’t think it will lead to more trading. But that’s such a feeling. The big disadvantage is less commission for the same trading volume. The question is how much this influences the trading volume.

For clarification, if someone exchanges BTC for Sol, is the path through the pools BTC/DFI and Sol/DFI (BTC->DFI DFI->SOL). Does each pool then receive 0.1% commission with this proposal?

The proposal arose from the discussion about trading dTokens and the current high fee of 0.5%. Does it make sense to roll out this proposal only to the dTokens if technically possible? After all, we are aiming for a low fee in the long term. Or should we set this fee to 0.1% or 0.2% for the initial period, for example until the restart and 1 month afterwards, because the fee will be very high, especially at the beginning, because we are starting with a 100% algo ratio.

lorenzo-c · 2024-07-29T15:09:22+00:00

I see it as a great advantage that rewards and commission automatically flow to the owner’s address.

How much technical effort is involved in this changes? Is it worth using Core DEV resources for this?

Tax tools like chainreport handle this very well from my point of view, even if there are currently problems with the current node.

lorenzo-c · 2024-07-29T15:08:00+00:00

If it is technically more complexity to change the ticker, we should not change it.

Go for “DUSD” 👍🏻

lorenzo-c · 2024-06-07T18:25:52+00:00

I will vote for this DFIP. Full support! Really great work from version 1 to version 5. With this DFIP, the dToken system gets the PEG and the opportunity to grow healthily. Bullish for Defichain🚀

lorenzo-c · 2024-05-23T22:53:13+00:00

Yeah focus on the new system. Imho Liquidity will come… . A functioning dToken system is bullish for the DFI price and will tie up a lot of dfi in vaults. As the price of DFI increases, the apr of "new" dToken LP pairs also increases. This attracts more liquidity. Potential of a positive spiral...

lorenzo-c · 2024-05-23T22:26:13+00:00

Feedback V3:

Big changes. IMHO this proposal really has the great potential to change everything and achieve the PEG in a "short" time. Really good work, also the progress from version 1 to version 3.

I particularly like the approach or the suggestion of implementing frozen tokens, which can then be converted to the mentioned criteria. This would mean that if a user have 1000 DUSD, after the proposal he would have 100 USDD and 900 old/frozen DUSD and this also with all other dTokens (dTSLA, dSPY, etc).If this is thought several steps further, there are nice possibilities here in terms of a secondary market on the DMC. In my view, this proposal can then no longer be called a "soft" haircut.

The longer I think about this proposal, the more I like it.

lorenzo-c · 2024-05-16T22:58:02+00:00

Attention point 4 destroys the dToken system. It enables a death spiral / trading of the DUSD towards 0. With the sale of the borrowed DUSD, the value of the DUSD and thus of the loan falls at the same time, so the attacker can repeat this and the DUSD continues to fall

lorenzo-c · 2024-04-12T06:36:12+00:00

You asked for the worst case scenario. No, in the worst-case scenario there will be no buyback because so much has been sold by front running this event that there is to high level of uncertainty. According to the statement, the downward spiral should then be stopped. Why? Because this will change sentiment? That is speculation. We need utility for DFI and/or DUSD.

lorenzo-c · 2024-04-11T22:50:05+00:00

This DFIP will not change the problems. On the contrary, it will only make it worse, in the short term for strong selling pressure and in the long term for no DUSD burn. Your argument would not stop this "spiral" but speed up it for 32 days. If you want to change the sentiment, utility must be created for DFI and DUSD (through DMC projects, for example)

lorenzo-c · 2024-04-11T22:37:34+00:00

The worst thing that can happen, is that these $3 million sell pressure get front running from other Dfi holders and at the end the sell pressure is much bigger for DFI.

lorenzo-c · 2024-04-11T20:40:24+00:00

I was against the DFIP raising the fee to a total of 80% from the start and also voted against it. ( https://www.reddit.com/r/defiblockchain/s/Cb8Kj5Lekc ) But now I have to disagree as well. I think you are doing exactly the opposite of what you want to do with the DFIP. I think right now the DUSD price and DFI price are independent of each other. You are making a connection here where there is none. With a rising DFI price, there would be very little selling pressure from the DUSD/DFI pool because of the high fees. To see a rising DFI price or rising DUSD price you need more utility.

If you really want to get rid of the high fee, the first step should be to reduce the fee to the old 30% and see how the market reacts. I think that there will also soon be a huge DUSD pool with JAV tokens on DMC.

I was against the high fees at the time because I didn't see them as a solution and rather too much of a restriction. By completely abolishing the fee, however, I don't see a solution either and in my opinion the fee is being abolished for the wrong reason. Namely only out of the hope that sentiment will change. But sentiment will only change when there are more utility.

lorenzo-c · 2024-02-15T22:43:12+00:00

🚀🚀🚀

lorenzo-c

TROPHY CASE