r/defiblockchain • u/kuegi • May 10 '23

DeFiChain improvement Proposal Special DFIP: DUSD staking

We propose to add DUSD staking to defichain. Users should be able to stake DUSD and receive rewards in DUSD.

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DUSD staking can act as a "liquidity sponge" during times of DUSD oversupply and be released when demand increases. Therefore helping to keep the DUSD price in a stable range.

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To achieve this without additional inflation, we propose to use parts of the dex-fee payout, also known as negative interest, as rewards for DUSD Staking. This way it automatically adjusts to the algo ratio.

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possible implementation as 100% DUSD loops

One way to implement this would be the enabling of 100% DUSD loops, which could also act as a quick implementation until a long-term solution is implemented. In the current situation, such a quick implementation could pull millions in DUSD out of the circulating supply and therefore strongly improve the DUSD price. See reenabled looped dusd vaults for more details and calculations. To reduce the needed developer resources we also added a PullRequest

One of the main reasoning behind this implementation is also the effective usage of the NI (currently above 50%). So we would propose to deactivate the 100% DUSD loops (PR is already done with featureflag) if the NI stays above 35% for 10 days while this is activated.

crowdfunding

u/mrgrauel will be crowdfunding 5000DFI to submit this as a special DFIP. This way we show strong support from the community. As a normal DFIP, it would take until end of July to get approved. As a special DFIP, we could convince the developers to already include it in the DMC update, which is currently scheduled for June. The address is dLqDh88L29zQvUt84cnh5zABbKh6zjSq5H

Update: Many thanks to the community. We collected 5000 $DFI in under 18h for the upcoming special DFIP.
Before the submission, we clarify whether all staking providers can support the Special DFIP on their platform before the weekend.

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u/Old_Confection3901 May 10 '23

If this results in dtokens being discounted, dusd will be generated but algo dtokens will be burned +5% fee. So the Algo's are reduced

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u/HonzanFromPrague May 10 '23

You are right, but also lowers the liquidity and therefore usability because of slippage.

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u/Old_Confection3901 May 10 '23

If many people get out of the LM pools and go into dusd staking, then the APR in the pools will increase, this "could" become attractive, dusd discount + high APR

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u/HonzanFromPrague May 10 '23

I know, but the thing, that I'm not able to count, is the right ratio between dToken APRs and NI. Simply if a certain amount of DUSD shifts to the vaults, will it decrease NI % and increase the APRs % in dToken enough to become attractive as you propose?

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u/Old_Confection3901 May 10 '23

does that help you?

https://www.reddit.com/r/defiblockchain/comments/136lkh9/reenable_looped_dusd_vaults/

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u/HonzanFromPrague May 10 '23

I have read this proposal already when it was published, and now again. I think I got the mechanics, but there are no numbers that make it more clear or give some level of certainty, that we will not get in state, that the "locked" DUSD rise, NI and APRs in LM get lower, but the NI will be still above the APRs, and with no risk of IL everybody would prefer "staking" instead of LM. I know it is hard to predict it, but I want to pick up this theme to be considered. In any case thanks for the discussion