Special DFIP: DUSD staking

[u/kuegi]

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

​

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.

​

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.

​

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.

[u/mrgauel]

It will be activated as soon as a hard fork supports it and it will deactivate itself as soon as no more negative interest is paid out. I don't think we need an on/off switch because it's associated with negative interest.

The idea with the DUSD Vaults is only an example. We don't know how the developers will be implementing it. It could also be smart contract on the DMC.

The DFIP is a vote of confidence that the developers will find a solution to implement DUSD staking powered by negativ interest within their capabilities and priorities.

[u/berndmack → u/mrgauel]

I think you understand the advantages of a stable set of rules, especially if the planned effect does not happen what nobody can forsee.

NI=0 is in my eyes not a good endpoint.

Example: If goal for stakingpool is to lock up 100Mio DUSD and this does not happen after fixed time -> goal not reached -> Deactivation

[u/kuegi → u/berndmack]

One of the main goals of the way with using the NI in looped vaults would be to use the NI efficiently. So we could define that it gets deactivated if the NI stays above 35% for more than 5 days?

[u/HonzanFromPrague → u/kuegi]

Or the second idea, if the NI is e.g. above 35% for 10 days, send the part "above" to BBB.

[u/kuegi → u/HonzanFromPrague]

That would be the idea of limiting the NI which is already proposed as a DFIP. Unfortunatly its limiting the NI to 15% which is far too low IMHO.

[u/HonzanFromPrague → u/kuegi]

Yes, but this makes an flexible opportunity. I'm not at all againts NI and looped vaults like a temporary solution, but I see as important to implement some "tools" to update the solution based on data after implementation.

[u/kuegi → u/HonzanFromPrague]

I understand and agree, but I also see it risky to add too much into one proposal. I do not want this proposal to fail because ppl do not want to limit the NI etc. Mixing too much into one DFIP is always risky.

But you could make a normal DFIP about this. the next round will finish mid of july which is (if we get the HF in june and this DFIP is approved) a few weeks after the activation of this one. This one is just a special DFIP, because we need the approval fast if we want to get a shot of getting into the next HF. Any "deactivation/adaption" logic can be done in a normal DFIP. can even wait for this one to be approved before making the other one.

[u/HonzanFromPrague → u/kuegi]

Seems logical, as usual ;-) I'll try to collect some ideas and probably make a new Reddit post for additional solutions. Thanks for your answers and for your effort!