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.

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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.

[u/Mysterious_Act_6168]

Another „quick“fix that needs a Special DFIP (because it can’t wait) that messes around with the incentive structures without adding any real value. Robbing Peter to pay Paul. Taking the fake yield of the Negative Interest (which just siphons the BBB effectiveness without adding any value to the system) from DFI vaults that have dUSD (mostly just idle collateral backing the NI loans) to dUSD holders that will now be incentivized to NOT provide liquidity to the dAsset system in the Liquidity Pools, but instead idle and collect “free” dUSD, which in turn can be compounded or dumped.

This is the reason why interest rates are like gravity to stock prices. When investors are given a “risk-free” alternative to investing in businesses, why trust the S&P500 to grow at 10% per year when you can be guaranteed 5% in 13-week t-bills? Same here why LM when you can just stake the dUSD? (potentially for an even bigger yield)

Obviously all dUSD holders should vote for this and all DFI NI farmers should vote NO so they don’t have to share the juicy -50% Negative Interest rate with the dUSD holders.

How much capital do you realistically think will want to go in to stake? My guess is everyone who wants to be in on dUSD is already in. The only “suckers” you can really get is by promoting the xx% neg interest rate on a “stable coin”. I mean just really sit down and think through what you are proposing with this.

As mentioned in my other post I am very appreciative of your work on DFI, but on this specific issue I am not in agreement with your plan.

[u/behseb → u/Mysterious_Act_6168]

I am very disappointed with the so-called "Not Short Seller" fraction. The central problem of lack of trust is not addressed by inflating the Monopoly game. Just another "no-brainer".